A (4:23)

Sources differ on this, but Zhu apparently did not stay at Selltel for very long. He quickly then founded another phone venture in Hong Kong called Techno Telecom limited Or he renamed Celltel to Techno. This part is rather fuzzy. Either way, Tecno built a factory and introduced their first phone called the Tecno T201 in August 2007. The techno brand remains prominent today, but as the company started to develop other brands, they renamed themselves to Tranzion, which is how I will refer to the company, to keep separate from their phones. In their first two years, Trin competed in the very competitive domestic Chinese and Southeast Asian mobile markets. But both were intensely competitive and Transhen struggled to gain a foothold and and soon decided that they cannot grow there. But where to go then? George Zhu had traveled to Africa while working for Ningbo Bird. He and his co founders agreed that Africa's large young population presented a blue ocean opportunity. Before we continue, I want to say that it is of course reductive to just be calling it Africa. Africa is a massive continent with over a billion people of varying cultures and business practices and markets, just like Asia. I want to acknowledge that and when possible I will try to narrow down. But let me generalize for now. In the 2000s, Africans were adopting mobile phones at a rapid pace. Companies like the South African giant Telecom Vodacom were investing hundreds of millions into infrastructure. Across various countries, mobile phone penetration surged from just 6% in 2005 to 30% in 2008. Good. But that number still lagged. The 40% penetration numbers in both mainland China and India and in larger markets like Nigeria, estimated at 200 million people. Mobile phone penetration was even lower. Somewhere around 20 to 30%. This trend was driven in part by the rise of prepaid billing services, which let telecoms collect money from people with unsteady incomes and no fixed addresses, as well as the popularization of mobile banking apps like M? Pesa in Kenya. M? Pesa allowed people to deposit money into an account stored on people's phones. Money can be sent to individuals with SMS texts. The service is well known for bringing financial services to the unbanked. If those countries developed like China did, then there was a lot of future growth ahead. In 2008, Transit announced that it was going all in exiting the mainland China market to exclusively focus on Africa.

A (7:21)

The first mobile phone company to enter the African market was the Finnish handset giant Nokia, which makes sense since Nokia was a technology pioneer and their low end GSM phones were relatively cheap at about 65 to €85, while also being reliable and easy to repair. Samsung later joined Nokia in the market, bringing a little competition, though not too much. By the end of 2007, the two companies had 80% market share combined. The rest of the market was filled by cheap Chinese phones, sometimes knockoff Nokias or Samsungs or Sanzai brands most have never heard of. Such products were often purchased and imported by African traders traveling to China or Hong Kong. But the two leading companies were not very committed to the market, selling the same type of phone into Africa that they made for everywhere else, products like the Nokia 1110 and the Samsung SGH N620. Little was done to adapt the phones to local tastes, either for lacking of resources or focus. They also left behind a major underserved market rural areas. They distributed and sold their phones through retail or the telecom networks, and since most such outlets were urban, it left the countryside and its informal economy basically untouched.

A (8:52)

