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Driving African Trade

Wilfred Li 

Wilfred Li’s Carmelton Company Ltd has been doing business in Africa since 1995

 

Wilfred Li has been exporting to Africa since 1995 after establishing Hong Kong-based Carmelton Company Ltd, a disposable diaper business in 1993. In recent years, he says he’s seen the growing spending power on the continent, where he sells to more than 10 countries.

“A customer in Kenya that I’ve had for three years, normally orders one container a month. It has now expanded its orders to include other products we offer, including adult diapers” says Mr Li, whose business in Africa, he says, saw 20 per cent growth in 2012 compared to the previous year. Nigeria, he says, which he only entered in 2011, has increased five-fold.

“There’s still big potential to grow,” he said. “The fact that the demand for my products has expanded, shows there is a growing disposable economy.”

photo
 

Listen to this podcast by HKTDC Assistant Executive Director Raymond Yip, who headed the 30-member business mission to Africa in November, with his insights into the continent’s vibrant markets

Mr Li joined a recent business mission to sub-Saharan Africa organised by the Hong Kong Trade Development Council (HKTDC), to “see first-hand the market’s potential and meet my existing customers.”

Out of Africa

The first HKTDC delegation to sub-Saharan Africa in more than 20 years, the group visited Nairobi, Kenya; Lagos, Nigeria, and Accra, Ghana.

Raymond Yip 

African consumers
have a big appetite for Hong Kong products,
says Raymond Yip,
HKTDC Assistant
Executive Director

 
“We organised the mission because we felt that the mature markets in the West are stagnating,” says HKTDC Assistant Executive Director Raymond Yip, who headed the 30-member group. “Our exporters need to look for new opportunities elsewhere.”

Kenya, Nigeria and Ghana, he says, are the three countries in sub-Saharan Africa that hold the best potential for Hong Kong, based on the current volume of Hong Kong exports to those economies, the size of their population, a growing middle class that can afford Hong Kong products, and their existing trade infrastructure to support trade flows.

First Movers

Besides being a hub for East Africa, Kenya also holds promise within its own market of 40 million people. Forty-five per cent of the population are middle class, which is a higher proportion compared to the rest of Africa. The country’s infrastructure is also one of the best in the continent.

Nigeria, meanwhile, is Africa’s most populous country with 167 million people, so it’s a “very big market in its own right,” Mr Yip notes. Its oil industry is fueling economic growth. Mr Yip says there’s a huge demand for manufactured goods in Nigeria, which Hong Kong suppliers can meet.

 Besides being a hub for East Africa, Kenya also holds promise within its own market of 40 million pe
 

Besides being a hub for East Africa, Kenya also holds promise within its own market of 40 million people

Ghana, a country with 25 million people, also has a vibrant growing middle class. The recent discovery of oil there has fueled one of the world’s highest GDP growth rates in 2011. It’s also rich in mineral that can be tapped by Hong Kong’s jewellery sector. Mr Yip says that the country also holds potential in agriculture with the size of its arable land “equivalent to 120 Hong Kongs.”

Electronics products constitute the biggest exports to Africa, including telecommunications, computers and electronic components and parts. Garments and textiles, as well as building materials are also in high demand with infrastructure development. Gifts and souvenirs also hold potential in Kenya with its thriving tourism sector.

There was a strong turnout from local business representatives, according to Mr Yip. “Our delegates had fruitful meetings. In Lagos, for example, we arranged close to 400 business matching meetings, and local buyers were queuing to meet with Hong Kong delegates. We felt we should have come earlier.”

“Future is in Africa”

The 30-member HKTDC delegation to Sub Saharan Africa visited Nairobi, Kenya; Lagos, Nigeria, and Acc 

The 30-member HKTDC delegation to sub-Saharan Africa visited Nairobi, Kenya; Lagos, Nigeria and Accra, Ghana in November

 
Some delegates joined the trip to find out more about the business opportunities in Sub-Saharan Africa.

“I treated this as research and was rewarded with a greater understanding of the continent,” said Behzad Mirzaei of Basio Consultants & Services, which serves primarily Middle East SMEs on how to conduct business in Hong Kong and China.

“I was in a different position from traders, who deal with products. I took the opportunity because very few missions are organised to the region.”

 Behzad Mirzaei
 Behzad Mirzaei,
Senior Consultant, Basio Consultant and
Services Ltd
The five days of networking included meetings with trade associations, representatives from the distribution industry, government and foreign direct investment officials, who gave their views on their countries’ future direction. “They clearly understand what’s needed,” Mr Mirzaei said. “But they currently do not have enough financial resources, so they welcome foreign investment.

“The future is in Africa, no doubt about it,” he says, noting that there are plenty of untapped sectors in the market, including in agriculture, services, consumer goods, but he noted that the countries’ infrastructure is still underdeveloped. “They’re still building the basics.”

During the trip, the consultant also met those in the services sectors, many of whom are Western-trained professionals. He said building connections with these people will be key to eventually doing business in Africa. But he believes that it’s difficult at the moment to find local partners.

Nigeria has a huge demand for manufactured goods, which Hong Kong suppliers can meet  

Nigeria has a huge demand for manufactured goods, which Hong Kong suppliers can meet

 
“My general perception after visiting is that no doubt, the professionals here have the skills, but standards would need to be developed in terms of the way business is conducted.”

For now, Mr Mirzaei says he intends to stay abreast of latest developments including on investment projects, which some of his Middle East clients, “who have more of an appetite for risk,” may be interested in.

“Living in Asia and doing business in the Western world all these years, I came away thinking, ‘why didn’t I open my eyes to Africa earlier?’ I would have had better contacts by now. My advice to others is, go for it. Africa is the future.”

Carmelton’s Mr Li agrees. “Africa is a good market, but many Hong Kong suppliers don’t see the potential, thinking it’s too small of a market,” he says. “They always look at the big cake like the US and Europe, but they don’t realise Africa is just as potentially big. Hong Kong companies should take the time to research and find the beauty and potential of the place.”

 

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