Edit | Yuer Lake
Produced | Tide Rising Network "Yu See Column"
In the past ten years, the competition in the domestic mobile phone market has been extremely fierce, and the "Matthew effect" of the mobile phone industry has become more and more obvious. While many domestic manufacturers were fighting desperately in the red sea of mobile phones, Shenzhen Transsion Holdings (hereinafter referred to as TRANSSION) made a fortune and achieved the feat of dominating the African mobile phone market.
The three-year epidemic has led to a collective mute of domestic and foreign mobile phone giants in the consumer market. On the contrary, no matter how chaotic the external environment is, Transsion, which is located in the African stronghold, still maintains steady development. As global demand for consumer electronics continues to weaken, mobile phone manufacturers are getting tougher. And this situation finally spread to the third world.
According to the latest 2022 performance report, revenue and profit fell for the first time since listing. TRANSSION Chairman Zhu Zhaojiang also joked that "good luck will end in 2022", and now it seems that TRANSSION, which dominates Africa, has a crisis.
The indigenous light of Africa is fading
When it comes to TRANSSION, many consumers may not know this mobile phone brand. The reason is simple, its main products are mainly for overseas markets. In recent years, it has been familiar to the public because of its dominance in the African mobile phone market. According to IDC data, TRANSSION's global mobile phone shipments in 2021 were 1.97 units, ranking third in the world. It is even more outstanding in the African market, ranking first in the mobile phone market share for many years.
Despite this, Transsion is still a low-key and mysterious company in the eyes of the public. However, when Transsion successfully landed on the capital market in 2019 and became the first mobile phone stock on the science and technology innovation board, its mystery gradually receded. The two key factors for Transsion's success in conquering the African continent are product development close to the local area and guerrilla-style marketing strategies.
In 2003, the total sales volume of the African mobile phone market was only 50 million units, and at that time, it was Nokia, Samsung and other international brands that occupied the mobile phone market. Due to various reasons such as poverty and backwardness and complex market environment in Africa, noble international giants do not pay attention to the African market, and still implement the product strategy of globalization.
Transsion seized this opportunity and launched mobile phone products suitable for African people. In 2007, Transsion's first dual-SIM dual-standby mobile phone was released in Nigeria and quickly sold out, opening the door to the African market. Later, while the iron was hot, it launched mobile phones close to local characteristics, such as four-card and four-standby, ultra-long standby, etc., which laid the foundation for Transsion's position in the African mobile phone market.
Another thing that Transsion is talked about in the industry is its marketing strategy. Whether in poor slums or fashionable office buildings, from the Sahara in the north to Cape Town in the south, as long as you are in Africa, you will always see Transsion's mobile phone advertisements. This also makes it highly recognized by the public.
Africa's mobile phone market has also benefited TRANSSION. During the epidemic, many mobile phone manufacturers' revenue was damaged and shipments declined. TRANSSION's performance did not decline but increased. From 2019 to 2021, its revenue was 25.346 billion yuan, 37.792 billion yuan and 49.412 billion yuan respectively; the profit was also increasing year by year, and the net profit attributable to the parent in three years was 1.793 billion yuan, 2.886 billion yuan and 3.909 billion yuan.
From the financial data, TRANSSION has developed rapidly. However, this came to an abrupt end with the release of the 2022 earnings express. According to the express report, TRANSSION's revenue in 2022 will be 46.36 billion yuan, a year-on-year decrease of 6.17%; The net profit attributable to the parent was 2.524 billion yuan, down 35.41% from the same period last year.
The official reason for the decline in revenue and profit was the decline in smartphone shipments due to the Fed's interest rate hike, the epidemic and other factors. In fact, from 2022, TRANSSION's performance has a downward trend, on the one hand, it is affected by the market environment, and on the other hand, it is also related to the collective overseas expansion of domestic mobile phones.
In recent years, the global mobile phone market has become saturated, and seeking new growth points has become an urgent problem for many manufacturers. Going abroad is undoubtedly the best solution. At present, Africa and South Asia are the fastest growing emerging markets for mobile phones, and the large number of people has great room for development. It has undoubtedly become the first choice for mobile phone manufacturers to go overseas. Mobile phone manufacturers have also rolled up from home to abroad, and the light of Africa in the past is not so dazzling.
Internal and external troubles, the position of the hegemon is threatened
In January 2019, after Xiaomi successfully developed the Indian market, it took the lead in launching the first shot to Africa; OPPO FOLLOWED SUIT IN FEBRUARY, AND IN JULY VIVO ANNOUNCED EXPANSION PLANS FOR THE MIDDLE EAST AND AFRICA MARKET. Not to mention, Huawei entered Africa as early as 1997. So far, the four giants of domestic mobile phones have gathered on the African continent.
As the hegemon of Africa, Transsion has also ushered in the challenge of domestic manufacturers. This has also slowly revealed its own shortcomings: industrial structure and technology research and development.
It is a well-known fact that Africa's communication technology is backward, which also leads to the fact that the current African mobile phone market is still dominated by functional machines, and smart phones are still in the development stage. According to IDC data, 114 million functional machines were shipped in Africa in 2021, a year-on-year increase of 2.29%. TRANSSION's industrial structure is also closely related to the characteristics of the African mobile phone market.
According to its prospectus, Transsion shipped 124 million mobile phones in 2018, of which more than 90 million were functional machines. However, from the financial data, smart phones are the main source of revenue and profit. According to the 2021 financial report, TRANSSION smartphone revenue was 39.298 billion yuan, accounting for 79.5% of the revenue. This also shows that the African mobile phone market has entered a transition period from functional machines to smart phones.
