Yoshida in China: What’s your Africa strategy?
He also signed an agreement to build a major port and industrial zone in Tanzania, which officials say could cost up to $10 billion.
In response to persistent fears that China is re-colonizing Africa (critics often point to mineral projects by China in Africa.), Chinese leaders staunchly defend their role there. And African leaders, obviously, are embracing China and, of course, China’s money.
China Daily reports that trade with Africa “has swelled over the past decade from about $10 billion in 2000 to $198.4 billion in 2012.” China has been Africa’s largest trading partner since 2009. With that backdrop, I often find myself talking about Africa during my company visits in China.
The African market is much closer and more accessible to many Chinese fabless companies than we think, thanks to a number of whitebox vendors in China who have the wherewithal to ship their non-branded products anywhere in the world.
One company, however, is working on its Africa strategy much more methodically than the rest of the crowd–Spreadtrum Communications (Shanghai).
Orange-Spreadtrum tie
Earlier this week, Spreadtrum formerly announced a strategic partnership with Orange, the French cellular operator. According to the announcement, Orange will use Spreadtrum’s low-cost mobile platforms for cost-effective, feature-rich mobile handsets and smartphones for consumers in Orange’s European and African markets.
The meat of the story here, in my mind, is Spreadtrum’s ambition to get into the vast African market. The Chinese chip company is doing so strategically, rather than opportunistically. Working with the French operator—which has a sizeable presence in Africa— is the key to Spreadtrum’s selling chips into the African market, explained Spreadtrum CEO Leo Li in a recent meeting with EE Times.
While the Spreadtrum CEO’s close connection with Orange is well known in the industry, the latest announcement makes that relationship much more public.
The two companies confirmed in the release: “Orange and Spreadtrum have now achieved the first milestone in the delivery of Spreadtrum-based handsets to Orange’s markets, with a feature phone designed by Alcatel, the Alcatel One Touch 1060, that is based on Spreadtrum’s SC6531 2.5G baseband chipset and is now qualified for launch in Orange’s markets beginning with France.”
In a recent conference call with financial analysts, Li also explained that for the African market, “there is a demand for feature phones and WCDMA feature phones, because I think 2G networks are very crowded. They want to offload the traffic from 2G network to 3G, even including voice type of a traffic.”
A recent story on a website called Electronics360 reports that executives at last month’s Mobile World Congress referred to Africa as “mobile’s last frontier.”
In illustrating Africa’s potential, market research firm IHS iSuppli reported that Africa’s population is growing from one billion in 2010 to 2.1 billion in 2050. A third of these people will be 15-34 years old (potential mobile phone users), and that number is expected to double by 2020. Africa’s consumer spending was $920 billion in 2010. That figure will be $1.4 trillion in 2020, according to IHS.
Here’s the kicker, if you’re looking for a genuine growth market.
IHS reported that the number of mobile connections in sub-Saharan Africa grew 44 percent from 2000 to 2012, compared to an average of 34 percent growth in other developing regions and a 10 percent increase in developed regions.
So, what’s your Africa strategy? Or don’t you have one?
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