Many traders of cheap Chinese phones have now established links with
mainland factories, but the trade mainly began in Chungking Mansions in
Hong Kong.
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| A mobile phone shop in Africa. Photograph by ICT4D.at. |
Nathan Road is Hong Kong’s busiest shopping street. It is
lined with skyscrapers and decorated with neon signs of every size, colour and
shape. Most of the logos are familiar: McDonald’s, KFC, Samsung, Rolex,
Carlsberg, 7-Eleven, Standard Chartered. This is Asia’s Times Square, a
luminous roll call of the world’s biggest companies and products, a shrine to
consumer culture in the modern world.
Workers, tourists and others cram the neon shadows of the
sidewalks, clutching engorged wallets and sleek plastic bags. The luxury goods
in the shop fronts of polished glass and mood lighting beckon their business.
Lots of money changes hands. Many shiny new items are purchased. This is the
apotheosis of globalisation as we know it best: big companies, handsome profits,
fancy boardrooms, high-flying executives, top quality goods.
But this is not the globalisation I have come to Nathan
Road to see. I know I am getting closer to my destination when an Asian
gentleman outside a Rolex store approaches. “Want nice watch? Mister, nice
Rolex for you? I give you best price.”
Despite admiring his brazen attempts to shift fakes not a
metre outside a shop displaying the genuine articles, I shrug him off and turn
into a narrow passage that takes me to the heart of a building called – in Hong
Kong’s typically optimistic style – Chungking Mansions.
This three-towered utilitarian block is one of Hong
Kong’s most notorious buildings. Unlikely as it may seem, it is one of the
major drivers of Africa’s technological revolution.
The building’s history is infamous. Erected in 1961 to
fulfil Hong Kong’s insatiable need for low-cost housing, it soon turned into
one of the most legendary stops on Asia’s hippy backpacker trail, thanks to the
proliferation of tiny, cheap guesthouses on its upper floors, many of which are
still operating.
These cheap tourists enticed merchants of tacky goods,
whose stalls swamped the building’s lower floors. In turn, this activity
attracted illegal immigrants, drug dealers and prostitutes, turning Chungking
into Hong Kong’s seediest underbelly; a place that locals avoided completely
and even police feared to tread.
In recent years, the place has cleaned up its act
somewhat, but still offers the city’s cheapest accommodation. It is home to a
large South Asian community (primarily Indians, Pakistanis and Bangladeshis)
and plenty of cheap tat: luggage, souvenirs, fake football shirts, etc. But in
the last decade or so, shopkeepers have introduced a new product which has kept
Chungking Mansions ticking: the mobile phone.
Africa calling
Pause and shift your geographical attention to the
markets of Africa, a continent that has also embraced the mobile phone in
recent years. The informal nature of this business makes it difficult to cite
exact figures, but it is likely that most mobiles sold in Africa are not traded
through official, licensed channels. They are hawked in markets or sold in
small family-run shops displaying a dizzying array of brands and phone styles,
many unfamiliar.
Often the handsets are simply lined up on shelves, a
tangle of headsets and charger cables in a box at the vendor’s feet. While
quality may be unpredictable, price is not. These phones are inexpensive, much
cheaper than their equivalents sold in slick shops or by service providers.
Without these low-priced phones, the African telecommunications revolution may
never have gotten off the ground. But where do they come from? And how do they
get here?
The first question is easy. Their provenance is China,
which makes the lion’s share of the world’s mobile handsets. According to
figures released by China’s Ministry of Industry and Information Technology,
the country produced over 915 million handsets in the first three quarters of
2012. By way of comparison, analytics firm Gartner estimates that around 1.2
billion handsets were sold throughout the world in this period. While China
manufactures many smartphones too (including the iPhone and the Samsung Galaxy
series), it specialises in the budget handsets favoured in Africa, meaning that
the vast majority of handsets in Africa will have been made in China.
The more interesting question is how these cheap Chinese
phones reach Africa’s markets from the huge factories in Guangzhou and
Shenzhen, two major cities on the mainland north of Hong Kong. It is a story of
low-end, informal globalisation on a massive scale – with dingy Chungking
Mansions as its backdrop.
For African traders, there are obvious barriers to the
Chinese factories and handset wholesalers. The first is language. Mainland
China does not, as a rule, speak English, and African traders are yet to pick
up Cantonese or Mandarin in any significant numbers.
Visas are another obstacle. China requires citizens of
most countries to acquire visas in advance. This can be difficult for a
small-scale African businessman who might not be able to demonstrate the
necessary financial proof that he is economically independent. A third is
connections. The factories are spread out around the sprawling megalopolis of
Guangzhou and Shenzhen, difficult to find unless you know in advance exactly
where you are going. All this makes it hard for traders to find the products or
negotiate for them.
