The Asian giant looks to Africa

The most successful cellphone maker in
China, Xiaomi, has announced its long-
anticipated arrival in Africa next month by
appointing a distributor. The continent has
been the fastest growing mobile region for
the past five years, and saw Q1
smartphone sales surge to 47%. Known as
“the Apple of China” Xiaomi
have aggressively grown their market
share in China, ousting the iPhone from
top-spot by selling slickly-designed
Android handsets made from quality
components but selling its handsets
cheaply by reducing hardware profit
margins. Instead, Xiaomi makes money
through its apps and games store. Formed
only five years ago, the company’s
meteoric rise in its home country made it
number three in global smartphone sales
last year, behind Samsung and Apple.
Founder and CEO Lei Jun is, who unveiled
expansion plans early this year for the
equally fast-growing Indian market, is
considered a rock-star entrepreneur in
Asia .
Xiaomi has appointed Mobile in Africa
Limited as distributor for the 50 countries
that constitute sub-Saharan Africa. The
company’s president is renowned tech
entrepreneur RJ van Spaandonk, most
recently executive director of Core Group ,
which distributes Apple in 14 countries in
sub-Saharan Africa. “I think Xiaomi is
currently the one of the most exciting
mobile internet brands. It is very well
suited to the needs and income levels of
the emerging middle classes in Africa,”
says Van Spaandonk. “There is a great
need for mobile technology in Africa that is
of top-notch quality but still affordable.
What I found in Xiaomi is a company, and
a business model, that can accommodate
the needs of African consumers,” Van
Spaandonk adds.
The London-based GSM Association’s The
Mobile Economy, Sub-Saharan Africa 2014
report found that “Sub-Saharan Africa has
been the fastest-growing region over the
last five years, in terms of both unique
subscribers and connections … By June
2014, there were 329 million unique
subscribers, equivalent to a penetration
rate of 38%… [and] 608 million
connections.”
Mobile In Africa is setting up online stores
in 14 countries, similar to the mostly-
online sales strategy Xiaomi uses in China.
“The brand is a mobile internet company.
It has made its name selling directly to the
public through online channels. We will try
and replicate that as much as possible in
Africa,” says Van Spaandonk. “What
attracts me to the Xiaomi’s Mi brand is that
they produce the highest quality product
with the best available parts at the lowest
possible price. For which there is an
immense demand in Africa,” says Van
Spaandonk.
Xiaomi's Red Mi 2
and M4
Xiaomi is launching the Red Mi 2 (costing $160)
and M4 ($320) in Africa next month.
Two Xiaomi handsets will be available at
launch: the Red Mi 2 (costing $160 /
ZAR1,999, including import duties in South
Africa) and the Mi 4 ($320 / ZAR3,999).
When we reviewed these handsets at Stuff
magazine, we were impressed. “The
Xiaomi Redmi 2 looks like a Lumia and
feels like it’s comparable in quality. In
performance, it fares slightly better than
most of Microsoft's
entry-level phones,” wrote Brett Venter,
Stuff’s online editor who has been
reviewing Android handsets for the last
five years. “The Xiaomi Mi 4 is similar,
except that it looks and feels like an iPhone
5 – with the hardware grunt and software
versatility of Android behind it. The Mi 4,
when it first launched internationally, was
very nearly the perfect phone.”
Venter isn’t very easily impressed – that’s
about as gushy as he gets.
The discontinuation of Nokia’s former
Asha handset range – which cleverly
bridged smartphone functionality on
cheaper mid-range handsets – after the
Microsoft acquisition has left a once-in-a-
lifetime opportunity for Android
manufacturers to capture the 40% market
share Nokia still commanded through its
strong brand loyalty.
Africa is known for its innovative use of
the more rudimentary feature phones,
about which I spoke at TED . But Android
handsets are flooding Africa’s cellphone
markets, accounting for 89% market share
to Apple’s 7%. They are fuelling a shift
from feature phones, sales of which
declined 20% year-on-year in Q1,
according to technology consulting firm
International Data Corporation
(IDC). Smartphones accounted for 47% of
mobile phones bought in Africa in the first
quarter, after a 66% year-on-year Q1
increase (selling over 36 million handsets),
IDC reports in its Q1 2015 Mobile Phone
Tracker. Total smartphone sales in the
Middle East and Africa (MEA) region are
expected to be 155 million this year, IDC
says.
“This comes at the expense of feature
phones, which suffered year-on-year
declines of around 20%,” IDC reported.
“The growth in smartphones in the MEA
region is being spurred by Google’s
Android and Apple’s iOS, with the two
platforms accounting for over 95% of the
smartphones shipped in Q1 2015.
Shipments of devices featuring these
operating systems increased by a combined
67% year on year,” the report concluded.
In South Africa, says Van Spaandonk, “over
50% of sales are smartphones. Kenya is
close to that. Nigeria is 30%. Those three
countries combined sell about 20 million
smartphones a year,” he adds. “That’s a big
opportunity. That’s more than the people
of Holland and no one would dismiss the
size of Holland as a market.”
Once mighty BlackBerry – which negotiated
uncapped data plans in Nigeria and South
Africa where the Canadian handset had
almost cult status for years – has slumped
to 14% in Q1, according to IDC. “The
strong growth in the region’s smartphone
market is largely being driven by the
emergence of low-priced devices that are
primarily powered by Android. Indeed,
almost half of all the smartphones shipped
across Africa (45.1%) in Q1 2015 were
priced below $100, while almost 75% fall
under $200,” IDC reported. “Android is
particularly dominant in the low to mid-
priced bands, while iOS is mainly found in
the $450+ price category.”
Huawei, which was ousted from this
quarter’s top three, is another Chinese
brand doing well in Africa. The biggest-
selling brands in Q1 were Samsung, Tecno
and Apple, accounting for 55% of all
smartphones sold across Africa, where
Nigeria sold 14% and South Africa 12%.

Best news I've read this week.
http://www.forbes.com/sites/tobyshapshak/2015/08/21/exclusive-xiaomi-the-china-of-apple-will-launch-in-africa-in-sept/

Finally