Boosting the local labour market and SA becoming a tech giant on the continent are some of the benefits listed by analysts ahead of the launch of the highly-anticipated smartphone manufacturing plant.
Today, the Mara Group officially opened its South African-based smartphone manufacturing facility at the Dube Trade Port Special Economic Zone in KwaZulu-Natal (KZN).
The opening of the Mara Phones Factory follows last year’s R1.5 billion investment announcement by Mara Group founder and CEO Ashish Thakkar, at the inaugural Africa Investment Forum.
At the time, Thakkar highlighted that few smartphones are assembled in Africa but nothing is truly being manufactured on the continent. As a result, his company decided to make SA, as well as Rwanda, manufacturing hubs of Africa’s “first high-tech, high-quality and affordable” smartphones.
This week, the Dubai-headquartered company took to its social media page to share some facts about the South African plant, tweeting: “Over 90% employees are youth! More than 60% of the staff are women here too!”
Thecla Mbongue, senior research analyst for Middle East and Africa at Ovum, says: “Opening such a factory creates jobs for South African citizens, generates new tax revenues for the authorities and may also position South Africa as a smartphone-producing hub within the SADC region. This would then generate further export revenues.”
Ofentse Dazela, director for pricing research at Africa Analysis, notes job creation is the expected positive spinoff of the factory.
“Should this project prove successful, this could see its operations expanding beyond the KZN region. Since factors such as exchange rates and trade duties will not weigh on the distribution channel, one hopes these devices will be more affordable to the local buyer from a pricing perspective.
“The move will also position SA as one of the tech giants on the continent as the second market after Rwanda to pave the way for locally-manufactured smartphones.”
Market appetite
The Mara brand enters a market that is saturated, with a population that is feeling the effects of the economic slump.
According to GfK SA’s Weekly Monitor, SA’s smartphone sales dropped 4.9% to just under three million units during the second quarter of 2019.
Further, the local market is dominated by South Korean smartphone maker Samsung as well as Chinese brands such as Huawei, Xiaomi and Honor.
Dazela believes uptake of the new smartphones coming from the Mara Group will depend on a number of aspects, such as the quality of cameras and speakers (sound), battery life, network platforms supported (4G/4G+/5G) and ultimately the price.
For Mbongue, there is room for smartphones produced anywhere, including locally. “Many consumers are after brand names but most of them can give new smartphones a go if the device is priced reasonably and marketed efficiently.
“Some buy brands, which they think reflect a higher social status; however, many consumers can cope with a less known brand if it satisfies their needs in terms of performance – battery length, storage and mobile data protocol.”
Local is lekker
“The establishment of Mara’s smartphone production plant here in South Africa sends a very strong message of confidence for local manufacturing in our country,” says Proudly South African CEO Eustace Mashimbye.
“Mara has committed to sourcing from other local enterprises, creating much-needed jobs in the process. We need many more Maras to see the advantages of setting up bases in South Africa, and of being part of the ‘buy local’ movement.”
Research analyst at IDC Arnold Ponela explains that opening more factories in the country will enhance the competitive nature between factories.
This, he says, means customers can shop for the most affordable and most responsive factory to produce their products.
“The South African government has a strong focus on promoting local production to boost economic growth and create much-needed jobs.
“Mara’s goals for the investment in the local manufacturing include bringing the latest technology to low-income consumers. As smartphone markets are maturing and the competition intensifies, smartphone vendors are turning to local production to obtain benefits of fast response to markets and to benefit from government subsidies.”
Competitive edge
It has been revealed the company will manufacture two smartphone models developed in partnership with Google, as part of the Android One Programme.
According to the company, it currently has two smartphone models, Mara X and Mara Z, which run on Android 9.0 Pie, selling at a recommended retail price of R2 999 and R3 999, respectively.
To dislodge the likes of Huawei and Samsung, Dazela advises the Mara Group to be much more competitive than its competitors, particularly from a pricing perspective.
“In Rwanda, the entry-level model went on sale for around R1 900, while the price for a more advanced version is around R2 800 on prepaid. If these price points are adopted for the local market, they will be up against Samsung devices such as the Galaxy J4 and J4 Core, which are priced in that range.
“These are powerful devices that also come with unmatched internal memory as much as 32GB and 2GB RAM. Samsung smartphones in this range also have powerful 13MP cameras. If the Mara Group smartphones are not able to match these features, then uptake is going to be subdued.”
Like Dazela, Ponela is of the view that pricing is key to winning market share in SA.
“Mara must focus on filling an unmet need in the mobile phone market, approaching the issue from bottom-up and also be prepared to spend considerably on marketing as well as research and development spending. Having a knowledge set will help Mara overcome some of these challenges but will not allow quick volume penetration.”
A good marketing and awareness strategy, as well as relevant partnerships with content and service providers, will be key to success, concludes Mbongue.
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