Transsion Bangladesh, Mobile Phone Industry, And Life: An Interview With Rezwanul Hoque, CEO, Transsion Bangladesh

Transsion Bangladesh, Mobile Phone Industry, And Life: An Interview With Rezwanul Hoque, CEO, Transsion Bangladesh

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Transsion Bangladesh is a relatively new entrant to Bangladesh’s fast-growing and equally competitive mobile phone industry. Within a short span of time, it has managed to build a strong presence in the market with its distinct strategy and consistent quality products at a competitive price. Here, Rezwanul Hoque, CEO of Transsion Bangladesh talks about mobile phone industry in Bangladesh, growing competition in the industry, the current state of Transsion Bangladesh, its ambition and the future of the industry going forward, reflects on his journey and ephemeral nature of life and why it is futile to try balance between our life and work and why our deepest satisfaction does not come from material achievement.

Future Startup

Thank you for agreeing to do this interview. First of all, please give us an overview of Transsion Bangladesh.

Rezwanul Hoque

Transsion Bangladesh is a subsidiary of Transsion Holdings, one of the largest mobile phone manufacturers in the world. To be exact, it is the 6th largest mobile phone maker in the world in terms of quantity. Transsion now operates in over 58 countries in the world. While they are a Chinese company, they don’t sell phones in China!

Transsion had started its journey in Africa where it is now the market leader. In some African markets, it has over 50% market share. After it tremendous growth in African markets, for past few years it has been expanding in South Asian markets.

It has started its South Asian expansion with India where it started operations only two years ago. Over the past two years, it has seen a tremendous growth in India where it currently holds number 02 position in terms of quantity. Success in India has led to more investment in other South Asian markets along with some European markets.

Transsion started its Bangladesh operation pretty recently, mid-2017. Transsion Holdings manufacturers a host of products including mobile phones, mobile phone accessories, and home appliances. Currently, we are only focusing on mobile phones in Bangladesh.

In Bangladesh, we are currently offering 3 brands, iTel – our mid-range feature phone and smartphone brand, TECNO – our relatively high-end smartphone brand, and Infinix – an online-only brand and recently Transsion has also acquired Spice brand in India. We maintain a multi-brand strategy which we consider is important for long-term success in the mobile phone industry.

Bangladesh imported about 34 million mobile phones in 2017. The composition was 70% feature phones and 30% smartphones. Although we had expected a faster growth of Smartphone, it did not happen. While Smartphone experienced a pretty fast growth a year ago, in 2017 it slowed a little.

Mobile phone industry is tens of thousands of crore taka business yearly in Bangladesh. It is an interesting market. We have diverse customers, very low-end users starting from less than 1000 taka budget to very high-end users. This is why it is so important to have a multi-brand strategy so that you can serve all segments of the customers as well as control the mobility of customers from one segment to another.

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Since China could offer competitive pricing, these local brands could offer relatively low price compared to the international brands undercutting them in the low and mid-range segment of the market. This allowed local brands to gain market share quickly in many markets.

Future Startup

Over the past several years, we have seen a tremendous growth in mobile phone penetration in the country. Initially, it was mostly feature phones and low-end smartphones and a host of local companies led that transformation. Now we are seeing a new wave of high-end smartphone brands and a growing smartphone penetration. Since you have seen this development from the very beginning, please tell us about how you see these developments.

Rezwanul Hoque

We can say that this is the 3rd wave of transformation in the mobile phone industry in Bangladesh.

The first wave of mobile phone penetration was led by international brands like Nokia, Siemens, BenQ, LG, Motorola, and others. This was the early days of the mobile phone in Bangladesh and penetration was relatively low, mostly limited to wealthy population and urban areas.

This was the story till 2006. Local brands were not that much in the scene almost anywhere in the world. Only a handful of international brands were dominating the market. These were mostly expensive phones made in the US and a few European countries.

After 2006, made in China mobile phones started to take over the market. Chinese phones were relatively cheap and offered value for money to customers.

This manufacturing facility has turned China into the factory of the world. Chinese mobile phone manufacturers started producing mobile phones for the whole world.

The 2nd wave of mobile phone market started in 2006 where local brands started to enter the market on the back of manufacturing facilities in China. These local brands would go to China and buy products and put their brand names on it and distribute in the local market. Since China could offer competitive pricing, these local brands could offer relatively low price compared to the international brands undercutting them in the low and mid-range segment of the market. This allowed local brands to gain market share quickly in many markets.

