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said that started domestic mobile phones, which brands do you think of? It is estimated that the answer in your mind is nothing more than Huawei, Xiaomi, or OPPO, VIVO, Meizu, Lenovo...
However, there is such a mobile phone brand. In 2019, the company's mobile phone shipments were 137 million units. According to IDC data, the global market With a market share of 8.1%, ranking fourth; Africa has a market share of 52.5%, ranking first; India has a market share of 6.8%, ranking fifth; Bangladesh has a market share of 15.6%, ranking second.
It is a well-known company on the Sci-tech Innovation Board: Transsion Holdings. Its mobile phone brands are: TECNO, itel, and Infinix. Looking at a set of financial data, from 2016 to 2019, the company's total revenue increased from 11.637 billion yuan to 25.346 billion yuan, a compound annual growth rate of 29.63%.
can make such a big performance, it is inseparable from the professional background of its founder, who was once a domestic mobile phone tycoon-"fighter in mobile phone", Zhu Zhaojiang, general manager of sales of Bird Mobile.
Seeing this, there are several questions worthy of our consideration:
1) The mobile phone industry is highly competitive, and the growth rate of global mobile phone shipments is declining. How does it achieve growth against the trend?
2) Compared with Apple, Huawei, and Samsung, how does it force them to grow into the "King of Africa" and what is the key to its victory?
3) Now that smart phones have shifted from an incremental market to a stock market, how can Transsion phones seize the opportunity?
(1)
Transsion Holdings, mainly engaged in the business of smart terminals with mobile phones as the core, including digital accessories and household appliances. The main products of
are TECNO, itel, and Infinix. The sales areas are mainly in Africa, South Asia, Southeast Asia, the Middle East and South America and other global emerging market countries, and enjoy the title of "King of Africa" in the industry.
Transsion adopts a production model based on sales and production, and arranges its own factories, outsourcing factories, and ODM manufacturers to collaborate to complete customer orders. Among them, its own factories are located in Shenzhen, Chongqing, Huizhou, Ethiopia, India, Bangladesh and other places. (The ratio of self-owned and outsourcing is not disclosed) The upstream of
is the supplier of raw materials such as electronic components, optical devices, electronic accessories, packaging materials and structural devices. The procurement model is based on production order.
As of 2018, the purchase amount of its top five suppliers was 5.092 billion yuan, accounting for 31.7% of the total purchase amount. The top five suppliers were Tuoda Electronics, Hongbo Technology, China Electronics, Helitai Technology, and Huabei Electronics. . Due to the strong availability of raw materials, it has a strong voice in downstream. The downstream customers of
are mainly distributors, but there are also a small number of operators and some supply chain management companies. The customer concentration is relatively low. In addition, it adopts a sales policy of "first payment before delivery" for most customers, and only gives a certain credit period to a small number of long-term customers, so it has a strong voice.
The actual controller of the company is Chairman Zhu Zhaojiang, the controlling shareholder is Shenzhen Transsion Investment Co., Ltd., which directly holds 51.05% of the company’s shares, and the second largest shareholder Yuanke (Pingtan) Equity Investment Fund Partnership holds 12.96% . The third largest shareholder Shenzhen Chuanli Equity Investment Management Co., Ltd. holds 7.59% of the shares. The company has 15 wholly-owned subsidiaries, including Shenzhen Zhan Information Technology Co., Ltd., Huizhou Aifu Top Technology Co., Ltd., and Shenzhen Zhixun Top Technology Co., Ltd. One of the ciphers that
has grown against the trend is to increase R&D investment. , Such as deep-skinned camera system solutions, dark-skinned face recognition algorithm development, and dark-skinned intelligent beauty technology development. Especially in terms of photography technology, in order to meet the needs of African consumers for photography, Transsion established a special group to collect a large number of photos of local people, analyze facial contours, exposure compensation, imaging effects, etc., and develop positioning based on eyes and teeth. The focused camera technology allows African users to show a healthy coffee color under the lens.
