China, Canada and EU
Some Challenges of China Considering doing business in China? Do you wonder how things there are done or perhaps not done? The development of China over the last 35 years has been absolutely impressive, from rice fields and “Mao uniforms” to iconic and remarkable skylines, international fashion shows and shopping malls. At first glance, Chinese cities look like any modern skyline and could, almost, be right here in the US. But beneath the glitter, it is far way and completely different from the US and has solid roots in 5,000 years of history… Read Full Article Here: https://worldquest.magtitan.com/magazine/issues/world-quest-issue-3/some-challenges-of-china-part-i Canada: Surprising Opportunity in the North How did you see 2016 for Canada’s economy and business environment? Stephen Armstrong: 2016 was a year of newfound momentum led by the Justin Trudeau Administration and his vision for Canada. We saw the country embrace new opportunities with Europe, foremost the Comprehensive Economic and Trade Agreement (CETA), as well as continued partnering with the United States to prepare for the incoming Trump Administration. Coming out of 2016 is a lot of positive momentum in Canada. There are great opportunities to utilize the country’s centers of innovation and the diversity of the Canadian workforce. Read Full Article Here: https://worldquest.magtitan.com/magazine/issues/world-quest-issue-3/canada-surprising-opportunity-in-the-north The European Union is on SHAKY GROUND – Can it Keep its Footing? What do you see as the biggest opportunities and biggest risks in 2017 for US businesses in Europe? 2017 is a crucial year for Europe, with many important political events happening throughout the year. The four founders of the European Community will likely have general elections before year-end. I believe this is the first time since the founding of the European Community that all four founding nations have elections in the same year. [Elections took place in The Netherlands in March; they will take place in France and Germany beginning in April and September respectively; and in Italy, elections are likely to occur before December 31st.] These elections drastically alter the political landscape because populist movements rising in these countries can either lead governments outright or have important roles in politics. This will, in turn, impact the business landscape. Obviously, it is never certain how new governments will behave towards foreign businesses looking to operate in their countries. Read Full Article Here: https://worldquest.magtitan.com/magazine/issues/world-quest-issue-3/the-european-union-is-on-shaky-ground-can-it-keep-its-footing
Brazil, China and India
Brazil Business Basics International expansion for any business small or large is a huge and costly undertaking on many levels. In March 2010, the U.S. Commercial Services Department sponsored an outbound mission to Brazil for U.S. companies looking to explore opportunities resulting from that country’s award of both the 2014 FIFA and 2016 Summer Olympic Games. My extensive marketing and sales background within the architectural, engineering and construction environment here in the U.S. equipped me with the knowledge of what infrastructure opportunities were arising as Brazil prepared for the Games. The following is a brief overview of the lessons learned during my subsequent three-year experience in developing international relationships and creating an economic bridge between the U.S. and Brazil. My first trip, with the U.S. Commercial Services, took me to São Paulo where we learned the World Cup opportunities and then to Rio de Janeiro where we learned about Olympics opportunities. Prior to my departure I had heard a lot of stories about Brazil and the dangers associated with crime within the favelas [slums]. In fact, when we arrived in São Paulo we were told not to leave the hotel and not to wander around by ourselves or even as a small group. That did not leave me with a very good impression for doing business in Brazil. Luckily, I had a very good Brazilian friend who traveled with me (otherwise I don’t believe that my husband would have let me go) and knew the country. She eased my concerns and ultimately I was able to enjoy. Read Full Article Here: https://worldquest.magtitan.com/magazine/issues/World-Quest-Magazine-8/brazil-business-basics Intro to India If you have decided to grow your business beyond U.S. borders, you have likely opened a map of the world to find a market with the greatest potential. China is likely the first market to draw your eye because of its size and sheer impact on global industries. But in fact, the best country for growth beyond the U.S. is India. Why India instead of the more popular trading partners such as Mexico and China? To start, India is the world’s fastest-growing large economy. That’s right — India is growing faster than China, Mexico and all of Europe. What drives this growth? Within 15 years, the Indian workforce will be larger than its Chinese counterpart…and stay younger with the world’s largest working-age population between 16 and 64 years old. This also amounts to a middle class that projected to be the largest in the world! With that information supporting India as the prime location for international business growth, your next question is probably how to start doing business there. Of course, the answer to that is to find a great partner in India — someone to work closely with on the development of your business and someone you can trust with the reputation of your company. To find the right partner, you will need help. Fortunately, the U.S. Department of Commerce offers some outstanding programs as a great resource. The first step is to contact your local District Export Council (DEC) at www.districtexportcouncil.org. Here you will connect with a group of business leaders appointed by the U.S. Secretary of Commerce with the goal of stimulating global trade with local business. Members of this organization work in various private sectors of business, large and small. Read Full Article Here: https://worldquest.magtitan.com/magazine/issues/World-Quest-Magazine-8/intro-to-india
China and Germany
