TCL has a plan to win SA’s budget smartphone market

Electronics maker TCL aims to conquer the market for smartphones costing less than R2,000 in SA through a set of devices that make the most of key consumers features and relationships with mobile operators.

The company has until recently operated under the Alcatel brand locally. 

TCL is a Chinese electronics company headquartered and listed in Hong Kong. It designs, develops, manufactures and sells consumer products including television sets, mobile phones, air conditioners, washing machines, refrigerators, and small electrical appliances.

Ernst Wittmann, regional manager for Southern and East Africa at TCL told Business Day that the company aims to phase out the Alcatel name plate completely in 2024. 

TCL has made gains internationally in markets such as the US where it launched in 2019. That progress prompted the group to shift to use its own brand globally. 

“Specifically in the SA market, because of the legacy of the Alcatel brand, there are a couple of products that have continued in our own portfolio from a mobile phone, MiFi and [customer premises equipment] product perspective. We will see those products off the shelves probably by midyear of this year,” said Wittmann.

MiFi refers to mobile Wi-Fi devices, while CPEs are fixed internet routers. 

Established in 2004, Alcatel Mobile Phones was a joint venture in which TCL held 55%, with French based Alcatel-Lucent at 45%. A year later, Alcatel Mobile Phones became a 100% subsidiary of TCL when the joint venture was dissolved. The Alcatel brand was licensed to TCL, an agreement set to end in 2024.

Largest manufacturer

“It’s quite a task to do that migration over to TCL, but we’ve got a strong team behind us to help us with activation and brand visibility. We’ve got the buy-in from our own customers. Our telcos are positioning themselves behind us to build the brand of TCL,” he said. 

SA’s smartphone market is dominated by devices running Google’s Android operating system. This is the market that TCL plays in. Samsung is the largest manufacturer of Android devices and commanded an estimated 50.87% market share in SA in January, according to Statcounter Global Stats.

Smartphone shipments in SA grew 73% year on year and 44% quarter on quarter in the third quarter of 2023, according to the latest data from Counterpoint Research’s market monitor service. The market reached its highest levels since 2021, just before the global economic slowdown started.

Counterpoint says the market was also helped in the quarter by an increase in people moving from feature phones to smartphones, driven by Chinese manufacturers tapping into entry-level price points.

Chinese players are starting to notice Middle East and Africa markets in general, and SA “will be seen as a particularly attractive market due to the higher income levels and better connectivity infrastructure”, the research firm said. 

Wittmann said the initial strategy to start introducing the TCL brand locally was by doing co-branding of products with a certain telecom operator “which, at least, associates us with a well-known telco name but then introducing products that were powered by TCL”.

The company has had a long partnership with Vodacom and parent Vodafone in which it has been producing phones on behalf of the operators since 2010. 

The next initiative for 2024 is to focus more on the TCL brand itself and introducing products purely branded “TCL”.

The strategy on pricing “is to keep a majority of our product range sub R2,000,” except for one specific phone that has a potential retail price of R3,999, said Wittmann. 

Rivals such as Oppo, Samsung and Huawei use a different model, having smartphones from entry level to premium, with sales largely following the makeup of the economy, in which most devices are still sold at the lower end of the market. 

Regarding expectations in this segment, the key feature sets that consumers consider are: screen size, battery life, camera quality and memory.

“So those are the four key sectors that we do play in and it is the four areas we do pay the most attention to what our competitors are doing and to market demands,” Wittmann said.

He admits that its chosen segment is competitive. “It is a very cut-throat sector,” he said.

The company has about seven products in that price range and has selected three specifically for the SA market. 

gavazam@busineslive.co.za