Company ready for next wave in Africa

Shandong-based enterprise has done well making molds for concrete poles but looks to branch out

In sport, surfing refers to riding a wave, and when the wave is huge, the surfing is more exciting.

However, for private business, surfing on the wave of a rising market can bring excitement as well as worries, especially when others are trying to ride the same wave.

Take, for example, Shandong Shengya Machinery Co, which is based in Linyi, Shandong province, and specializes in the design and manufacture of concrete pole molds, block-making machinery and mixers. After enjoying a good domestic market in China, it decided to go global.

As part of its overseas expansion plan, the company began to explore the Nigeria market in 2004, its first step in selling electric pole mold machines and block-making machines in Africa.

It has now set up companies in such African countries as Nigeria, Algeria, Ethiopia, Kenya, Cameroon, Tanzania and Cote d'Ivoire. It stretched its arm to Kenya in 2013, wading into East Africa's leading economy.

Chai Xixiang joined the company in 2010 and worked as a sales manager in Anhui province. His experience in sales led to him becoming one of the team members when the company planned to set up a new company in Kenya. He is now the sales manager of Nile Machinery Limited, registered in Kenya.

"In the first two years, we tried to break even, and in 2015 and 2016, the sales volume picked up, fueled by the new products brought from China," says Chai.

In 2015, the company began to consider bringing more variety to the market. It started to assemble small carts, fencing molds, paving stone molds, maize threshers, rice milling equipment, walking tractors and concrete mixers. The move helped boost its business in Kenya.

To cater to the different policies of different countries in Africa, the company adopted flexible policies, Chai says.

For instance, in Ethiopia, where the government has a tight foreign exchange policy and restricts imports of complete manufacturing plants, the company bought 16 acres (6.5 hectares) of land, constructed factory buildings and bought lathes, planers and millers to produce its products locally. The localization helped sharpen its competitive edge due to reduced labor costs.

The first products of the company in Kenya are concrete electric pole molds and block-making machinery. Currently, there are 13 private enterprises producing concrete poles in Kenya. Seven of them bought the machinery from Shengya. The rest imported the equipment either from China or from other countries before Chai's company started its business in Kenya. Therefore, the products enjoyed a good market among local private companies for the first few years.

Statistics indicate that from 2013 to the present, Kenya has needed 5 million new electric poles to replace wooden poles, an ambitious plan that boosted demand for concrete pole molds.

However, after several years, the market has become saturated, leading to a slowdown in business. Chai worries about the future of the company, especially since many large Chinese companies are flocking to the Kenya market to ride the wave of the Road and Belt Initiative.

He says these companies are much stronger than small, private companies like his.

"The dark days for the business will soon come," Chai says. "But it is a business cycle you have to be prepared for. We need to look for a new market or bring new products for our own niche market."

panzhongming@chinadaily.com.cn

(China Daily Africa Weekly 09/08/2017 page28)