By Liza Lin and Dan Strumpf
SHENZHEN, China -- The top player in Africa's fast-growing
smartphone market isn't Apple Inc. or Samsung Electronics Co. It is
Transsion Holdings Ltd., an obscure Chinese manufacturer that won
customers by offering handsets with features targeted to local
markets.
Transsion -- whose products are sold under the Tecno, itel and
Infinix brand names -- developed handsets with two SIM-card slots
after research showed people were carrying additional cards to
avoid making out-of-network calls to save money. It also optimized
its cameras to better highlight the features of people with dark
skin tones.
"We didn't want to bring what we had," said Arif Chowdhury,
Transsion's vice president. "We wanted to bring what customers
need."
That kind of thinking partly explains how Chinese manufacturers
managed to snare more than 40% of the global smartphone market in
the first quarter of 2017, double what they had five years ago,
according to industry researcher IDC. Meanwhile, Samsung's and
Apple's share of the global market has begun to slip, down 3.5%
last year.
The other answer can be found in the Pearl River Delta, China's
southern tech corridor. With few exceptions, notably Beijing-based
Xiaomi Corp., most of the more than 20 Chinese smartphone makers
are there, a region rich in the technical know-how and
manufacturing infrastructure.
Shenzhen is home to Huawei Technologies Co., ZTE Corp. and
Transsion. BBK Electronics Corp., the parent owner of the popular
Oppo and Vivo smartphone makers, and TCL Corp. are both less than
60 miles to the north.
It is a volatile market, as shown by Xiaomi's fall from the No.
1 Chinese phone maker in 2015 to the No. 5 position last year. The
fight is all about staying competitive in pricing and features, and
Shenzhen is the battleground.
Once known as little more than a hub of contract manufacturing
for Western technology giants, the region has given birth to an
array of domestic upstarts by marrying low-cost production and
high-tech engineering
"The impression that Chinese companies are not good at
innovation was accurate three years ago but not any more," said Li
Dongsheng, chairman of TCL, whose smartphones are ranked in the top
five in the U.S.
Oppo, China's largest smartphone maker by market share last
year, started producing phones eight years ago that were notable
only for simple design flourishes such as a camera molded into the
shape of a smile. Today, its biggest selling points include a
"beautify" function that smooths and brightens users' selfies and a
fast-charging battery.
"We do customer channel checks and survey our large sales force
to find out what consumers need and want from their phones, and try
and innovate that way," said Alen Wu, Oppo's vice president and
marketing director for its China market.
In 2016, Oppo sold more than three phones in China for every two
sold by Apple. A year earlier, it was the other way around.
Now, Oppo is taking the same playbook overseas. In Southeast
Asia and India, where Oppo found that consumers love taking
selfies, they rolled out wide-angle camera lenses designed for
group selfies. The Chinese vendor announced plans this year to
expand its Indonesia factory, open one in India and push into the
Middle East and North Africa.
Similarly, Huawei has streamlined its lineup of smartphones and
has put greater emphasis on its phone cameras, including its own
version of the depth effect pioneered by the iPhone 7 Plus -- with
the background blurred and foreground in focus -- in a phone
costing a third of the iPhone's price.
"In the smartphone space, what we're going to do is catch up
with our competitors through innovation," Shao Yang, president of
strategy marketing at Huawei's consumer group, told reporters at a
briefing this year. "In the next phase, we hope to take the lead by
offering the best user experience and the best products for our
users."
At Transsion, company executives introduced the dual-SIM-card
phone after noticing how African users often carried two SIM cards
and swapped them around because call rates between different
telecom networks were more expensive than intra-network calls.
The company also found that customers enjoyed taking selfies but
were disappointed at how poorly darker skin tones turned out,
Transsion's Mr. Chowdhury said. It tweaked the algorithm on its
smartphone camera to allow more light exposure, boosting photo
clarity.
It paid off. Transsion was the top phone maker in Africa last
year, with 38% market share, topping Samsung, according to IDC.
In emerging markets such as Africa and India, low price is
crucial to success. But Chinese makers are also making strides in
the U.S. Smartphone makers from China increased their market share
to 19% in the U.S. last year from 13% in 2012, at the expense of
Apple and Taiwanese maker HTC Corp., IDC data shows.
TCL, which bought the rights to BlackBerry's phone brand at the
end of last year after helping the brand manufacture its
smartphones, plans to use the once-ubiquitous marque to enter the
high-end segment in the U.S., TLC's Mr. Li said.
U.S. customers are practical and, apart from Apple users, brand
loyalty isn't strong, he added. This has created an opportunity for
Chinese brands to muscle in.
Still, the similarities among Chinese makers and the lack of
Apple-like brand cachet means that Chinese smartphone makers are
mostly fighting one another for customers.
The challenge for those companies is how to differentiate
themselves as they expand beyond their sales strongholds, said
Kiranjeet Kaur, a research manager at IDC in Singapore.
"Chinese phone makers stand out from their foreign peers because
of its features but less so from each other," Ms. Kaur said. "As
they enter new markets, they will face more competition from each
other."
--Junya Qian in Shanghai contributed to this article.
Write to Liza Lin at Liza.Lin@wsj.com and Dan Strumpf at
daniel.strumpf@wsj.com
(END) Dow Jones Newswires
June 07, 2017 05:44 ET (09:44 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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