It is not difficult to understand why Xiaomi, OPPO and other mobile phone manufacturers have entered emerging markets such as India, Africa and South America in recent years, after all, a new round of smartphone sales growth is coming. At the same time, in terms of smart phones, domestic giants have natural advantages in technology, which is precisely the pain point of TRANSSION.
When it braved the STAR Board, TRANSSION was criticized by the outside world for its R&D expense ratio being seriously lower than the average level of companies listed on the STAR Board. From 2019 to 2021, its R&D investment was 805 million, 1.158 billion and 1.511 billion yuan, respectively, accounting for only about 3% of revenue. Compared with domestic manufacturers in the number of mobile phone patents, it is obviously not at the same level.
In 2021, Huawei, OPPO, and VIVO authorized 7,630, 4,196, and 2,916 invention patents, respectively. TRANSSION has only 1,705 authorized patents as of 2021. The technical disadvantage can also be made up for by the advantages of channels, but the biggest problem of TRANSSION is that the development of the African mobile phone market has fallen into a bottleneck period.
From 2019 to 2021, TRANSSION's revenue in Africa was RMB19.0 billion, RMB22.45 billion and RMB242.4, respectively. It can also be seen from the data that Transsion's revenue in Africa has gradually slowed down. Especially from the latest performance report, it is speculated that the revenue in Africa may not grow in 2022, or even decline.
Compared with the threat posed by external mobile phone brands, this is the biggest difficulty encountered by Transsion. At present, the African mobile phone market is in the 3G to 4G replacement cycle, but due to the adverse impact of the global macroeconomy, consumer electronics continue to weaken, and Transsion's high-hopes replacement boom is not coming.
This also led to a doubling of TRANSSION's pressure on destocking.
According to the financial report, Transsion's inventory in the first half of 2022 was 9.598 billion yuan, and although the inventory fell to 7.421 billion yuan in the third quarter, the inventory amount was still at a record high. TRANSSION's inventory pressure has not been completely eased. This requires TRANSSION to urgently expand other overseas markets, but from the current situation, TRANSSION is still difficult to go out of Africa.
Laying out high-end construction ecology and breaking out of Africa is still a problem
Transsion can get to where it is today, of course, it is inseparable from the credit of Zhu Zhaojiang, who is at the helm. As the person in charge of the overseas market of the original Waveguide mobile phone, he successfully transplanted the understanding of the brand and channel of the Bird mobile phone to Transsion. However, do not forget that it is precisely the impact of external brands and the neglect of mobile phone technology that led to the decline of Waveguide. Transsion is going through a similar process at this time.
But now the sound transmission is not the waveguide of the past, after all. When major mobile phone manufacturers began to enter the African market, TRANSSION gradually improved its industrial structure and system to cope with the upcoming mobile phone war.
At present, Transsion mobile phones have three brands: itel, TECNO and Infinix, corresponding to the low, medium and high three gears, fully covering the mobile phone market. It is worth noting that in recent years, Transsion mobile phones have also begun to develop towards new trends and high-end.
In July last year, TRANSSION launched the Camon 19 Pro Special Edition. The unique back plate can change color in the sun, attracting the attention of many domestic friends; The recently released Phantom X2 pro is equipped with a MediaTek Dimensity 9000 processor and has a number of black technologies such as retractable lenses. The release of these new mobile phones indicates that Transsion has begun to transform itself.
In addition, TRANSSION also owns the consumer electronics brand oraimo and the mid-to-high-end home appliance brand Syinix. The intention of diversified development is very obvious, and it has gradually constructed a product ecosystem belonging to Transsion. The reason why it dares to develop on such a large scale is, of course, its own confidence. That is, uploading sound at the software and after-sales level has a unique advantage.
Different from domestic mobile phone brands, TRANSSION's three mobile phone brands each have independent operating systems and application software platforms, which is its unique advantage in the African market. Its music software Boomplay is currently Africa's leading streaming platform; In terms of after-sales products, TRANSSION has a professional after-sales brand Carlcare, with more than 2,000 service outlets around the world.
These are the results of TRANSSION's decades of experience in Africa. But this only makes it invincible in the African market for a short period of time.
It must be known that Huawei has also been rooted in Africa for decades, and thanks to strong infrastructure and 5G advantages, it must be a strong opponent of Transsion in the future. And another archrival, Xiaomi, despite its late entry, is developing rapidly. With low prices and social media marketing strategies, Xiaomi mobile phones have ranked third in the African smartphone market in 2021.
At the same time, in emerging markets such as South Asia, the Middle East, and Latin America, Xiaomi's market share is also stronger than Transsion. Especially in the Indian market, Xiaomi occupied 25% of India's market share in 2021 and topped the list, while Transsion's market share was only 7.1%, ranking sixth. Therefore, it is unknown whether TRANSSION's set of play in Africa can be applied to third world countries such as South Asia, and rushing out of Africa is still the biggest problem for TRANSSION in the future.
epilogue
Nowadays, domestic mobile phone manufacturers are using the "time machine theory" to enter the third world mobile phone market, and the situation that Transsion is the only overseas mobile phone has gradually been broken. It can be seen that in recent years, TRANSSION has been constantly adjusting its products and technologies, trying to establish a more intelligent new TRANSSION to meet the challenge.
The moment it successfully landed in the capital market, the test of Transsion has begun. Although the replacement cycle of the African mobile phone market has not yet arrived, it may be a curse for Transsion. While the performance has stagnated, it has also given it more time to fight. Once the replacement cycle arrives, it will be a mobile phone guerrilla war without gunsmoke.