The 3rd wave is what we are seeing now where Chinese manufacturers are launching their own brands and entering the market in different parts of the world. Albeit not all the manufacturers, but some. Since they have been producing phones for the world, they have developed expertise and a deeper understanding of the markets.

In the past several years, we have seen the rise of China made brands. Now China is not only about making products for others, we are seeing the high quality and high-end Chinese brands in many sectors taking markets by storm.

Apart from Samsung and Apple, we can see that almost all the top brands such as Huawei, Oppo, Vivo, Xiaomi and many other leading mobile phones brands are Chinese. This has created a new dynamics in the market and it has been particularly challenging for the shortsighted local brands who did not invest in the R&D and brand building.

In the next few years, we will see more and more Chinese domination in the markets. I suspect local brands will, not only in Bangladesh but also in many other markets, face significant challenges because Chinese brands have the competitive advantage in terms of cost and R&D that local brands don’t have.

Future Startup

Coming back to the tremendous growth of the local brands in many markets, you saw this development from the very beginning in Bangladesh, what has helped local brands to dominate the market? That’s number one. Number two is, now we are seeing a different scenario where competition is intensifying and many local brands are struggling to meet the competitive pressure.

Rezwanul Hoque

Many local brands offered value for money. They ensured good after sales service and developed consumer insights as well as organization capability that helped them to grow their business. Don’t get me wrong, these companies are doing well even these days. Local brands have consistently offered superior value proposition which consumers liked.

As you mentioned, now things are changing fast. Competition is intensifying. I think many local brands made some mistakes in their heydays when they were leading the market. Please keep in mind that many local brands are doing well even these days and I believe they will continue to do so in the near future and will be able to fend off the competitive pressure. However, if they had not made these mistakes their position would have been better today.

First of all, the mobile phone is a volume business. This particularly applies to local brands because you outsource the manufacturing and have minimum control on manufacturing cost. Without a large volume, your negotiation power with the manufacturer and other supply chain partners diminishes resulting in a pricing disadvantage for you. In a hyper-competitive market, you don’t make money from selling, you make money from buying at low cost.

Then the question comes how do you get that volume? The only answer for the local brands is expansion beyond local markets as well as segments. This is where many local brands made mistake. The local brands should have expanded to other segments or even other markets when they had the opportunity which could give them the advantage of volume and a leverage to use in bargaining with the suppliers and other supply chain partners. Many local brands failed to do this.

Secondly, they should have invested in R&D and manufacturing. I understand that it is tough and expensive but it is a very strong competitive moat. There are other options as well such as joint venture. They could have tried a more collaborative approach with their manufacturing partners.

Although we have seen a tremendous growth in mobile penetration over the last several years, smartphone penetration is still relatively low at about 30% which means the market for the smartphone is still largely untapped and we have a huge growth potential there.

Future Startup

How big is your operation in Bangladesh, how many people work at Transsion Bangladesh now?

Rezwanul Hoque

Bangladesh is a big market. In fact, it is the 10th largest mobile market in the world in terms of the number of mobile phone users. We have a huge young population who are joining the market every year.

Although we have seen a tremendous growth in mobile penetration over the last several years, smartphone penetration is still relatively low at about 30% which means the market for the smartphone is still largely untapped and we have a huge growth potential there.

On an average, Bangladeshis change mobile phone every 3 years which will come down to 2 years over the time which means market size will simply double when people do so. In nutshell, we see an incredible opportunity in Bangladesh.

Transsion Bangladesh has started its journey in Bangladesh in June 2017. You can call us a relatively late entrant to the market. However, we have grown pretty fast. In the last quarter, we became the 2nd in the market in terms of the number of customers we served.

We have managed to build a good awareness in the market. We have designed a better service strategy where we ensure that every customer receives superior customer service. The supply chain partners have also understood that our products are of better quality than many other available products in the market.

Currently, we are a team of 500 people and growing. We will be around 1000 people by mid-next year.

We have already started working on setting up a factory in Bangladesh in the next year where we would be able to create opportunities for another 1200 people initially.

Our core value at Transsion Bangladesh is ‘Together We Can’. This value informs everything that we do at the company. We work as a team and are trying to build an organizational culture where everyone contributes to the greater goal. We make sure that everyone in the team understands and internalizes these values and we also ensure that you get rewarded for your contribution.

Future Startup

How do people work at Transsion Bangladesh? Please tell us about your organizational culture.

