The rise of Chinese smartphones in South Africa
Sales of Chinese smartphones exploded in South Africa in 2023.
Counterpoint Research’s Market Monitor of South African shipments in 2023 showed that total smartphone sales increased 29% year-on-year.
Former Huawei subsidiary Honor performed exceptionally well, boosting its sales by over 1,000%.
While that improvement came off a low base of 1% market share in 2022, it is impressive that it climbed from 1% to 13% market share.
Two other Chinese brands — Tecno and Xiaomi — recorded growth of 64% and 61%, respectively.
The top four best-selling Chinese brands accounted for 39% of South African smartphone sales in 2023.
The “Other” brands category made up another 39% and includes Apple and popular Chinese manufacturers like Oppo, Vivo, and iTel. This category recorded year-on-year growth of 24%.
The surge in Chinese smartphone sales has reduced the sales and market share of Samsung, the dominant smartphone manufacturer in South Africa.
The South Korean tech giant’s total smartphone shipments declined by 6% year-0n-year, while its market share dropped from 29% to 21%.
The infographic below shows how South Africa’s smartphone sales and vendor market share changed between 2022 and 2023.
Huawei was the first major Chinese player to upset the market.
Starting with the Huawei P8 in 2015, it began offering powerful and well-designed flagship smartphones at significantly lower prices than Apple and Samsung.
However, as has been the trend in other countries outside China, Huawei’s market share in South Africa has plummeted in recent years.
That is because the United States (US) banned companies from doing business with Huawei, officially due to its close ties to the Chinese government.
The official position of the US is that it fears China could use Huawei’s network equipment and handheld devices to compromise its national security and spy on its citizens and government officials.
The ban has led to a lack of Google Mobile Services (GMS) and Google apps in most Huawei models released after 2021, and has cut off Huawei’s access to cutting-edge chips with 5G connectivity.
Despite significant global headwinds, an industry source has told MyBroadband that South Africa is Huawei’s biggest market outside China.
The company has at least been partially successful in selling smartphones without GMS or has convinced consumers that emulation software like GBox can get them all the Google functionality they require.
Regardless of its current predicament, Huawei has undoubtedly played a significant role in convincing a once-sceptical market that Chinese smartphone brands have much to offer.
Pricing is key — but so is government backing
Chinese smartphones are often priced much lower than models from Apple or Samsung with equivalent or similar specifications.
This is achievable thanks to China’s big economies of scale, vast production power, and relatively low labour costs.
Another major factor in the rapid adoption of some brands is significant financial backing from the Chinese government.
Some Chinese smartphone brands are majority-owned by the Chinese government.
For example, Honor is majority-owned by Shenzhen Zhixin New Information Technology, a state-controlled company.
Honor has not been shy about its close government ties.
In South Africa, it has actively promoted its efforts to strengthen business relations between China and South Africa.
With state funding, Honor is able to offer big incentives to dealers and sales agents.
That motivates staff in operator-franchisee stores to sell Honor smartphones over other brands, explaining its big jump in sales.
Government-backed brands can also price their devices more competitively, with limited profit margins or even losses on sales in their initial uptake periods.
Honor’s association with the Chinese government could raise concerns over whether it could face similar bans in the US as its former parent company.
US lawmakers were previously split about adding the company to the list of banned entities in September 2021, shortly after it separated from Huawei.
One important distinction between Huawei and Honor is that the latter is not involved in the network equipment business.
However, the Biden administration has extended its crackdown on Chinese companies doing business in the US to many industries — the most recent being the automotive sector.
Oppo, Vivo, and Xiaomi are not owned by the Chinese government and are seeing fairly impressive growth with highly competitive prices.
Oppo and Vivo were originally part of BBK Electronics, which was once the world’s second-largest smartphone manufacturer.
Both companies have been spun off into separate entities and are privately owned.
Xiaomi is a publicly traded company. Its co-founder, chairman, and CEO, Lei Jun, has firm control over the business, with 62.3% of the voting power.