Photo/Zhang Yun (NBD)

Jan.24 (NBD) -- Chinese smartphone maker Xiaomi is to set up a business unit for the African region to accelerate its expansion on the continent, the company said in an internal letter to its employees last Saturday.

Wang Lingming, vice president of the company, is appointed head of the new unit and will report to senior vice president and global business head Wang Xiang.

This is the second great move for Xiaomi this year, following the spinoff of Redmi business. As a smartphone maker that values overseas market, Xiaomi will continue to expand global shipments this year.

Its expansion in Africa is out of two reasons, reported a self-media citing Sun Yongjie, an expert in the telecommunication sector. The first one is that IoT is one of the core businesses of Xiaomi and smartphone represents a basic entry to guide customers to its IoT ecosystem. The second is that Xiaomi positions itself as an internet company and investors value the size of customer base of such companies.

Contrary to slack global sales of smartphones, the African market seemed exceptionally vibrating last year. According to statistics released by data firm IDC that the shipment of smartphones in Africa totaled 22.4 million units in the second quarter of 2018, an increase of 9.8 percent over last quarter.

Actually, this is not Xiaomi's first try in African market. It started selling Redmi 2 and Mi 4 in South Africa, Nigeria and Kenya in late 2015 through a local distributor called Mobile in Africa. The distributor, which is specialized in online selling, runs online stores in 14 African countries.

However, that effort didn't turn into a big success and Xiaomi wanted to start over again. But the new push is also facing an uphill battle with well-established rivals on the continent.

Transsion, the largest mobile phone manufacturer in Africa, made a foray into the continent over ten years ago and has dominated the market since 2014. Now it takes up about an astonishing 40 percent of market share there.

Transsion has studied the market well and is targeting different groups of users with three sub-brands—Tecno for mid-income earners, Infinix for young people and Itel for low-end market.

Its success is also ascribed to low-price strategy. According to an author on Baidu's news platform Baijiahao, Transsion's function phones are priced at about 20 U.S. dollars on average and smartphones 40-50 U.S. dollars. In comparison, Xiaomi's phones in similar markets, such as Southeast Asia, are still pricier.

In addition, Transsion's localized operation is well done. Based on the skin colors of local people and situation of communication facilities in different countries, its phones support optimized photo-shooting, multiple SIMs (4 at most), long endurance (20-30 days) and multiple languages.

Moreover, it has established a large sales network with Transsion outlets seen almost everywhere on the streets. It also managed to approach Africa people by employing local workers, inviting local stars as spokesmen, and naming local sports teams.

There is lot of difficulties to go through before Xiaomi standing out in the Africa market, stated the author.

Sun noted that Xiaomi will not shake Transsion's dominance immediately. But in the long run, Xiaomi will be a potential threat for all its rivals in Africa, including Transsion, Samsung and Huawei.

Email: tanyuhan@nbd.com.cn