Rezwanul Hoque

We are a young company in terms of age of our operation in Bangladesh as well as our team. While recruiting talents, we don’t focus much on the experience, rather we look for people who are passionate about the work we are doing.

Our core value at Transsion Bangladesh is ‘Together We Can’. This value informs everything that we do at the company. We work as a team and are trying to build an organizational culture where everyone contributes to the greater goal. We make sure that everyone in the team understands and internalizes these values and we also ensure that you get rewarded for your contribution.

Future Startup

How does the mobile phone industry work? Please help us demystify the intricacies of the mobile phone industry.

Rezwanul Hoque

The industry has two parts. Part one is manufacturing. It is huge because you need R&D, manufacturing plants and other technical capabilities. I would say that no one does vertical integration in the mobile phone industry. Everyone goes for horizontal integration. There is a host of components in a mobile phone and in very rare case one company makes all the components. There are companies that specialize in making Chipset only, some in designs, some in the display, and some in accessories. You should have a horizontal integration in order to have economies of scale.

Another part is sales, distribution and after-sales services. And you know how that works.

I would say the core of this business is innovation where you have to innovate every day. This is not only in manufacturing alone, it is also in your different processes. You have to understand the market, how it works and deliver accordingly.

Future Startup

How do you see the competition in the local market? A couple of new companies have started aggressive marketing and Walton has just started manufacturing locally.

Rezwanul Hoque

I would say that the competition that we are seeing now is relatively healthy. Previously, there were gray products and all kind of unhealthy competitive practices in the market.

The entry barrier is very low in this industry. You can start a business tomorrow if you want to. But it is very hard to survive in this industry.

Having said that, 2018 is going to be a very important year for Bangladesh mobile phone industry because a lot of things are happening.

Firstly, Tax has increased for almost all kinds of businesses, particularly in import tax has increased significantly. On the other hand, local manufacturers will enjoy significant tax benefits. The challenge will be around seizing this opportunity and utilizing it to your advantage.

Secondly, USD exchange rate has increased a lot recently. These are actually external factors for any industry.

Thirdly, I would say that everyone is facing challenges and trying hard. No one would tell you that they are doing good and happy with the industry and market. As you mentioned, competition has grown and everyone is trying hard to fight their place in the market.

My hunch is that small companies will face even greater pressure next year as the competition gets tighter over time.

In the past, we saw retailer dominated the market but now we are seeing the rise of classified outlets. The big brands are investing in their own outlets which is expensive and a very challenging endeavor to pull off for the smaller brands given the investment requirements.

I would say the core of this business is innovation where you have to innovate every day. This is not only in manufacturing alone, it is also in your different processes. You have to understand the market, how it works and deliver accordingly.

Future Startup

What is your strategy to deal with these competitive challenges?

Rezwanul Hoque

There are a few strategies that brands apply in the mobile phone industry. You build a high-end, high margin brand and spend heavily on marketing. Oppo, Vivo and a few other brands are doing this in many markets. They can spend heavily because they earn high margin on their products.

Another strategy is, you only focus on the product. You make quality products and expect that your quality will bring you demand and you would not spend much money on the channels. You give full value to the customers.

And there are companies that take a hybrid strategy where they focus on high quality and better service strategy along with a limited premium and medium communication budget strategy.

Then and again, it is hard to find a winning strategy right away. You can only know after using a strategy for 4-5 years that you can know whether this strategy works or not.

At Transsion, ours is more of a hybrid strategy where we pay enough attention to the product as well as to distribution, communications and our channel partners.

Future Startup

How does your marketing and communication works?

Rezwanul Hoque

We are not that much focused on ATL activities in Bangladesh yet. ATL is quite costly in Bangladesh and media landscape is quite fragmented in the country. We are getting some advantage from our international communications. For now, we are mostly investing in BTL activities and digital media.

Future Startup

What are the challenges for Transsion Bangladesh now?

Rezwanul Hoque

Our challenges, for now, are mostly external in nature. Tax, exchange rates, disruptive market and the government policy are some of the challenges that we have now.

For internal challenges, we are a startup like all other startups ensuring efficiency, human resources development and cultivating a learning culture are some of our internal challenges.

One of the key ingredients for the long-term success of any business is people. You need really good people in order to build a winning business. When you are growing as a company, you should also invest in the development of your people so that they can push the growth further as well as manage it. If you fail to do that, your business will eventually collapse.