Tranjan was by no means the first Chinese mobile phone company to enter Africa. What differentiated them from others like Oking and Xtigi was how much attention they paid to the African market. This starts with product Transient's first breakthrough feature was multisim. Zhu and company noticed that Africans keep multiple SIM cards so they can swap between carriers to get the best coverage and avoid expensive charge fees for calling other Networks. Per a 2012 study, the average Nigerian has 2.39 SIM cards. Multisim phones were popular in mainland China, so Tranzhen figured that it might work in Africa. In 2007 they introduced the continent's first multisim cell phone, the Tecno T780. Inventories sold out in just over a month. A year later they introduced the Forerunner Africa's first phone with four SIM card slots. Another instant hit. Ten years later, 87% of Kenyan phone users own multi SIM phones, 70% in Ghana, Nigeria and Egypt. The second major feature set involved battery power supply is inconsistent in Africa and in more rural areas. Electrification itself is still scarce. So Tranjan brought out phones with bigger batteries and power saving features. Their marketing and advertising also emphasized battery life and fast charging. There is another Africa customized future, but it comes a bit later, so let me set it aside for now. So on the wake of that success, Transgen released a string of models stuffed with unusual but popular features like flashlights, more ram, FM radio and even tv. One other thing of course is pricing. A key transient strength is its ability to offer these decent features at a low price. They have consistently kept their pricing umbrellas around the low to middle end of the range, leaving the top ends to Apple, Huawei and others. Their first brand, Tecno, remains their middle range flagship brand with a number of sub branded products sold at varying prices between $120 and $280 a year. After launching Techno, Transient launched its second phone brand, iTel. Starting with a lowercase I, Itel is entry level, positioned as the reliable brand for everyone. Like with techno, it features several sub brand products. But it seems like Itel's bread and butter for a long time were simple feature phones. These phones, dead cheap $8 to $20 USD prices, helped them stick around for far longer than even I expected. In 2017, according to IDC, 57% of the 216 million phones sold in Africa were feature phones. Somewhat surprisingly to me, smartphone sales volumes in Africa didn't surpass those of feature phones until Q1 2024. Later in 2012, Transgen added their third big brand, Infinix. They position it as the hip brand for the young and technologically savvy. To reach the whole market, Tranjan realized that it needed to break into the rural areas. To do this, they took a page from the Chinese cell phone playbook and built relationships with local sales agents and distributors. Structures depend on the country. In Ghana for instance, there are four levels of sales agents. New products are sold by transient to national level agents who then distribute them to dealers, wholesalers and then finally retailers. Early on in the 2000s, African customers were repeatedly burned by the wave of Chinese Shanzhai phone exports. By 2008, the phrase chinaphone had become synonymous with fakes and low quality. In Nairobi, Kenya, such devices were called Chinku phones. Cheap but unreliable, glitchy and occasionally horrific. Like Frankenstein's monster, Tranzhen worked hard to avoid this stigma and they needed to show people that they weren't out just to make a quick buck like the others, and that they actually stood by their products. Technophones were early on sold with a 13 month warranty, a month longer than the standard. Just as important were professional after sale services. In 2009, Transgen set up a separate brand called Carlcare. In some countries, like Ghana, these were the first centers exclusively dedicated to repairing one company's phones. Customers can come and get their phone repaired within one to three days. Transient invested tens of millions into Carl Care and has since expanded to 1,000 service points and maintenance collection points in Africa. Nigeria alone has 95 service centers and 60 cities staffed with 400 employees. A former transient employee recalls Carlcare evolving out of basic user research, indicating that African users, like anywhere else, wanted to know that they can rely on their phones. Another thing Transhon does is play down their Chinese roots. They like to highlight the many locals they hire, claiming localization rates of 90%. Whatever that means, by 2018 they had 10,000 employees in Africa and 6,000 in mainland China. This includes their local manufacturing facility, a factory in the city of Addis Ababa in Ethiopia. Opened in 2011 and staffed with 90% local laborers. It took great effort to build up the local supplier ecosystem around the factory. After that, the company started two R&D facilities in Lagos, Nigeria and Nairobi, Kenya. Local workers there help adapt the general directives coming from China for a local context. By 2011, techno had established a solid grip in the African market. Customer surveys that year found that 60% of people had a Techno. One Transient employee recalled meeting a Techno user claiming that their phones were German made. He considered that a compliment. In November 2011, the company won the Corporate Ghana Customer Service Award for Most Customer trusted brand of 2011 2012, a major turnaround from just a few years ago when hardly anybody wanted a Chinese phone. In 2014, the company imported and sold 45 million devices into Africa. Amongst Chinese phone makers, they trailed only Huawei, which sold about 73 million units. Over that same time.

A (16:07)

Another significant Transgen mobile phone feature, and perhaps the one observers are most likely to bring up, involved the selfie cameras. In 2015, Tranjan released the Tecno Camon C5 phone, a new sub brand. It was their first with 4G LTE connectivity, running Android 5.0 Lollipop and selling for about 13,000 Kenyan shillings, or $100 today. As the name implies, the Camon brand's key strength was its camera's high megapixel count. But there was still another issue photo quality. Early cell phones struggled to recognize and thus focus on the faces of darker skinned individuals. In around 2016, Transient's RD team formed a special working group to collect and label images of the locals for a new model. Employees took thousands of photos of local people eating outside or sitting around for sending back to Guangzhou. I must admit that the practice sounds a bit dodgy, but the dataset let Transient tune their model such that their Camon C8 phone can better recognize an African person's face with just their eyes and teeth, plus do some exposure compensation. Additionally, Transgen's engineers consulted with fashion and cultural experts for guidance on how to beautifully present African faces, recognizing that for Africans, a beautiful selfie did not mean more whiteness. And I think it is to their credit that these new algorithms were well received by customers.

