Chinese Mobile Phones Hold a Big Chunk of East African Market, But That’s Not a Good Thing

Just yesterday, I wrote about China’s soft-power failures from a regulatory perspective, and today there is more news about soft power failures, albeit of a kind that isn’t really the government’s fault. This excellent Caixin piece describes how Chinese shanzhai (low-cost imitation) mobile phone makers have grabbed a huge chunk of the East African mobile phone market. Chinese phones — nearly all of them counterfeit or off-brand cheap ones — now account for about 50 percent of the phones across East Africa.

That might sound like a win for Chinese soft power — Africa embraces Chinese brands! — but it isn’t, because unsurprisingly, Africans aren’t any more excited about poorly-made mobile phones than Chinese people were when these same companies were peddling their wares domestically. From the Caixin article:

These low-cost, sometimes short-lived devices, have shaped the common Kenyan’s impression of “made in China” — too often for the worse. Moreover, some say Chinese wholesalers pouring cheap phones into Kenya have torn a fissure in Sino-Kenyan relations.

I have long felt that Africa might be an ideal market for China’s cheap (but well-made) smartphones; most of them branded Android handsets that run between $100-$300. But it appears that by the time companies like Xiaomi can get their ducks in a row and expand into this market, shanzhai and low-quality handset may have already thoroughly poisoned the well by convincing African consumers that Chinese brands are, in the parlance of our times, cheap crap.

On the other hand, the fact that shanzhai manufacturers are even peddling their wares in Africa to begin with is a sign of maturation in the Chinese mobile phone market, where just a few years ago these same terrible phones were being sold quite widely. Rocky Wang, the sales manager for “Tecno,” one off-brand handset maker doing business in Africa, told Caixin:

We pulled out of our domestic and Asian markets early and made Africa the main focus. A billion consumers [across Africa]. What a vast market!

But, of course, China has more than a billion mobile phone consumers, and the rest of Asia probably has a billion more at least. The real reason Tecno and companies of its ilk have pulled out of Asia and moved into Africa is the same reason that traveling snake-oil salesmen moved from town to town: once people figure out your product is crap, the market dries up and you’re forced to move on. Chinese consumers have, in relatively short order, gone from embracing shanzhai phones for their low cost to mostly mocking them while buying respected domestic and international brands instead. The Chinese market for shanzhai phones has shrunk quite dramatically over the past three to five years.

From the sounds of the Caixin article, it seems many Africans are already wising up to the game too, but it’s a shame that these terrible phones have served as the Chinese tech industry’s ambassador to the region. To a certain extent, Africans probably wouldn’t be thrilled about massive phone imports from anywhere regardless of their quality, because that stifles the growth of domestic handset companies. But with that said, I suspect that real Chinese brands that could have succeeded and build some good will in Africa will now have face a very stiff challenge if they decide to move into the region. It’s said that you never get a second chance to make a first impression, and Chinese shanzhai phone manufacturers have helped assure that Africa’s first impression of Chinese phones is pretty damn bad.

(As an interesting side note, it seems that some Chinese salesmen are quite literally carrying on the tradition of the traveling snake-oil salesman. Called “backpackers,” they move from city to city selling cheap, fake phones and then moving on when interest dries up.)

[Caixin via MarketWatch, image via Caixin]