Xiaomi and OPPO Launch Surprise Attacks, Transsion Struggles to Hold Its African Stronghold | Focus Analysis

Author | Zhang Ziyi

Editor | Yuan Silai

The flames of war in the mobile phone market are now raging everywhere, even in areas with little profit.

In each annual report of Transsion Holdings, one can see that they have put a lot of effort into serving overseas users.

For example, to adapt to the Indian habit of eating with hands, its gesture unlocking function can work normally even when fingers are greasy; for the Southeast Asian market, it replicated the "photography function" from the African market, which can adjust beauty parameters according to the different aesthetic habits of various ethnic groups in Southeast Asia...

These various small functions are sufficient proof of Transsion's profound insight into overseas markets, which also helped it build a brand moat in the past. After all, in the past, mobile phone manufacturers did not pay much attention to emerging markets such as Africa and Latin America.

All this has completely changed now.

On April 24th, Transsion's 2024 annual report showed that the company achieved an operating income of 68.715 billion yuan in 2024, a year-on-year increase of 10.31%. However, the net profit attributable to the parent company reached 5.549 billion yuan, only a slight year-on-year increase of 0.22%; the non-recurring profit after deduction was only 4.541 billion yuan, a year-on-year decrease of 11.54%.

In response to the situation of increasing revenue but not profit, Transsion said that affected by market competition and comprehensive supply chain costs, the gross profit margin decreased, resulting in a reduction in non-recurring profit after deduction.

To put it simply, the competition in emerging markets has significantly intensified. Transsion is under continuous impact from giants.

In particular, in Transsion's proud home market of Africa, the growth rates of Xiaomi and Realme are extremely rapid. Realme's year-on-year growth rate exceeded 89%. Transsion's unique distribution channel network construction in Africa once discouraged domestic mobile phone manufacturers, but today, other companies have gradually learned Transsion's approach.

In addition to cost-effectiveness, Xiaomi also focuses on localizing to attract "Mi fans"; Vivo focuses on the localization strategy for overseas expansion; Realme targets the young and trendy crowd.

The same is true in the Southeast Asian, Latin American, and Middle Eastern markets. The goal of each company is clear: to divide up Transsion's market share.

The low-price strategy is Transsion's advantage, but it also makes it difficult for the company to move up to the high-end market. In today's highly mature smartphone supply chain, once large manufacturers are determined to seize market share at all costs, it is difficult for Transsion to resist their offensive.

The final result is that Transsion, which sold over 200 million mobile phones last year, can only present a rather mediocre financial report. Its ups and downs prove an unbreakable truth in the hardware industry: the market will ultimately belong to only a few giants.

01 The Advantage of Time Difference No Longer Exists

To be fair, no mobile phone manufacturer understands Africa better than Transsion today. After all, Transsion has witnessed the entire transformation era of Africa from feature phones to smartphones.

IDC statistics show that in 2024, Transsion Holdings' market share in the African smartphone market exceeded 40%, ranking first. In terms of revenue, the African market contributed 22.719 billion yuan in revenue to Transsion last year, a year-on-year increase of 2.97%, accounting for more than 35.95% of the total revenue.

Compared with other emerging markets that Transsion has entered, Transsion has the highest gross profit margin in Africa. The company's annual report shows that Transsion's gross profit margin in Africa is as high as 28.59%, while in other Asian regions, it is only 17.66%.

Based on this calculation, in 2024, Transsion obtained a gross profit of 6.495 billion yuan in the African market. In contrast, the total gross profit earned by the company in multiple markets such as South Asia, Southeast Asia, the Middle East, and Latin America was only 7.901 billion yuan.

This also shows that Transsion's investment in sales channels and brand building in Africa over the years has formed a barrier.

In the African market, sales channels must be extended to the grassroots level. Offline purchases are the main consumption mode in Africa, and the African population is highly dispersed. A mature channel network requires years of operation and maintenance and is not easy to be replaced. Due to the uneven development between urban and rural areas and the underdeveloped transportation and logistics network, consumer products can only reach consumers through a multi-level sales network.

In the early days of entering the African market, Transsion attached great importance to the establishment of a dealer system and preferred independent retail channels such as mom-and-pop stores and wholesalers.

First, with the cooperation of a group of mom-and-pop stores and continuous investment, it gradually built a three-level dealer system, and the mark-up rate of the entire system is about 30%. For key markets and key dealer customers, Transsion will assign sales specialists to maintain long-term and stable daily communication with dealers, distributors, and retailers to obtain first-hand market feedback and demand information in a timely manner.

Based on such a distribution channel method, Transsion has established a large-scale offline network in Africa. One can even find small stores that combine "mobile phone repair + charging station + phone bill recharge" in desert tribes.

