Gionee goes online to crack phone market

Chinese smartphone company is breaking into regional market by using online sales in Kenya

Chinese smartphone maker Gionee is confident of dialing up demand in East Africa after opting for an unconventional route into the lucrative but competitive market.

The company, based in the southern city of Shenzhen, launched in Kenya in July and aims to sell 100,000 units by the end of the year, and then triple that number in 2017.

"In our first year, we'll focus on Kenya, and then expand into other East African countries," says Eric Ai, the general manager of Gionee Communications Equipment Co Ltd's operation in Kenya.

Yet while most telecom companies have teamed up with local agents and dealers to distribute their products, Gionee has opted instead for an online assault on the market by striking a deal with Kilimall, the Kenyan shopping website.

"E-commerce is big in Kenya," Ai says, explaining the decision to focus on online sales. "There is a growing interest in online shopping on the basis of widespread mobile money transfer services and the growing number of smartphone users. A good percentage of the population now access internet through mobile phones."

According to the African Mobile Trends 2016 report by Nigerian shopping website Jumia, the number of internet users in Kenya has seen double-digit growth, rising to 36 million, or 83 percent of the population.

In a separate report, the company states that 58 percent of phones sold in the nation in 2015 were smartphones, roughly 1.8 million handsets.

Danson Njue, a research analyst with Ovum Telecoms Research, says the smartphone market has huge potential in East Africa due to high demand across various customer segments. He attributes this to increased broadband connectivity, a key driver to increased adoption of smart devices.

However, he says Gionee, as the newest market entrant, should consider affordability.

"The low-end customer segment is sensitive to pricing, so the manufacturer should aim at getting the price right," Njue says.

Gionee offers two models in Kenya: the Pioneer 5W, which has a five-megapixel camera, priced at 9,000 Kenyan shillings ($90); and the Elife S6, which has a 5.5-inch display and 3GB of memory, priced at 38,000 Kenyan shillings.

Ai says the company is banking on its high-spec, low-cost handsets to meet the need of young people and those in business.

"Our smartphones have a long battery life, making them ideal for businesspeople who access email on their phones, and young people who mostly use their phones for chatting and social networking," he says.

Njue believes Gionee should also think about partnering with local telecom companies to reach target markets more easily, as mobile operators have large distribution networks.

"Such partnerships can ensure new devices are bundled with network services, such as airtime and data bundles, to attract new customers," he says, adding that competition is beginning to take shape, so Gionee will need to come up with a plan to stand out. "It should come up with clear marketing and distribution channels to ensure its products are available even in the most remote places."

In addition, Njue also warns that the East African market has a big problem with cheap counterfeits, while the regional tax system "is unstable, with governments introducing new taxes often".

Despite the challenges, Ai says he is confident based on the performance of his company in Asia and Nigeria, and he feels the quality features on Gionee handsets will set them apart from competitors in East Africa.

Gionee is among the top smartphone brands in China and is ranked in the top 10 worldwide, with 30 million handsets sold last year, according to report by Strategy Analytic.

The company has a huge market share in India, where it sells 600,000 units a month, and is making inroads in Nigeria, where it now sells 200,000 units a month.

"Riding on that success, we intend to grow our market in Kenya share by 20 percent in the next five years and want Gionee to become one of the top three mobile phone companies in Kenya," Ai says.

edithmutethya@chinadaily.com.cn

(China Daily Africa Weekly 08/26/2016 page28)