In addition, TRANSSION has also increased the battery capacity and introduced superLong standby mobile phones eliminate the obstacles caused by charging difficulties in some parts of Africa; the high temperature in Africa makes mobile phone users easy to sweat, which affects the use of mobile phones and causes corrosion of mobile phone shells. Transmitting is made by modifying the metal oxidation process. A drop-proof and anti-corrosion mobile phone case; based on the low price of local SIM cards but the high cost of inter-network phone calls between operators, TRANSSION also introduced a dual-card or even four-card design to facilitate user SIM switching. This series of technology research and development of
meets the needs of African consumers, solves the consumption pain points of related groups, and is highly praised by local consumers. The main financial basis for this point of
is continuous R&D investment. The company’s R&D expenses have increased from 385 million yuan in 2016 to 805 million yuan in 2019, an increase of 109%. The proportion of operating income from R&D investment in 2016-2019 They were 3.31%, 2.99%, 3.14% and 3.18% respectively, basically maintaining a relatively high level.
(2)
The population growth rate and age structure of the African market are the most dynamic in the world, and the demographic dividend is expected to continue to be released.
Africa has a huge population base and a young population structure, and maintains a rapid population growth rate, and the total population will continue to rise.
According to PopulationPyramid statistics, as of 2019, the total population of Africa reached 1.308 billion, of which the population aged 0-14 accounted for about 41% of the total population, and the population aged 15-29 accounted for about 27%. The young population accounted for a large proportion, and the population structure showed a typical pyramid shape. , It is expected that the population of Africa will continue to rise in the future. The penetration rate of
mobile phones has increased, and the superimposed feature phones have been switched to smart phones. The African market has ushered in sufficient growth momentum. At present, the penetration rate of mobile phones in the African market is relatively low. According to GSMA data, the penetration rate of smartphones in Sub-Saharan Africa in 2018 was 39%. GSMA predicts that the penetration rate of smartphones will increase to 67% by 2025, and smartphone penetration in Africa There is a lot of room for rate improvement.
According to IDC statistics, from 2014 to 2018, shipments of feature phones in the African market increased from 107 million to 127 million, while the number of feature phones in the African market fell from 498 million to 357 million, and the per capita number also fell from 0.43 to 0.28. On the contrary, smartphone shipments increased from 54 million to 88 million, holdings increased from 152 million to 430 million, per capita holdings also increased from 0.13 to 0.33, and the holdings increased steadily.
In 2018, the number of smartphones per capita in the African market exceeded the number of feature phones per capita for the first time. The African mobile phone market is in the stage of switching and upgrading from feature phones to smartphones.
From the perspective of consumption levels, Africa’s per capita GDP is low, and smartphone prices are concentrated in the low-end. It is expected that with the increase in the African economy in the future, the consumption capacity of smartphones is expected to increase.
According to IDC statistics, the consumption level of smartphones in Africa is concentrated below US$100. Approximately 51% of local smartphone prices are below US$100 in Q4 2019. With the gradual improvement of the local economic level and the gradual improvement of infrastructure construction, the mobile phone iteration cycle of the user group continues to shorten, and the demand for smart phones is expected to continue to grow.
Transsion relies on technological innovation, sales network and other first-mover competitive advantages to increase the development of the African market, increase regional sales outlets and introduce new distributors. In 2018, the company's market share in Africa has steadily increased to 48.71%. Manufacturers have an absolute advantage in the competition and maintain a strong growth trend.
Let's look at product thinking again.
From the perspective of revenue structure, in terms of smart phones, in the first half of 2019, TECNO smart phones accounted for about 50%, followed by Infinix smart phones with 23%, itel smart phones with 26%;
functional phones, TECNO functions Machines account for about 40%, and itel function machines account for about 60%. In terms of average selling prices, for smartphones, Infinix averagedThe highest price, nearly 600 yuan/unit, the average price of TECNO is nearly 500 yuan/unit, and the average price of itel is nearly 300 yuan/unit, which is consistent with the company’s brand market positioning; the average price of
functional machines remains stable overall, and the average price of TECNO is about 77 yuan/unit The average price of itel function machines has stabilized at 60 yuan/unit.
