Bulls n Bears Entrepreneurship Zone :: Seven Chinese companies that have made it in Africa

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China’s growing commercial involvement in Africa has been well documented.
However, a new study by McKinsey & Company, titled Dance of the lions and
dragons, suggests the number of Chinese businesses in Africa are much
greater than previously thought. It estimates there are more than 10,000
Chinese-owned firms in the continent today.

Africa-based Chinese enterprises are making respectable profits. Nearly a
quarter recovered their initial investment within 12 months, while 50%
reported it took them three years or less. One of the reasons for their
success is that Chinese entrepreneurs are prepared to act boldly and swiftly
– often at considerable personal risk – to build their businesses.

How we made it in Africa takes a closer look at a few Chinese companies
successfully operating on the continent.

Tecno: Products tailored for Africa

McKinsey estimates about 90% of Chinese companies in Africa are
privately-owned. These firms work towards their own profit motives,
challenging the belief that most Chinese investment in Africa is coordinated
through the state. One such private venture is mobile phone brand Tecno,
owned by China-based Transsion Holdings, which has achieved market share of
as high as 40% in some East African countries, despite the presence of
global competitors.

Tecno’s devices are generally affordably-priced, and has features
specifically tailored for the African countries where it operates. For
instance, it was the first major brand to introduce a keyboard in Amharic
(Ethiopia’s official language) and its devices include photo software to
batter capture darker skin tones.

Twyford: State-of-the-art factory run by locals

About two hours from
<https://www.howwemadeitinafrica.com/category/countries/kenya/> Kenya’s
capital Nairobi, in a mostly-rural area, stands the Twyford ceramic tile
factory, constructed in just eight months in 2015-16. It took the McKinsey
team some time to arrange a visit to the Twyford factory, as the managers,
like many other Chinese businesspeople in Africa, prefer to keep a low
profile. The facility is a joint venture between two Chinese firms: Sunda
Group and Keda Clean Energy Company. Sunda started out by importing tiles
from China into Nigeria, but has since launched its own manufacturing
operations in a number of African countries; its partner, Keda, is a
Shanghai-based supplier of industrial machinery.

The majority of this modern factory’s workers, including management, are
Kenyan, debunking the myth that Chinese companies don’t employ locals. In
fact, 89% of employees at the more than 1,000 companies McKinsey talked to,
were African. It is estimated that Chinese-owned businesses already provide
work for millions of Africans.

Huawei: Transferring technology

Telecommunications company Huawei is an example of a Chinese operator whose
technology has enabled African companies to boost their service levels. In
2015, Kenyan mobile operator Safaricom migrated 12.8 million of its M-Pesa
mobile money subscribers to Huawei’s platform. The benefits of the new
system included faster transaction processing, an open application program
interface (API) for third-party integration, and improved security measures.

According to McKinsey’s research, Chinese companies are involved in
substantial transfer of technology in Africa – nearly 50% have introduced a
new product or service, and over a third have brought in new technology.

Sunshine Group: Multisectoral player

Sunshine Group is an example of a Chinese company which started out in one
industry, and expanded into others. Founded in Tanzania in 2012, it
initially focused on mining, but has since entered sectors including
agriculture, manufacturing and transport. The company has invested around
US$100m in projects such as a gold-smelting facility, agri-processing
plants, and a card-printing facility that produces bank and phone cards.

StarTimes: Making pay-television accessible

Broadcasting company StarTimes has grown into one of the continent’s top
pay-television providers, with about 10 million subscribers and established
subsidiaries in more than 30 African countries. It has taken a long-term
view by investing in low-cost, digital satellite television. For instance,
in Tanzania, StarTimes has lowered the local price of pay-television by up
to 90%. And in Kenya, the company has introduced digital satellite
television to rural parts of the country that previously had limited access
to a television signal.

Bobu Africa: Catering for Chinese tourists

Not all Chinese companies in Africa are large industrial enterprises.
Travel agency Bobu Africa was launched by a young Chinese couple to
introduce authentic African culture to Chinese tourists, who are showing
increasing interest to visit the continent. The founders developed an array
of interesting travel routes, including visits to craft workshops, enabling
local artisans to boost their incomes.

FAW: Manufacturing for the domestic market

McKinsey’s research found that Chinese factories in Africa are
predominantly serving the domestic market, with 93% of the revenues of the
manufacturers it interviewed originating from local or regional sales.

An example of a large business targeting domestic buyers is truck
manufacturer FAW. It has invested $50m in an assembly plant in South Africa,
which produces about 5,000 vehicles annually for both the South African
market and other African countries. In 2013, FAW also partnered with
Perfection Motors to assemble and market its trucks in Nigeria.—
Howwemadeitinafrica 



Chinese mobile brand Tecno successfully competes with global players in
Africa.

 

 

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