Future Startup

What are the future plans for Transsion Bangladesh?

Rezwanul Hoque

We will start our manufacturing plant in Bangladesh in 2018. That’s a priority for us.

In the long run, our goal is to be a respectable organization that delivers value to its customers, employees, stakeholders, channel and distribution partners. We want to cultivate the best practices in the industry and build Transsion as an organization where people would love to work.

I believe that it is easy to be a leader in any category, what is hard is sustaining your success and leading sustainably for a long time.

We often see a lot of brands that grow quite fast taking the market by storm for the short term but eventually lead for a long time when competition grows. The rise fast and fall equally fast. They can not survive in the market.

One of the key ingredients for the long-term success of any business is people. You need really good people in order to build a winning business. When you are growing as a company, you should also invest in the development of your people so that they can push the growth further as well as manage it. If you fail to do that, your business will eventually collapse.

For example, in order to be the number 2 brand in the market, you need people of number 2 caliber and you have to groom up and train your people.

That’s what we plan to do. We are here for the long-term. We want to grow our business together with our people. We are investing in the development of our people and we will continue to do that in the coming days.

On the product side, currently, our sole focus is on the mobile phones and once we build a sustainable business in this space we will focus on a few other products.

For 2018, our priority is to ensure a healthy growth

Future Startup

You have decades of experience in building and growing companies from scratch, what are some of the biggest lessons from your journey so far?

Rezwanul Hoque

We are always looking for shortcuts to success and things. Many of us are incapable of having a long-term vision. We do 5 years plans and all that but we often fail to hold on to that. Don’t get me wrong. There are of course people who think long term in Bangladesh. My regret though is that the number is pretty slim. The first lesson for me is that you have to think long-term. There is no alternative to it.

The second thing is, I already mentioned earlier, our companies seldom invest in their people. At the end of the day, a great company is all about great people. If you don’t have great people, you will not build a great business. Investing in the development of people is not yet part of our organizational culture. We consider it as an expense. That should change.

Finally, integrity is an indispensable quality that many of us overlook. It is important you maintain the highest level of integrity. In order to succeed in life and work, you need the 3-H namely Honesty, Hard Work, and Humility.

Future Startup

What is your management philosophy?

Rezwanul Hoque

There are a few ways you can deal with people: you can base your management absolutely on numbers and KPI. You train people, groom up them, reward them or fire them based on KPI and numbers. That’s one way. It is mechanical in nature and does not care much about human qualities.

Another way is that you inspire your people to deliver a better result, help them when they need help and reward them when they do good works.

I would say that an organization needs to balance these two approaches. If someone is doing an excellent job, you need to grow him more and if someone is not doing great at work, you need to train him and develop his strengths.

My personal observation is that we are very emotional as people and sometimes irrational. Inspiring people is the best way to manage in our cultural context and that’s my style. I’m open and don’t boss around. I empower people sufficiently so that they can operate autonomously and I try to available to my people when they need me.

We are always looking for shortcuts to success and things. Many of us are incapable of having a long-term vision. We do 5 years plans and all that but we often fail to hold on to that. Don’t get me wrong. There are of course people who think long term in Bangladesh. My regret though is that the number is pretty slim. The first lesson for me is that you have to think long-term. There is no alternative to it.

Future Startup

What does it take to build a company from the scratch?

Rezwanul Hoque

The only thing that is needed is ‘One Heart’ of the organization. Everyone in the organization should understand and own the vision of the organization. From the leader to the operator of lift, everyone needs to have the same ambition and same objectives in mind. If you can have this kind of alignment, success should not be an issue at all.

The other thing is execution. Having a good plan, a strategy is great but unless you execute a good plan would not produce any result. And execution is done by the people. Meaning you have to focus on your people. In our country, we do have an abundance of ideas, we talk a lot but when it comes to execution, we fail to execute. I think it is important that you invest and put equal emphasis on execution as you do on planning.

Future Startup

How do you improve execution capability of an organization?

Rezwanul Hoque

I think it is important to learn by doing. There are people with good grades and all but can’t deliver when tasked with a responsibility. And there are street learners who go out, stick to a challenge and get things done no matter. Doing is a mentality and you have to invest time and effort in developing this mentality.

I encourage my people to do both. I ask my people to go out there and make mistakes and learn from mistakes and do it again. The only thing that I care about is that you are learning from these mistakes. I think organizations should allow their people to make mistakes and learn that should help.