's leading market share shapes TRANSSION's brand influence. In 2019, TRANSSION’s mobile phone shipments were 137 million. According to IDC statistics, the global market share is 8.1%, ranking fourth; Africa’s market share is 52.5%, ranking first; India’s market share is 6.8%, ranking fifth; Bangladesh The domestic market share is 15.6%, ranking second.
In the “Top 100 Most Favorite Brands of African Consumers in 2019/2020” published by the well-known pan-African business magazine “African Business” (June 2020), TRANSSION’s three major mobile phone brands TECNO, itel and Infinix is ranked 5th, 21st and 27th respectively; in the top 100 list, TECNO has been ranked first among the selected Chinese brands for many consecutive years, and itel ranked second among Chinese brands.
Although the company's products are positioned for feature phones and low-end smart phones, it still has a strong brand premium capability. Generally speaking, the gross profit margin of mobile phone brands is greatly affected by the company's product positioning.
Although Transsion Holdings is deeply involved in emerging markets such as Africa and India, and its products are positioned in feature phones and low-end smartphones, the company's gross profit margin in the African market in 2019 was 31.08%, which is close to the gross profit margin of Apple, which produces high-end products and is engaged in Internet business ( 37.82%), far surpassing Xiaomi (13.87%) and other domestic brands of mobile phones, which are pursuing the marketing strategy of small profits but quick turnover. The brand premium ability is prominent.
(3)
Finally, let’s look at how to leverage the stock market of smart phones. The answer is to improve internal power construction.
1) Order by production and efficient supply chain management to ensure low cost.
Transsion Holdings’ raw material procurement mainly adopts the production-to-order model. Specifically, the company determines the total demand for materials and the actual demand based on market forecasts or customer orders, and ensures that a certain safety stock is reserved, and finally sends purchase orders to suppliers . The raw materials purchased by
Transsion Holdings mainly include screens, memory, chips, batteries, and cameras. The screens, batteries, and cameras are basically purchased from domestic manufacturers, while baseband chips and memory are purchased from overseas manufacturers.
Relying on its scale and brand advantages, Transsion Holdings has established a stable and friendly cooperative relationship with suppliers in the procurement process. Through the implementation of a supplier evaluation system and a strict procurement approval system, the procurement cost of raw materials is reduced while ensuring the quality of raw materials. Quality and lead time. As a mobile phone brand company,
Transsion Holdings actively promotes domestic mobile phone component suppliers to set up factories overseas, further enhancing the timeliness and stability of procurement.
Supply chain management is the core of cost competition. Transsion Holdings' supply chain is more suitable for the needs of the African market, maintaining steady growth and excellent profit levels in emerging markets with changing policies.
According to Statista, the average price of smartphones in North America in 2019 was 475 Euros, much higher than the average price of 225 Euros in the Middle East and Africa. The African smartphone market is concentrated in the low-end price range.
Transsion products are positioned in functional phones and low-end smart phones. The raw material cost of the production line is adapted to the needs of the African market. It has a stable cooperative relationship with upstream key component suppliers and is one of its main customers in the African market.
At the same time, the company has been rooted in the African market for many years, has a high market share in the African market, has strong supplier bargaining power, and strong cost control capabilities.
In order to meet the differentiated market needs of consumers in different countries, the company has also built a diversified flexible production line with a multi-variety, multi-batch manufacturing capacity. In addition, the company has set up its own factories in Ethiopia, India, Bangladesh and other places. On the one hand, it can respond quickly to market demand, and on the other hand, it also promotes the construction of local employment and production supporting facilities. The rapid market response and flexible production capacity of
Transsion Holdings have enabled the company to gain a good reputation and reputation in the market, and further build barriers to market entry.
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