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But Chinese brands are not far behind. In fact, if one considers B2B (business-to-business) transactions, they seem to be way ahead of their Indian counterparts, to the extent that China is Africa’s third-largest trade partner, after US and former colonial power France. A report by China’s General Administration of Customs says that bilateral trade between China and Africa will exceed $100-billion by end of 2008, two years earlier than predicted. The trend can be attributed to rising shipments of natural resources to China, especially crude oil, metals and minerals. In the city of Rwanda, for example up to 80% of all new roads have been built by Chinese money. In fact, during the first half of 2008, exports to Africa from China rose 40% to $23-billion (Chinese Customs Authority). On the flip side however, over 70% of Chinese investments are concentrated in just about four countries that include Angola, Nigeria, Ethiopia and Sudan.

So why has Africa suddenly become hot for Indian and Chinese brands? Says Saurabh Nanda, Executive Director, Nature’s Essence, an ayurvedic and natural product company from India, successfully operating in South Africa, “The uniqueness of the African market lies in its quick acceptance of new product categories, which is rarely seen in other communities.” Agrees Sudip Bandyopadhyay, CEO, Reliance Money, “Even the financial services market is under developed and the opportunity is significant.” Sood however cautions, “Private capital will flow where opportunities appear. But they cannot succeed without good governance in the long run.”

Moreover, fuelling their growth at home, China and India are also desperate for new markets to sell goods. And Africa is the perfect destination. Further, the two countries must find more raw materials to fuel their boom and Africa suddenly pops up on their radar. China, which accounts for a fifth of the world’s population, has seen its oil consumption rise 35-fold in the past decade and it’s Africa that is now providing a third of it – a reason why state owned companies like CNPC, China Exim Bank, CNOOC, COBEC and Sinosteel are present there.

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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