The other thing is execution. Having a good plan, a strategy is great but unless you execute a good plan would not produce any result. And execution is done by the people. Meaning you have to focus on your people. In our country, we do have an abundance of ideas, we talk a lot but when it comes to execution, we fail to execute. I think it is important that you invest and put equal emphasis on execution as you do on planning.

Future Startup

How do you organize yourself, how do you work and what does a typical day of you look like?

Rezwanul Hoque

On a personal level, I do not believe in getting obscenely rich and in having worldly things and I don’t believe in the idea of tomorrow. I mostly live for today.

I plan one day at a time. I try to live my today best so that I can have a better tomorrow. That’s you can call a philosophy. I work hard to complete my day and daily task. What I will be doing tomorrow, that’s for tomorrow. I try not to worry about it.

I am not that much active on social media which I think save me a lot of time and energy. I’m physical kind of person. I either need to play football or hit the gym every day. Otherwise, I feel sick. However, hitting the gym on a daily basis is becoming increasingly challenging these days given my schedule. Still, I try to attend gym a couple times a week.

From my childhood, I have developed this habit of working in the midnight to make my personal plans and think about strategy and future. Midnight is usually quiet and allows me to contemplate and think deeply. I like that time.

As CEO of a startup company, my hands are always full on a weekday that does not allow me much time to think. So I take the advantage of quite in the midnight. I believe that quiet time allows your mind think deeply, come up with strategies and solutions that are hard to come by when you are busy and worried and tense. You need to stay out of the box in order to see inside the box. As a result, I go to sleep late and wake around 8 AM in the morning.

I think it is important to learn by doing. There are people with good grades and all but can’t deliver when tasked with a responsibility. And there are street learners who go out, stick to a challenge and get things done no matter. Doing is a mentality and you have to invest time and effort in developing this mentality.

Future Startup

What do you think about life?

Rezwanul Hoque

This is interesting. This a question I ponder upon a lot, even these days. Life, religions, meaning of life – I often think about these questions.

I have come to realize that, although we think we control our lives, in reality, we don’t. I did not make many of the most important decisions of my life. For instance, I did not choose my birthplace or parents and I don’t know when I will die. These are some of the most important decisions of our lives and we have no way to influence them. This understanding allows us to relax and enjoy life as it is.

Life is ephemeral in nature and I think if we are passing a good quality time that should suffice. My target for each day is to have a quality time at my office, do my work, spend quality time with my family and be useful to people around me.

I am not that much active on social media which I think save me a lot of time and energy. I’m physical kind of person. I either need to play football or hit the gym every day. Otherwise, I feel sick. However, hitting the gym on a daily basis is becoming increasingly challenging these days given my schedule. Still, I try to attend gym a couple times a week.

Future Startup

How do you deal with the stress and challenges that come with building a company from the scratch?

Rezwanul Hoque

This is my second journey. I started a company from zero and then built it into a successful business. And then now I have started again from zero and I don’t know what the future has for me.

I do not know how well I will be able to do that but still, this is the life I love and want to live. This acceptance helps me to deal with my challenges in a more positive way.

Now, in order to achieve things in life, you need to three things: decision, action, and Luck. Luck means labor with correct knowledge. If you work hard on some misplaced goals, it might not yield any result.

Future Startup

What is your personal resolution for 2018?

Rezwanul Hoque

I do not have a personal resolution. I have always been like this. I don’t separate my work from my life. The idea does not make sense to me. Whenever I am onto something, my focus and plans revolve around it.

Future Startup

What advice would you give to people who are just starting out?

Rezwanul Hoque

Success is different things to different people. First of all, you have to know what success is to you.

There is no end to the success if you are seeking material wealth. But to me, success comes from contentment. You need to define your success first. Then you can choose your scope of work to achieve that.

Now, in order to achieve things in life, you need to three things: decision, action, and Luck. Luck means labor with correct knowledge. If you work hard on some misplaced goals, it might not yield any result.

This story is made possible in part by our friends at Dhaka Bank, whose generosity enables us to publish premium stories online at no cost to our readers. Dhaka Bank Go gives you secure access to your Dhaka Bank Accounts and Credit Cards and other exciting facilities from your mobile devices anytime, anywhere. Explore and enjoy the infinite opportunities. Learn more here.

(Interview by Ruhul Kader, Transcription by Md. Tashnim, Cover photo – Transsion Bangladesh)

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