African expansion to fuel competitive edge

Sinotruk plans to build five spare parts warehouses and service centers in South Africa, the Democratic Republic of Congo and Nigeria this year as part of efforts to keep pace with established European and American rivals.

The company already assembles medium-duty trucks in Nigeria, delivers lengthened chassis to Angola and ships heavy-duty trucks to Ghana. It has built a reputation for products that are competitively priced and easily serviced, including military off-road vehicles, trucks, passenger cars, minivans, engines and spare parts.

China National Heavy Duty Truck Group Co Ltd, known as Sinotruk, exported 12,470 trucks to Africa last year, up 13 percent year-on-year, thanks to growing demand in markets like Senegal, Angola, Benin, Mali, Niger, Ethiopia and South Africa.

Cai Dong, general manager, says continued foreign and domestic investment in infrastructure, energy and trade development will be vital to supporting economic growth in Africa over the next decade. The Chinese company is now looking to build an assembly line in East Africa.

According to the Beijing-based China Chamber of International Commerce, truck sales in Africa accounted for 17 percent of global sales last year, fueled by an infrastructure boom and a surge in demand for consumer goods and logistics.

Cai says it has not been easy to gain a foothold in these markets. Logistical issues such as ensuring spare parts reach customers on time and setting up an adequate number of after-sales offices posed difficulties early on.

Eager to establish a reputable brand image, the company initially shipped spare parts by high-cost air cargo via airports in Dubai or Qatar to various African markets. It also invested in regional service centers in major cities such as Lagos, Accra and Dar es Salaam.

"Government procurement is another important growth channel for Chinese automobile companies," Cai says. "In Africa, the biggest consumer is often the local government. If Chinese automakers get included in government procurements in Africa, they would stand to gain a lot.

"The majority of African nations are still in the early stages of economic development, and the strategic sectors of infrastructure services, transportation and logistics companies are under state control, which means when it comes to buying trucks, the government is one of the biggest customers."

However, this is easier said than done. To win a share of the government procurement market, Cai says Chinese companies will have to continue to increase their own strengths and credibility, as this will create an overall favorable impression.

To date, Sinotruk has built a global market network in more than 100 countries and regions, including 41 African nations. It has six overseas manufacturing facilities, including in Russia and Malaysia. Its African production bases are in Nigeria and Morocco.

Liu Wei, deputy general manager of Sinotruk, says the main competitors in Africa are European truck makers such as Sweden's Scania AB and Volvo Car Group, and Germany's Mercedes-Benz and MAN Group.

Many European trucks are secondhand and widely used in construction and logistics services, he adds.

Contact the writers at zhongnan@chinadaily.com.cn and huhaiyan@chinadaily.com.cn

(China Daily Africa Weekly 03/18/2016 page25)