As Africa ascends, lift business booms

Figures for China's elevator industry are truly lifting: Growth is 20 percent a year and the cumulative figure by the end of last year had reached 2.45 million units, ranking the country first for the number of elevators in use, their production and growth, according to an industry report.

That has thrown up opportunities for Chinese lift makers to export their wares, one of the companies being Shenyang Brilliant Elevator Co Ltd, which is looking to Africa to gain more growth as it strives to catch up with better-established rivals in the continent.

The company, a subsidiary of Yuanda Enterprise Group in Northeast China's Liaoning province, has grown rapidly in Africa in recent years as big energy programs, infrastructure and government building programs and housing projects have taken off in countries such as Kenya, Nigeria, South Africa and Tanzania, feeding the demand for lifts and escalators.

In contrast with weak sales in the US and Europe, more than 7,600 lifts were installed in Africa last year, a rise of 12 percent from the previous year, a recent world industry study by the China Chamber of International Commerce published in June said.

Shenyang Brilliant Elevator says it sold more than 245 lifts in 13 African countries last year; over the same time it sold 11,000 lifts in China. The company has now set up more branches and added more dealerships in Africa.

Cong Jun, general manager of the International Trade Company of Shenyang Brilliant Elevator, says compared with the US and Europe, buildings in Africa are low, but most have lifts, a throwback to colonial days.

"Even though many buildings in Africa are only three or four stories tall people in Ghana, Malawi and Tanzania are not really used to walking up stairs," Cong says.

Traditionally, the African lift market has been dominated by companies from the US, Europe and Japan, such as Otis Elevator Co, Schindler Group and Mitsubishi Electric Corporation, which have more than 80 percent of the market in the continent, the China Chamber of Commerce for Import and Export of Machinery and Electronic Products says.

Africa's continued potential for urbanization and infrastructure building gives the Chinese lift industry a great opportunity because the African market is growing faster than in many other places and has not been badly affected by the global economic crisis, Cong says.

"Because many lift-makers in both Europe and the US are still focusing on Asia and South America, this has offered Shenyang Brilliant Elevator an opportunity to diversify and expand services and sales channels in Africa."

Most governments in Africa are acutely aware that undeveloped infrastructure is one of the biggest obstacles to growing their economies, says Zhao Ying, a researcher at the Institute of Industrial Economics of the Chinese Academy of Social Sciences in Beijing.

Indeed, the lack of functional office, hospital, public service and modern residential buildings has made it difficult for many businesses and government bodies to operate and develop in many parts of Africa, and promoting foreign investment and improving amenities is fraught with difficulties.

Thus many large Chinese construction project providers have moved to Africa to cash in on the continent's need for government buildings, hotels, stadiums and residential blocks. That means more lifts, too, which are also needed as the pace of infrastructure building gathers pace.

Because the demand for new lifts relates directly to the construction, engineering and home-building industries, Shenyang Brilliant Elevator is working with large state-owned enterprises - such as China Communications Construction Company, China State Construction Engineering Corporation and China Road and Bridge Corporation - to expand its foothold in Africa.

Power outages are common in some sub-Saharan African countries, so one of the biggest challenges for foreign lift-makers is to cope with that and to reduce energy use.

Shenyang Brilliant Elevator says it deals with these issues by installing extra storage batteries on its lifts and making an extra effort with energy-saving for its customers and dealerships in Africa.

Zhao says rising demand for lift repair and maintenance has provided Brilliant with another avenue for increasing its business. About 220,000 units that need maintenance are installed in Africa, he says.

Countries such as Kenya, Malawi and South Africa have strict regulations on lift maintenance, and the norms they set out on maintenance and modernization help drive the industry.

"It's hard to say what the average lifecycle for lifts in Africa is," Zhao says. "But most Chinese-made lifts can be used for between 30 and 35 years if are they properly maintained and serviced."

Many of the lifts in Africa are fairly new, he says.

Cong of Brilliant says: "We want to be a service-oriented company instead of just making and installing equipment."

In Africa, where customers are sensitive to price, third-party maintenance is usually the cheapest, but original equipment suppliers normally provide the best service, Cong says.

Both kinds of service have their place and should be supported to promote a market where fair pricing and competition rule, he says.

Li Shoulin, president of the China Elevator Association in Beijing, says Africa's modernization and the growth of services will keep the continent's demand for lifts high over the next decade. Li, who was in Africa twice last year promoting sales, says: "Many African countries are spending at lot on boosting industries such as transport, hospitality and tourism, so a lot of infrastructure building projects are needed.

"That means more lifts will be installed in public places such as office buildings, shopping malls, hotels, airports, railway stations and residential areas sooner or later."