• Friday, July 19, 2024
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BusinessDay

Chinese phones rule as Nigerians spend $2.83bn in five years

Global smartphone demand down despite shipment growth — IDC

When Abiodun Akinde first sought an Android phone in 2011, he opted for a Tecno device. “It was the cheapest option available,” recalled Akinde, who was a student at the time.

“This was the early days of Android, and most people in my class were either using Symbian phones, Blackberries, or feature phones,” he stated. This was the early days of Tecno’s entry into the smartphone market, when many were skeptical about the brand known for its loud-ringing double-sim feature phones.

For Akinde and many others, Tecno offered the chance to own a smartphone for N12,000, which was significantly cheaper than alternatives from brands such as Samsung. Since then, Chinese brands, especially Transsion and Xiaomi, have enabled more Nigerians to own smartphones despite economic challenges in Africa’s fourth-largest economy.

Read also: Entry-level Chinese phones expand smartphone penetration in Nigeria

Smartphones have fueled Nigeria’s digital economy over the past decade, with most imports from China. “Smartphones have become the computer for many Nigerians today,” Adia Sowho, the former chief marketing officer of MTN Nigeria, said.

Chinese companies have capitalised on this trend, building devices that cater to their consumer’s needs without requiring additional platforms. Since 2019, Nigerians have spent $3.82 billion on telephones, including smartphone imports, with $2.83 billion (74.09 percent) coming from China, according to the International Trade Center (ITC).

During this period, data consumption has surged, largely driven by smartphones, with monthly usage up by more than 501.99 percent since 2019. According to the Nigerian Communication Commission (NCC), monthly internet usage rose from 125,149.86 terabytes (TB) in December 2019 to 753,388.77 TB in March 2024. representing 500 percent growth.

The ITC, sourcing its statistics from the National Bureau of Statistics since 2013, categorises the telephone import items as “Telephone sets, incl. smartphones and other telephones for cellular networks or for other wireless networks; other apparatus for the transmission or reception of voice, images or other data, incl. apparatus for communication in a wired or wireless network, parts thereof (excl. transmission or reception apparatus of heading 8443, 8525, 8527 or 8528).”

Ifeanyi Akubue, the President of the Phone and Allied Product Dealers Association of Nigeria noted, “Since COVID, there has been a digital boom, and Chinese phones have played a key role. They were already leading the market due to their availability and price.”

Data from the NCC shows that mobile phones from the Chinese Transsion Group, including Tecno, Infinix, and iTel, dominate the country’s approved phone market.

In 2023, Canalys, a leading global technology market analyst firm, revealed that Transsion and Xiaomi, two Chinese manufacturers, accounted for 85 percent of the smartphone shipments into Nigeria in the third quarter of 2023.

Transsion, which manufactures Tecno, Infinix, and iTel, has held the largest market share in Africa since launching in Nigeria in 2006. Xiaomi, which entered the Nigerian market in 2019 with the Redmi Note 7, now holds about 19 percent of the market share, surpassing Samsung.

The International Data Corporation (IDC), a global data insight firm, reported that despite rapid currency devaluation, Nigeria’s smartphone market grew in the third quarter (Q3) of 2023, driven by increased shipments of entry-level devices from Infinix and Xiaomi.

By Q4, 2023, IDC noted that Nigeria recorded Africa’s second-highest growth rate, thanks to a strong push by Chinese brands. By Q1 of 2024, IDC emphasised, “Meanwhile, Nigeria saw robust growth fueled by the success of Transsion brands and Xiaomi, particularly in the entry-level segment, which significantly boosted shipments.”

Chinese phones have cracked the Nigerian market primarily due to their lower prices. This eventually forced established brands like Samsung to launch mid-range smartphones around 2018, which were well-received by Nigerians.

Read also: Infinix Note 40: Setting new standards for mid-range smartphones

Karl Toriola, the chief executive officer of MTN Nigeria, recently stated that digital inclusion hinges on the low cost of mobile phones.

In an X post dated June 1, 2022, David Brown, an entrepreneur and consultant, commented, “For the last 10 years, the Chinese firm Transsion Holdings actively listened to what Africans wanted and designed its phones (Infinix, iTel & Techno) to meet that need at highly affordable price points.”

He noted that the phones are popular because they are designed specifically for the African market, with camera exposures adjusted for black skin.

In a CNN report, Arif Chowdhury, former vice president and current board member at Transsion, confirmed this strategy. “Our cameras adjust more light for darker skin, so the photograph is more beautiful,” he said. “That’s one of the reasons we’ve become successful.”

He added, “When we started doing business in Africa, we noticed people had multiple SIM cards in their wallet. They can’t afford two phones, so we brought a solution to them.”

Transsion also focused on building phones with long-lasting batteries, which appealed to users in a country where constant electricity is epileptic. When established brands were making phones with battery capacities of less than 4,000 mAh, Chinese phones were offering 5,000 mAh.

Manish Pravinkumar, senior consultant for Middle East and Africa (MEA) at Canalys, told BusinessDay that the growing demand for affordable smartphones with advanced features contributed to this shift in consumer preferences.

The senior consultant emphasised that pricing is the major selling point of this phone. “While many incumbents failed to recognise the need for affordable smartphones, Chinese OEMs quickly filled this gap. For instance, with less than 74,000 Naira ($60), one can buy a Tecno smartphone running Android, making Tecno a leading brand among the masses and youths in Nigeria and Africa.”

He explained other strategies employed by Chinese brands, saying, “Financing schemes like TRANSSION’s Easy Buy and Palmpay have successfully enabled consumers to purchase new smartphones through long-term installment plans, a model now being emulated by other brands.

Read also: Smartphones, youthful population to fuel Africa gaming boom

“Vendors like Xiaomi leverage social media platforms to engage with consumers and introduce products like the REDMI 13C, which has become the top-selling phone. In contrast, some competitors have struggled to establish a unique market position, relying on price skimming, which is unsustainable in a market where sophisticated Nigerian consumers seek more than just low prices.”

Growth in Nigeria’s smartphone market is expected to continue in 2024. Pravinkumar, earlier quoted, predicted that the country’s smartphone market will grow modestly by five percent by the end of 2024.

He noted that the rising cost of living, driven by record-high inflation at 33.95 percent in May 2024, will increase the demand for entry-level phones. He highlighted that demand will also be driven by the Central Bank of Nigeria (CBN)’s cashless programs, increasing smartphone demand with the transition from cash to digital payments.