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Text/Liu Xiaoting
Source: The Passage (ID:passagegroup)
When The Passage chatted with a friend who is investing in Africa and wanted to follow the brand trends in Africa, his first reaction was, “This is a very nonsense topic.” In his opinion, big European and American brands are really fighting Few have entered Africa, and there is no need to talk about brands in this land.
There are millions of mom-and-pop shops and roadside stalls here. They are the most mainstream business forms in the local area. According to the 2020 employment survey of the Republic of Angola, one-third of business activities and 80% of employment in the country come from such small traders. . A friend who tried to make a sanitary napkin brand in Africa described that in Africa, you often see such a scene, a big truck is like a mobile store with all kinds of goods on it. .
It sounds that Africans’ demand for commodities is still in the most primitive stage of meeting material needs. Whether you are a white brand or a famous brand, in their eyes, it is the same.
However, with the in-depth interview of The Passage, I heard the well-known names in Africa such as Transsion, Boda and Senda, in some specific categories, mobile phones, home appliances, 3C, as well as washing powder, toilet paper and other daily necessities. , the brand has appeared.
And their appearance has its own historical origin. The domestic processing from the initial stage of reform has gradually developed into a world factory. This process also nurtured the first foreign trade people to enter Africa, who brought China’s rich products to Africa. Later, after completing the original accumulation, they began to build local factories and dominated the local market by virtue of their strong supply chain advantages.
The story of TRANSSION is more like an African copy of vivo and OPPO from the Chinese countryside surrounded by cities. It adopts the most primitive marketing method in Africa, posting posters and painting walls in large areas. In some African towns, “TECNO” can be seen everywhere. blue poster wall.
With the rise of e-commerce and the establishment of supply chains, can Chinese people under the new opportunities copy the next Boda, Senda and Transsion based on the experience of their predecessors?
From building materials, hardware to opening a factory to make a brand
Africa has a population of about 1.3 billion, which is comparable to that of China. There are only 6 countries with per capita GDP exceeding US$5,000. In 2021, the per capita GDP of most countries will only be around US$1,500, which is equivalent to the level before the 1990s. of China. In African countries with a per capita GDP of more than 5,000, the main source of economic dependence is energy extraction.
“Africa does not have its own supply chain, and commodities have always been dependent on foreign countries, especially China.” Chen Qi, an employee who has worked in Africa for many years, told the Zhixiang.com that Africa is lacking in material and most of the necessities of life need to be imported.
This unexplored wasteland has attracted a large number of entrepreneurs to come here to “dig for gold”. Before the 21st century, there were not many Chinese companies in Africa. Taking infrastructure as an example, Europe and the United States took over 80% of the infrastructure projects in Africa. As business opportunities are discovered, more and more Chinese companies have opened up business in Africa.
Due to the backward production level, Chinese enterprises were initially engaged in industries related to hardware and building materials. Take Keda Manufacturing in Guangdong as an example. Before 2015, Keda Manufacturing had become the leader in the global ceramic machine industry, with a global share of 30%. In 2015, Keda cooperated with Senda Group to start building a ceramics factory in Africa, and has become one of the largest suppliers of building ceramics in Africa. After launching its African business, Keda’s revenue last year reached 2.345 billion yuan.
According to a report by McKinsey in 2017, there are more than 10,000 Chinese enterprises in Africa, 90% of which are private enterprises and one-third are engaged in manufacturing. According to the report, 500 billion US dollars of industrial output value in Africa comes from Chinese companies, accounting for as high as 12%. A friend who is doing customs clearance in Nigeria told the Zhixiang.com that around 2000, many Chinese companies from coastal cities in China, such as Fujian, Zhejiang, and Guangdong, started to set up factories in Nigeria to produce daily necessities, which basically became a monopoly in Nigeria. enterprise.
In addition to local factories, foreign trade carries a larger share of Chinese goods entering Africa. In 2021, China’s total exports to Africa will be US$148.3 billion. Due to the poor supply chain level in Africa, there is no perfect industrial scale, and the cost of local production is higher. Shipping from China has become a better choice.
However, the reputation of Chinese products has not been good for a long time. This needs to mention the market environment in Africa. In Africa, due to the general pursuit of low prices, local retail products are generally messy, and fake and inferior products emerge in endlessly.
In addition, big-name counterfeit and shoddy, falsely labeled products are not on the right level, and they will be broken after a few days of purchase. Similar product experience is a very common phenomenon in Africa. In the past, such problems were common to Chinese products. As early as 2013, when China inspected more than 260,000 items of goods imported into Africa at ports, it found about 13,000 batches of counterfeit and substandard products. Africans have previously had a bad reputation for Chinese products, and even referred to inferior products as “kichina”. However, due to low consumption levels, low-priced but low-quality Chinese goods have always maintained high sales in Africa.