However, other domestic mobile phone manufacturers are more used to dealing with chain dealers, operators, and e-commerce channels in the past. Therefore, OPPO and Xiaomi entered the African market in 2014; vivo and Realme under OPPO entered the African market in 2019, all trying to directly copy their domestic experience, but none of them made much of a splash.

By 2024, under the continuous growth pressure, all mobile phone manufacturers began to learn from Transsion's experience and go a step further.

Xiaomi adopted a "ground-level strategy" in the African market, promoting the low-price series of its sub-brand Redmi, including Redmi A2, Note 12 4G, 12, 12C, etc., targeting the ultra-low-end market. The hot-selling models Redmi 10A and 12C are priced at only $75 (about 543 yuan) and $95 (about 688 yuan) respectively.

Manish Pravinkumar, a senior analyst at Canalys, pointed out that in the fourth quarter of 2024, thanks to the active market expansion in West African countries such as Cameroon and Ghana, as well as year-end consumer interaction activities such as the "Xiaomi Discount Carnival" in Egypt and the "Xiaomi Fan Meeting" in Nigeria, Xiaomi achieved a 22% growth in Africa; with the growth momentum of the Note series, Realme even achieved a 70% year-on-year growth in the fourth quarter of 2024.

Transsion once successfully occupied the brand awareness of African consumers for mobile phones with a widespread advertising strategy. Its low-price strategy and differentiated functions also stood out when other manufacturers did not pay much attention to Africa.

However, this good time of insufficient competition cannot last.

02 Impact from Emerging Markets

Transsion is a far-sighted company. When it was known as the "King of African Mobile Phones", it continuously explored emerging markets. As early as 2015, Transsion entered the Southeast Asian market starting from Indonesia and then began to layout in India. After 2017, Transsion also entered Latin American countries such as Colombia and Mexico.

Transsion's 2024 annual report stated that the company expands other emerging markets through a multi-brand strategy to consolidate and increase its market share in key markets. IDC data shows that in 2024, the company's market share in the Pakistani smartphone market exceeded 40%, ranking first; in the Bangladeshi smartphone market, it was 29.2%, ranking first; in the Indian smartphone market, it was 5.7%, ranking eighth.

Transsion also has a clear strategy for the Middle Eastern and Latin American markets.

In the Latin American market, Transsion continued its African strategy, focusing on low-cost products. In countries such as Colombia, Ecuador, and Peru, it reached long-term cooperation with local operators and dealers to open up the market. After LG withdrew from the Brazilian market, it reached an exclusive cooperation with the Brazilian electronics manufacturer Positivo Tecnologia to produce and sell its Infinix series of mobile phone products exclusively in Brazil through Positivo.

In the Middle Eastern market, it adopted a price strategy. In view of the huge consumption gap in the Middle East, Transsion mainly sells mobile phones priced at $60 - $150 in Iraq, which is the lowest price in the Iraqi price system, differentiating itself from OPPO's $100 - $300 and Realme's $100 - $200 price ranges. Thus, it has found its own path in the channel: using the low-price strategy to quickly occupy the mid - and low - end markets. In addition, its mobile phones launched an entry - level product portfolio, providing detailed instructions on using the phone and guarantee services to attract consumers.

Although Transsion's strategy in emerging markets is differentiated, it is still in a fierce competition with other domestic mobile phone manufacturers.

According to Canalys statistics, in 2024, the smartphone market in the Middle East (excluding Turkey) grew strongly, achieving a 14% growth, almost twice the global growth rate of 7%. In terms of brands, the top three in the Middle Eastern smartphone market in 2024 were Samsung, Transsion, and Xiaomi respectively. Among them, Xiaomi's shipments increased by 33% year - on - year, while Transsion's was only 9%. Honor achieved a strong growth of 67%.

The smartphone shipments in the Latin American market reached a new high of 137 million units in 2024. This is due to the aggressive promotions of manufacturers. In the segment with a selling price of less than $300, the devices in this price range accounted for 72% of the total annual shipments.

According to Canalys statistics, Xiaomi's shipments reached 22.7 million units; Transsion solidified its fourth - place position in the Latin American market with a 40% growth rate, with shipments reaching 12.8 million units. Honor made its first appearance in the top five with an astonishing 79% year - on - year growth, with shipments reaching 8 million units.

The low - price market is Transsion's "comfort zone", but obviously, it has now been invaded by other manufacturers.

In today's highly developed and mature mobile phone industry chain, to some extent, manufacturers are no longer competing on mobile phone parameters, but on brand power and control over the supply chain. This determines whether mobile phone manufacturers can hold their ground in the more intense overseas competition. Now, Transsion has entered its bottleneck period. If it cannot break through, it will be difficult to regain its former glory.