A (17:48)

In 2017, Transgen sold an estimated 100 million phones into Africa, generating $3 billion of revenue. In China, success inevitably starts to attract competitors. Thusly, Xiaomi and Realme soon arrived in Africa with deep pockets and started to grow extremely fast there. For all their market share in Africa, Tranjan produces far less revenue and profit than its more well known cohorts. Xiaomi has consistently been nearly five times larger. Transhan's response has been to expand into other developing markets like India, Bangladesh, Latin America, Southeast Asia and eastern Europe. In 2016, they launched the Itel brand in India, capturing about 8% market share after a year. In a 2017 interview with the Financial Times, George Zhu said that the company's future focus would be in India, North Africa and the Middle East. The issue is that most Chinese handset makers had ignored Africa or not given it much attention. That's not the case in India, Pakistan, Bangladesh and Dubai. India alone counts Xiaomi, Huawei, Vivo, oppo, Meizu, Lenovo, OnePlus, Gioni and more. Counterpoint Research notes that the company's gross margins in Africa are around 30%, but outside of their African core, slightly over half of that. So growth outside of the core market has been tough.

A (19:24)

One big difference between Xiaomi, Huawei and Transian is that the former two can lean on their non phone businesses, but over 90% of Transgen's revenue still come from phones. Over the past 10 years, though, they've released several software service products in pursuit of building an ecosystem. Back in 2012, they released their own messaging app called Palmchat, first on their feature phones and then smartphones too. They have said that they are the only messaging app for feature phones and have been using that to expand into smartphones. By 2016 they claimed that Palmchat had 85 million users and today I about 140 million. Over half of the total user base and 80% of the most active user base is in Nigeria. Transient has expanded Palm Chat's functionality, turning it into a broad distribution channel for new software. Today the app also offers casual games, a video based social network and a dating thing for meeting cool guys and and hot girls. Wait a second. Hot single moms in my area sign me up. Another app they've tried to bootstrap adoption through their hardware is their music player Boomplay. In 2015, techno released in Nigeria the Boom J7, the first in a series of smartphones tailored to playing loud music with good bass. The boomplay app, which shipped pre installed on the phone, offering local African and urban music that people can listen to for free. This has turned out well, gathering 75 million users by 2020. It's the most popular music app in Africa.

A (21:21)

So you might say that this ecosystem approach works. I am less sure how well it might work outside of Africa or what might happen if the Western tech giants get involved, but it works and I believe it's gotten them thinking. While walking the floor at Computex 2025, I noticed a booth hosted by techno and the interesting thing I saw there was that the booth featured a complete ecosystem of products from laptops to watches to headphones. Quite well made products too. I looked it up and it seems like techno is building up in AIoT ecosystem, a variety of products with this thing called techno AI at the center of it. The pitch is that techno AI is so easy. They exhibited in Computex 2024 too, bringing robotic dogs, water cooled mini PCs and even a set of AR glasses. This feels like a real expansion on the product line and strategy, perhaps to capture share in more developed markets. The company is also doing a serious expansion into vehicles with their Tank Volt line of electric bikes and tricycles Tuk Tuks. First introduced in Uganda in 2023, they're now also going into Nigeria, Kenya, Tanzania and Ethiopia. It sounds like a natural extension, something akin to Xiaomi selling cars, but the competition and EV infrastructure challenges in Africa may present a problem. This move of trying to provide a complete product lineup is a risky one, but it shows the scope of the company's ambition. They want to prove that they can fry the whole turkey and match toe to toe with the other Chinese electronics giants around the world. We shall see if they can pull it off alright, everyone, that's it for tonight. Thanks for watching. Subscribe to the channel. Sign up for the Patreon and I'll see you guys next time.