In this context, some high-quality Chinese brands are slowly starting to emerge, gaining a firm foothold in Africa with high-quality products.
A representative enterprise is Boda Technology. In 1999, Boda entered the African market and started to do ceramic trade business. Later, with the advantages of Foshan’s manufacturing industry, Boda exported various commodities to Africa, extending to daily necessities such as diapers and washing powder, and built a local factory. Taking washing powder as an example, since the hardness of groundwater in Africa is 500, while that in China is 100, Boda specially developed a formula for washing powder for African water sources and successfully entered the local market. According to reports, most of Boda’s products exported to Africa have been modified to meet the differentiated needs of the African market. In 2020, Boda’s annual revenue has exceeded 3 billion yuan.
Previously, due to the low value of the African market, most Chinese entrepreneurs did not invest much energy, resulting in poor quality products exported to Africa. At the same time, this also leads to low technical barriers for products in Africa, and it is easy to make differentiation advantages. On the other hand, Boda Technology discovered the vacancy in the African market, transitioned from building materials to manufacturing, and embarked on a branding route, with more than 20 product brands under its banner. Different from other Chinese companies, Boda began to pay attention to the quality of its products, and even started to develop customized products.
In other sub-categories, Chinese companies have also created special categories such as mosquito coils and wigs in Africa, and there is a trend towards branding. Taking mosquito coils as an example, the mosquito coil brand “BeFine” made by Chinese businessman Li Fafa in Africa has achieved an annual revenue of more than 100 million yuan. Its brand has won 40% of the market share in Angola, Africa.
It can be seen that a reality is that in the early years, Chinese enterprises mainly engaged in building materials and hardware business in Africa, and the products exported to Africa were of poor quality. However, with the upgrading of China’s manufacturing industry, some enterprises began to pay attention to the African market and consciously established brands. Barriers to build early brand recognition in Africa.
Offline channels are king
To understand African brands, one cannot compare China’s new consumer brand model in recent years. The latter is a product of the social media era and conveys a certain personalized life needs; it is necessary to return to the pre-Internet era and use offline channel brands. perspective.
“When Europeans and Americans make brands, they emphasize values and lifestyles. For example, Starbucks emphasizes that what it sells is not coffee, but a kind of life. But African brands are not like this. It is often what distributor channels you have mastered, and what kind of distributors you have. It is the ‘brand’ of this region.” Lin Jun, who is a sanitary napkin brand Calmfident in Africa, told the Zhixiang.com.
In Africa, there are millions of small, medium and micro enterprises, including mom-and-pop shops and roadside stalls. They are called informal businesses, and it is estimated that such small traders account for one-third of commercial activity and 80 percent of employment in Africa. “What’s more exaggerated is that some places will pull a big truck with all kinds of goods on it, and then Africans will swarm up to grab the goods, paying the money and grabbing the goods.” Lin Jun said.
Due to the backward business form in Africa, if a product wants to form a brand effect, it needs to rely on channel circulation. The means of brand promotion is to attract more distributors and retail stores.
Taking Mooved as an example, in the previous interview with Xu Ran from The Passage, Xu Ran mentioned that in order to gain the support of offline dealers, Mooved began to help offline stores renovate their doors after reaching 1,000 offline stores. , to do more brand exposure for Mooved. In addition, Mooved has also opened franchise stores. The large household appliances such as TVs and refrigerators in the franchise stores are all of the Mooved brand.
From the experience of Mooved, we can see that building a brand in Africa is actually a re-travel of the early Chinese brand development route. In an era when there is a shortage of marketing channels such as TV and the Internet, brands can only be formed by cooperating with offline stores to advertise. Influence. For example, in the early years of China’s Chenguang Stationery, it helped the store to decorate the storefront in exchange for an exclusive stationery display area.
“Africa’s consumption level is low, basically you can buy whatever is cheap, and the pursuit of brands is not high,” Lin Jun said, “Many times, your packaging has a logo label, or you find a celebrity endorsement, and the celebrity is printed on it. Go up, this is a sign.”
That is to say, the brand development in Africa is still in a very early stage, and whoever owns the channel owns the brand. If the brand has a regional distributor, it can become a regional brand in a certain region and category in Africa. For example, the mosquito coil brand issued by Li has a 40% share in Angola.
Here we need to mention a successful brand case – Transsion.
Transsion is known as the “King of Mobile Phones” in Africa. According to IDC data, in Q4 2021, the total shipments of mobile phones in Africa will be about 48.6 million units, of which, the shipments of Transsion’s sub-brands will reach 31.44 million units. It accounted for 65% of the total shipments in Africa.
Transsion, a mobile phone brand born in 2007, has now become a household name in Africa. Transsion mobile phones are cheap, and according to the needs of Africans, it has iterated beauty cameras that are suitable for African skin tones. Even in response to the phenomenon of Africans sharing a mobile phone, Transsion mobile phones have launched a four-card four-standby function.
