Branding success in Africa

Sunda banks on tailor-made products and villa projects to expand overseas footprint

Though big-ticket infrastructure projects and building contract have been the preferred route for most Chinese companies in Africa, one Chinese company is hoping to make a difference with a rather diverse approach.

The company, Guanghzou-based Sunda International Trading Co, is banking on its Africa-specific brands and villa construction projects to grow profits and establish strong links in Africa.

Sunda, which started operations in 2000 as a foreign trade agent, was one of the first Chinese companies to launch Africa-specific brands in 2011. From its first branch in Ghana in 2004, the company now has a footprint that covers more countries in Africa.

Wang Dajiang, vice-president of Sunda, says Ghana will be the pivot for the company's expansion in Africa, which includes a washing powder factory and a villa project.

Expansion of activities in markets such as Kenya, Tanzania and Cote d'Ivoire, especially in sectors like home decoration and building materials, fast moving consumer goods, hardware and electronic products, are also on cards, Wang says.

Wang says that total exports surged to $135 million in 2012 from $560,000 in 2004.

Sunda decided to tap the global markets, especially in Africa, in 2003 due to the stiff competition among foreign trade agents in China, he says.

"There were lots of foreign trade agents in China then, and the competition was fierce. At the Canton Fair (China Export Commodities Fair) we saw that foreign buyers were pitching for lower prices. Our margins were falling steadily. We decided that the only way forward was to venture abroad."

Wang says the company decided to export products to Africa, and Ghana in particular, because there was very little competition at that time. The growth potential was huge, he says.

"It was also tough as there was no existing demand patterns for us to decide on what to export."

To overcome this, Sunda shipped two containers carrying 60 types of goods to test the market. Over six months, the company found that building materials, especially ceramic tiles and glass, were the most sought-after products in Ghana.

Along with the building materials, the company also decided to send some daily goods like toilet paper to make full use of the containers.

Wang says that the Ghana unit is the company's largest foreign branch, and accounts for more than one-third of its overseas sales. The Chinese company currently has a 60 percent market share in Ghana's ceramic tiles market.

To further maximize the economy of scale and supply chain efficiency, Sunda opened branches in Tanzania in 2005, and in Kenya and Cote d'Ivoire in 2009.

"Very few Chinese companies have expanded in such a big way in Africa. But it is this expansion that has given us our competitive edge," Wang says, adding that the branches in Kenya, and Cote d'Ivoire started making a profit in six months.

While many Chinese companies were focusing on trading in Africa, Sunda took the next step by creating its own brands in these markets, says Chen Guohai, dean of the Human Resources Department at the School of Management, Guangdong University of Foreign Studies.

Such a strategy made sense for Sunda, as these brands helped consolidate its presence in Africa, he says.

Having strong brands in overseas markets is one of the best ways that Chinese companies can improve competitiveness, says the year-end work review of the Ministry of Commerce.

The 2,551 foreign trade companies with brands, which made up less than 1 percent of the foreign trade companies in the country, accounted for 5 percent of commodity exports in 2011, it said. Exhibitors with brands forged orders 5.8 times more than those by companies without brands on average during the 113th session of the Canton Fair held in April and May, according to the ministry.

Sunda launched its own brands in African markets in 2011."It is relatively easier to create brands for fast moving consumer goods. We created brands that can withstand future competition, as initial advantages like lower price can disappear fast," Wang from Sunda says.

The company currently has brands for products such as diapers, napkins, washing powder, toilet paper and ceramic tiles, and also for building material and grocery stores.

In the future, Sunda would need to further subdivide the African markets for brand building and focus as an international company in terms of management, operation and human resources, Chen from Guangdong University says.

It has already expanded its reach in procurement, by selling tiles made in Spain and Italy, and is also considering sourcing products from countries such as India.

"China's position as a world manufacturing center will not be easily replaced but in certain categories of goods, we can source more competitive products from elsewhere," Wang says

At the same time, the company is also looking to move some manufacturing abroad, and has acquired land for building a washing powder factory in Ghana.

"Industrial relocation is set to happen but you need to master the tempo well. If you go too early, when the conditions for such a move, such as power and water supplies, are not available, you become a fallen pioneer," Wang says.

Villa construction is another area in which the company is expecting success in Africa. The first phase villas developed by the company in Ghana will be completed this year, he says.

Sunda has recorded sales growth in Africa of 20 percent to 30 percent in the past few years, and Wang expects the trend to continue for the next five years.

"Living standards in Africa are steadily improving and this creates greater demand and a stable investment environment," Wang says.

Sunda plans to set up operations in more African nations this year and also expand to South America next year. In Ghana, it employs more than 200 local people in managerial positions, and has more than 200 local workers in lower-level positions.

Having more local employees is part of the company's broad plan for Africa as it helps better manage differences in culture and customs, Wang says.

liwenfang@chinadaily.com.cn

(China Daily Africa Weekly 01/03/2014 page20)