The simple solution is Hong Kong: easily accessible with
many flights linking it to African countries such as Ethiopia, Kenya and South
Africa. The island’s relaxed entry policy means that most nationalities can get
in without a visa. Much of the city’s business is conducted in English so
communication is easy. For the business connections: simply head to Chungking
Mansions, take the stairs to the first floor, and start negotiating with the
dozens of wholesalers operating from tiny shops filling the towers with every
possible kind of handset.
Lessons on low-end globalisation
The importance of Chungking Mansions to the African
telecommunications boom cannot be overestimated. Academic Gordon Mathews of the
Chinese University of Hong Kong spent five years studying the building and
wrote a book on it called Ghetto at the Centre of the World. In 2009 some 20%
of all handsets in Africa, about 10 million, physically passed through this building,
he estimated. And even more arrived in Africa thanks to deals made and business
relationships formed within its walls.
“Low-end globalisation is globalisation not as practised
by the big multinationals with their batteries of lawyers and their billion-dollar
budgets,” Mathews said in an interview with CNN. “It’s globalisation done by
individual traders carrying goods in their suitcases back and forth from their
home countries.”
To understand Mathews, I have come to Chungking Mansions
to buy phones. A Zambian friend has asked me to buy 20 handsets for a maximum
of $15 each, which he intends to sell in a rural Zambian town.
This puts me in the same position as many would-be
cellular entrepreneurs who are drawn from thousands of miles away by the building’s
whispered but well-known reputation as a place where good business is done. My
first lesson is that my order is laughably small. While some shops deal in
hundreds of handsets, most only accept orders of a thousand handsets. One
hopeful merchant even offered the exclusive rights to import his product into
my country of choice.
My tiny order and small budget rule out some of the more
serious-looking shops. They sell genuine new and used phones that cost the same
as in any other shop in Hong Kong, beyond the prescribed budget. Some of them
also sell “fakes”, exact replicas of top-brand originals in appearance, and
“used fakes”, second-hand handsets where the genuine exterior has been
preserved but the electronics inside have been replaced. These sell for
significantly less, but no shopkeepers would even admit the existence of
potentially illegal goods to first-time, unproven buyers like myself.
'China phones', however, are affordable. Chinese
companies manufacture these handsets and brand them with their own logo. Often,
they bear a striking resemblance to premium brands, but crucially, do not claim
to be the real thing (except one obvious iPhone knockoff that carried a picture
of a smiling Steve Jobs on the home screen). These phones are enormously popular
in some parts of Africa, particularly Nigeria, as they offer more features than
well-known name-brand phones at a fraction of the price.
Take, for example, the phones I ended up buying. The
KGtel 8520 is made by a Chinese firm I have never heard of, and modelled on the
BlackBerry 8520. Even the software looks the same. There are some obvious
differences, of course, most notably it is a bit thicker, lacks a trackpad and
does not connect to the BlackBerry Messenger services. But it also has features
that the BlackBerry does not, such as a torch and dual-SIM capability, which
allows the phone to run SIM cards from two different networks at the same time.
Then there is the price. The KGtel sells for $15 in
Chungking, while the current BlackBerry equivalent goes for about $250. This
huge price difference provides the potential for serious profit. Mickey, a
Nigerian trader, can stuff his suitcase with 600 similarly-priced phones and
sell them at home for triple the price a conservative estimate, he says. For his
outlay of $9,000 he can recoup $27,000, which – after travel, expenses, tariffs
and/or the inevitable cut paid to customs officials – is still a profit of
around $15,000. In other African countries with less supply and higher selling
prices, the margins are even wider. A Zambian friend reckons he can get between
$80 and $90 a handset.
As I collect the phones, I suddenly realise why traders
get away with such hefty margins. I am nearly out the door when the
shopkeeper’s assistant – another Nigerian, employed to bring in customers and
translate – slips something into my hand. “These are the stickers”, he says.
“Keep them safe.” I look down, and there are 20 stickers each bearing the
BlackBerry name and logo, designed to fit perfectly into an indent on the KGtel
handset. It is a deception that would not fool anyone who has seen a
BlackBerry, but there are many in Africa who have not.
Moving to the mainland
These days, as the trade in mobiles from China to Africa
has become more established, the importance of Chungking Mansions is
decreasing. The serious players in the industry – the ones who import
containers rather than suitcases of phones – now deal directly with mainland
factories. Some of the more adventurous smaller traders, looking for a better
deal, are also venturing across the border, where China’s recent economic
progress is making it easier to do business. This is reflected in Kenya Airways
announcing in April 2013 that they are introducing direct flights between
Nairobi and Guangzhou.
These new developments should not detract from Chungking
Mansions’s continuing significance as a gateway for African traders into China.
It will retain its place in history as the predominant single physical space
that propelled Africa’s mobile boom. It remains a symbol of the informal,
low-end globalisation which expedited Africa’s high-tech transformation.
This article was originally published here at Good
Governance Africa.
Think Africa Press welcomes inquiries regarding the
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