Summarize this content to 2000 words in 6 paragraphs in Arabic Chinese authorities have detained the chief financial officer of Transsion, Africa’s largest smartphone supplier, adding to pressure on the Shanghai-listed manufacturer as it seeks to fend off intensifying competition and accusations of patent violations.Shares in Transsion closed down nearly 5 per cent on Monday after it announced over the weekend that Xiao Yonghui was being investigated by authorities in Dandong in north-east China.The Chinese company, nicknamed the “King of Africa” for its dominance of the continent’s smartphone market, gave no details of why Xiao was under investigation, but said his detention would not have any major impact on its regular operations.Transsion is in the throes of a major push into other emerging markets as it battles with growing competition from Chinese rivals and legal pressure over alleged intellectual property violations.The company got its start in a Nigerian market where founder and chief executive George Zhu began selling basic phones out of a backpack in 2006.But with rival Chinese manufacturers eroding its African market share and big technology companies filing potentially expensive patent lawsuits, Transsion is increasingly targeting other markets in the Asia-Pacific, eastern Europe and Latin America.In the first half of 2024, Transsion sold 3.75mn phones in Latin America nations, up 276 per cent year on year, according to research firm Counterpoint. Its market share in the region rose to 7 per cent in the second quarter of this year from 2.2 per cent in the same period of 2023. “They clearly saw the opportunity to go for those markets where smartphone penetration is much lower than average. And that gave them quite a sweet spot,” said Francisco Jeronimo, data and analytics vice-president at the IDC research group.“Transsion is becoming massively popular in Latin America,” said Andres Rodriguez, chief executive of Totalynk, a smartphone distributor in the region. Its phones were particularly popular among “Gen Z and young millennials”, Rodriguez added. The company, which does not sell its devices in North America, western Europe or China, was the world’s sixth-largest smartphone supplier with 8.3 per cent of the global market in the second quarter of 2024, according to Counterpoint. Zhu honed his strategy of making low-cost products adapted to local needs after flying to Lagos in the mid 2000s to test demand for the basic “feature phones” that China was then churning out.Transsion’s smartphones now sell for $110-$120 compared with Apple’s average selling price of $900, according to Counterpoint. This differential drives much of the appeal of the company’s Tecno, Infinix and Itel brands.The company also incorporates features tailored to the African market. Its phones promise long battery life to compensate for an intermittent electricity supply, greaseproof screens for sweaty climates and cameras designed for darker skin tones.“We have been both innovating and localising to find out the market demand that’s ignored by our peers,” Zhu told Chinese state media in a rare interview in 2019.But Transsion’s share of the African smartphone market fell to 42 per cent in the second quarter of this year, down from 46 per cent in the same period of 2023, according to Counterpoint data.“Transsion is on the defensive,” said Yang Wang, senior analyst at Counterpoint. “Especially in the recent two or three quarters, we’ve started to see [rival Chinese brands] Xiaomi, Oppo, Vivo and Honor starting to pay attention to the African market.”“The premium segment hasn’t gone so well for these Chinese brands so they are scouring the earth for places where the midrange is going to work for them,” Wang said.Transsion’s revenues have still been growing fast, hitting Rmb71.8bn ($10bn) in the year to April, up 48 per cent from the previous 12 months.It has had success in markets difficult for western rivals. Jeronimo at IDC said Russia accounted for 81 per cent of its sales in central and eastern Europe in the first quarter. Transsion sold 5.1mn smartphones in eastern Europe, including Russia, in the first half of 2024, up 162 per cent year on year, Counterpoint data showed. But Transsion’s global expansion could be threatened by intellectual property action abroad.Large technology companies, including Qualcomm, have launched lawsuits against Transsion over alleged violations stemming from its lack of negotiated patent licensing agreements.Philips is pursuing an intellectual property case against the company in India, and others, such as Nokia, are attempting to negotiate licensing deals.Richard Vary, a partner at law firm Bird & Bird, which has been hired as outside counsel for Nokia to assist in its dealings with Transsion, warned that the Chinese company could be hobbled by future court action if it did not agree licensing with patent holders.“It’s really just a case of at what point Transsion accepts that it needs to come to the negotiating table and take a licence before somebody does manage to get an injunction against it in a major market,” Vary said.In 2022, Chinese handset maker Oppo pulled its smartphones from Germany after an injunction against it following a successful patent lawsuit filed by Nokia. Oppo returned to the German market this year after it reached a settlement with the Finnish technology company that included back payments for use of its technology. Industry analysts said that being forced to agree licensing deals could make it more difficult for Transsion to undercut competitors.“Transsion’s success can be attributed largely to its ability to keep their phones at a low price point,” said Wang of Counterpoint, adding the patent disputes “could throw a spanner in the works of its product strategy and ambitions outside of Africa”.Transsion did not reply to a request for comment. Asked about intellectual property disputes in July, the company told the Financial Times it “respects the intellectual property rights of third parties” and was willing to reach licensing agreements with patent holders through “friendly negotiations”.Additional reporting by Ray Douglas in London
