Fitbit eyes entry into new Middle East and African markets

American gadget maker is looking at alternative markets to ward off the effects of the US-China trade war on its business

Vincent Lamoureux, director of new markets at Fitbit, sees a lot of potential in MEA region. Courtesy Fitbit

Fitbit will expand into new markets in the Middle East and Africa, as the gadget maker evaluates the effect on its business from US tariffs on products made in China, a top company executive said.

The world's two biggest economies have been engaged in a tit-for-tat tariff war that has threatened global economic growth and forced the World Bank and the International Monetary Fund to revise down their projections for world economy.
The tariff war is a major issue for many US corporations. Apple is lobbying against the rise in levies because it affects business and increases the cost of its products for American consumers as well.

American companies received a temporary respite last month when the Trump administration delayed a round of tariff increases on $250 billion (Dh918.29bn) worth of Chinese goods until October 15. China also said it would exclude some of the American products from its list.

"Our manufacturing is done in China and any increase in existing tariffs or new duties will have a direct impact on our business," said Vincent Lamoureux, director of new markets at Fitbit.

“Things are still developing and we are also evaluating the situation … We will comply by the rules and haven’t decided yet on how to deal with the increased burden, if there is any,” Mr Lamoureux said.

One way for Fitbit to offset any shock to its business is to strengthen presence in existing markets and enter new ones.

Within the MEA region, the UAE, Saudi Arabia, Kuwait and South Africa are “performing very well he said.

Fitbit recently entered Morocco and will launch in Algeria and Tunisia next year. It has completed certification requirements for Egypt, the most populous Arab nation, and will enter the market "soon".

“We will be expanding in Lebanon, Turkey and down the line into Jordan as well. It’s a natural business progression from the UAE but we have to move step by step,” said Mr Lamoureux.

Fitbit manufactures products such as smartwatches and wireless headphones that track activities and provide everyday tips for health and fitness.

Its connected device and app were differentiators for the brand but are now facing stiff competition from Apple and Samsung.

To attract health-conscious customers, Apple integrated an electrocardiography app into its Watch Series 4 and WatchOS 5 last year. Samsung has reportedly applied to US health authorities for approval to add an ECG heart-monitoring feature to its smartwatch that will be introduced next year.

Many new companies are jumping in the wearables business, increasing the size of the pie, said Mr Lamoureux. "Of course, you will lose some market share but your overall business will grow," he added.

Collectively, Apple, Samsung, Fitbit and Garmin are the four most popular smartwatch brands, accounting for eight in 10 devices shipped worldwide.

Driven by nearly 30 per cent growth in the number of devices sold globally, Fitbit's revenue increased 5 per cent year-on-year to $314 million in the last quarter to June. Despite selling 800,000 more devices in the last quarter, the company's market share still suffered a slight slump.

Last week, Fitbit Versa 2, the next generation of its best-selling smartwatch in the region, launched in the UAE. At Dh899, it will be available at leading stores and retail websites in the country from Tuesday.

"We are very committed to this region and we will be making new announcements and hiring more staff here to facilitate our growth plans," Mr Lamoureux, said without specifying a figure.

Fitbit, which launched its UAE operations in 2013, is awaiting approvals to launch more apps to track cardiac health and manage chronic diseases in the Middle East, he said.

“Dealing with chronic diseases through technology will be the next big thing. We are actively using the collected data to improve the algorithm of our apps,” said Mr Lamoureux.