Technology industry

‘China is everywhere’ in Africa’s booming tech industry

People use their mobile phones in Abidjan, Ivory Coast, August 31, 2015.

Jose Cendon | Bloomberg | Getty Images

It’s a match made in business heaven: expansion-hungry Chinese tech companies are plunging into the less-developed African continent, where several countries are aiming for double-digit economic growth.

Iginio Gagliardone, a senior lecturer in media studies at the University of the Witwatersrand in South Africa, told CNBC by phone that the expansion of the Middle Kingdom in Africa has been particularly pronounced over the past four to five years. years.

“China is everywhere,” Gagliardone said, while noting that its presence was stronger in certain markets.

For example, Gagliardone explained that China was “definitely the only player” in Ethiopia, with Chinese investment in the country’s tech sector totaling $3 billion in 2012.

But, he added, China was making its presence felt not only in East Africa, but also as far north as Egypt and Morocco and as far south as South Africa.

According to analysts CNBC spoke to, success in Africa came down to cost, with Chinese companies offering cheaper alternatives to their American and European competitors. Gagliardone also said African businesses welcome the “no questions asked” Chinese style of doing business.

The China-Africa tech story began two decades ago, with the expansion of Chinese telecommunications giant ZTE, followed by Huawei, which provides similar services.

Tim Steinecke, an analyst at management consultancy Xynteo, wrote to CNBC via email that the two multinationals have helped set up telecommunications infrastructure in Africa and have also worked with local African companies, research and governments.

A sign for Chinese multinational communications company ZTE sits above a shopping mall in Addis Ababa, Ethiopia February 24, 2015.

Simon Dawson | Bloomberg | Getty Images

Others highlighted the innovation that Chinese companies have brought to Africa. In a report released in June, consulting firm McKinsey said that “nearly half of Chinese companies in Africa have introduced a new product or service to the local market, and more than a third have introduced a new technology.”

Making a smartphone suitable for African markets

Tecno, a smartphone maker under Hong Kong-based parent company Transsion Holdings, has epitomized the winning formula for Chinese companies on the mainland.

Handsets from Tecno, which has a regional base in Nigeria, have practical innovations geared towards African markets.

These included long battery life, as reliable power sources can be hard to come by, screens resistant to dust particles, and cameras specifically suited for darker skin tones. Along with this local understanding comes market-appropriate pricing: handsets typically cost between $50 and $100.

Tecno has grown rapidly, and according to the Transsion Holdings website, its collective brands in Africa hold a market share of over 40% in sub-Saharan Africa. Transsion Holdings also recorded a total sales volume of more than 246 million dual-SIM handsets, or phones that can hold two SIM cards.

According to CNBC AfricaTecno itself holds 25% of the total smartphone market in Africa.

Attai Oguche, deputy marketing director of Lagos-based Tecno, told CNBC by phone that Chinese companies are “good at spotting trends.”

They “adapt easily and have a product that everyone loves,” he said.

Oguche added that Europe’s “very conservative” approach means companies risk falling short of their Chinese rivals.

Arif Chowdhury, Vice President of Tecno and Transsion Holdings, gives a presentation on the future of the brand.

tech

The influence of Chinese companies on the continent has diversified since the first forays and now includes broadcast networks, data centers and smartphone sales.

McKinsey’s report pointed to Chinese broadcaster StarTimes, which used a strategy of getting in low and expanding later.

The company employs and trains locals while growing its audience and investing in local and international programming. It has found particular success in Tanzania, according to the report.

“StarTimes’ focus on the local market has taken television viewing from an occasional luxury to a daily routine for many Tanzanians,” according to McKinsey, capturing Africa’s growing middle class.

China’s official One Belt, One Road infrastructure projects have also boosted the mainland’s interest in the mainland.

In December 2016, China Telecom Global announced that it would work with the Djibouti data center to expand its network and drive the growth of fiber cable services in East Africa.

Liu Changhai, general manager of China Telecom in Africa and the Middle East, said in a statement that the move “marks a new page for the company’s regional strategic planning.”