Price and technical barriers are the key to the success of Transsion mobile phones, and another success factor is the overwhelming offline brand marketing. Facing the lack of information marketing in Africa, TRANSSION Mobile adopted the most primitive marketing method: large-scale posters and wall painting. In some African towns, blue poster walls of “TECNO” can be seen everywhere. In order to introduce mobile phones into mom-and-pop stores, Transsion also brought the performance platforms and gift-giving marketing methods of offline stores in China to Africa. In 2021, Transsion’s cost of sales will be as high as 3.245 billion yuan, twice the cost of research and development.
“Walking in the streets and alleys is full of advertisements, so the brand recognition will naturally be high.” Lin Jun said.
It can be seen that African brands are in an early barbaric growth era. For ambitious 3C and home appliance brands like Transsion and Mooved, they can also seize the blank market in Africa through brutal and pragmatic marketing.
waiting for a long period of growth
Although brands are starting to appear in Africa, the market is not yet ready to form big brands. Because of low wages, low-priced commodities are still the first choice in the African market, and low prices mean that the premium space for commodities is low, and ordinary consumer product brands cannot undertake large-scale brand marketing. Except for brands like Transsion that have formed technical barriers, the products of other channel brands are very substitutable.
Moreover, the supply chain and sales channels in Africa are very backward, which brings a high threshold for the entry of new brands.
Lin Jun introduced the situation of sanitary napkin products in Africa to The Passage. In fact, some African countries have already accepted sanitary napkins cognitively. For example, Kenya abolished the sanitary napkin tax in 2004, while developed countries such as the United Kingdom did not abolish it until 2020. In Kenya, there is a very large market for cheap sanitary pads.
However, it is very difficult to be a sanitary napkin brand in Africa. The main problem is the consumption level and supply chain. “Because of poverty, African women buy two sanitary napkins when they have money, and they don’t use them the next day when they have no money. Therefore, African sanitary napkins are sold in separate packages, which increases the cost of packaging,” said Lin Jun. ” Moreover, the supply chain level in Africa is poor, the quality of employees needs to be improved, and the daily output rate of factories is not high. It is not directly imported from China by sea. The overall productivity level in Africa is relatively low.”
“In my opinion, many Chinese companies in Africa did not set their sights on this market from the beginning, but had some objective advantages. For example, they have African resources themselves, and traders like Guangzhou Xiaobei have African locales. People’s dividends.” Lin Jun added.
Therefore, when new brands enter Africa, they need to pay a lot of extra costs to establish a dealer network and conduct marketing promotion. Brands that have entered Africa may also need to cultivate the dependence of African consumers on the brand for a long time.
With the increase in mobile phone ownership, the penetration rate of e-commerce in Africa has also increased, providing another way of thinking for Chinese brands.
“This year, we found that more and more Chinese merchants are interested in African e-commerce,” Zheng Songqi, general manager of JumiaGlobal, told The Passage. “In the past few months, we have had more than 3,000 active direct sellers, although Chinese sellers as a whole have Not many, but there are ten times more new sellers this year than in previous years.”
On the Jumia platform, even Umidigi, a mobile phone brand from 0 to 1, was born. However, when asked if there is a trend of branding of African e-commerce platforms, Zheng Songqi said that the current trend is not obvious. “The price of African e-commerce products is about 15 US dollars, which is higher than that of the Southeast Asian market, because the cost of e-commerce in Africa is higher,” Zheng Songqi said, “So, the portraits of e-commerce users are those with middle-to-upper income in Africa. .”
African e-commerce products are dominated by digital 3C and clothing, while in Nigeria, where the economy is relatively high, the online penetration rate of mobile phone sales is only around 5-10%, and it mainly relies on offline purchase channels. Moreover, the current African e-commerce basically still relies on offline payment.
The consumer market of 1 billion people is still immature. A few brands have been successful for various reasons, but poor supply chains and consumption levels have limited more ambitious brands to look to Africa. “For example, in the Southeast Asian market, I may have to wait five years, but in the African market, I may have to wait ten years. Then why not start a brand in Southeast Asia and come back when the African market is mature?” Lin Jun said.
But there are still people who are still optimistic about the African market. In addition to mobile phones, Transsion also owns home appliance brand Syinix, smart accessories brand Oraimo, etc. Mooved has also launched refrigerators, air conditioners, kettles and other categories on the basis of TVs. It can be seen that these brands are moving towards grouping, waiting for the opportunity of future economic growth in Africa.
Xu Ran once told the Zhixiang.com that in the past, after China’s per capita GDP exceeded US$3,000, it ushered in a period of explosive growth in home appliances. The current per capita GDP in Africa is about 1,500 US dollars a year. In the next 3-5 years, when the per capita GDP increases to more than 3,000 US dollars, home appliances will usher in an explosion.
“By that time, we are ready.” Xu Ran said.
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