Trials and Tribulations of Doing Business IN and WITH China The most common difficulties regarding business in China ultimately relate to differences between American and Chinese cultures as well as applications of business philosophy (US capitalism vs. the work environment of China’s State-Owned Enterprises). Of all the issues that arise, none is more important than cultural differences. These impact 100% of your interactions. Here are a few quick examples of culture clashes with the Chinese: Talent workplace deficiencies, Two separate business styles are bound to clash: China’s 5000 years of Confucian philosophy and top-down management which dictates instructions to employees versus U.S. individual-based accountability and a management style that engages and works with employees. One of our China clients did not allow for a one-week paid leave for an employee to attend a family gathering in a city far away. Such attendance is normal practice in China with its emphasis on the family and multi-generational, rather than nuclear, family units. The entire line of fellow employees working with that one leave-denied employee all quit with no notice. That was a huge cultural issue the American employer should have understood. Instead of emphasizing individualism, in China, collectivism and family importance are ingrained in the culture and must be understood. Read Full Article Here: https://worldquest.magtitan.com/magazine/issues/world-quest-magazine/trials-and-tribulations-of-doing-business-in-and-with-china Expanding Your Business Into Germany Quick! What descriptions come to mind spontaneously when you think about the entrepreneurial environment in Germany? Here are the most common answers when I do presentations: High Taxes Rigid Employment Laws. These assumptions, however, are no longer valid. For over a decade, Germany has made many efforts to become far more competitive. Among those measures is the fact that the overall tax rate for a GmbH, an entity like a Corporation, has dropped down to around 30% – 32%, depending on the municipality or city where the company is located. The above quoted rate includes corporate (Federal) and trade (local) tax. Regarding employment laws and while exceptions may apply, a new hire’s employment can be terminated within four weeks to the 15th or end of the month, as long as the firm employs not more than ten full-time persons. However, for all German firms termination time increases the longer an individual is with the company, i.e., after two years it is one month to the end of month, after five years it is two months to the end of a month. Another important fact is that normally every employment agreement has a probation clause. Read Full Article Here: https://worldquest.magtitan.com/magazine/issues/world-quest-magazine/expanding-your-business-into-germany
Why “Culture Shock” Isn’t
Many people assume that plunging into life in a new country – either on an extended visit or a long-term overseas assignment – can be difficult, surprising and confrontational, otherwise known as culture shock. This sounds like there will be a wave of negative experiences and emotions crashing on the shores of existence for expatriates (natives of one country living in another), doesn’t it? Let’s set the record straight on this: For cultural trainers who prepare people for life and work abroad as part of a global marketing initiative, the idea of a shock isn’t the best way to explain the transition between cultures. Here’s why: Calling the challenges of adjusting to a new and different environment a shock isn’t a concept which supports those who embark on the journey into foreign lands. By definition, a shock is “a sudden upsetting or surprising event or experience, which typically leaves the upset person with a feeling of disturbed surprise resulting from an upsetting event.” So, describing as a shock the irritation some expats feel when exposed to unfamiliar behaviors and social norms is a bit of an overstatement. I’ll admit: our team of trainers and coaches is guilty of having used the culture shock concept liberally in the past. And we have put an end to this practice. Instead, we choose to refer to this global-marketing process as adaptation and the acclimatization period. Often this adjustment time will be packed with experiences that are unusual or not “normal” (compared to the behavioral preferences in one’s home culture). Sometimes these encounters with the unfamiliar or “the other” may be a bit challenging or irritating. But let’s be real: they aren’t shocking. It’s also critical that the expat’s spouse receive the same adjustment and adaptation training as the assignee. Otherwise, marital tensions can easily explode, which often results in detrimental effects on the overseas work assignment. It is not uncommon for relationships to suffer or even to end abroad. And while children often adapt more easily, they too should absolutely receive some orientation to the new culture, its people and its norms – especially if they will be attending school in the new country. Humans are meaning-making machines; our brains have the ability to give any experience a certain meaning. Humans can also choose: We can make an upsetting encounter mean something negative and label it as “shocking.” We can also decide to make it mean something entirely different. For example, we can choose to delay the meaning-making until we better understand the behavior which seems so unfamiliar or even unacceptable at first. Sounds easier said than done, you say? Well, yes. However, robust cultural trainings and expat support programs create an awareness that the idea of “normal” behavior is an arbitrary concept. There are thousands, if not millions, of different sets of “normal” around the world. It’s up to us to decide whether the new “normal” is weird, or simply different. During their adaptation period, expats go through some exciting and inspiring as well as some demotivating and unpleasant phases. To label those ups and downs as shocking is missing the point – even though the emotional roller coaster ride can sometimes be a bit wilder than that in the home culture. Let’s look at the peaks and valleys, and the trips in between, that both partners and children can experience: First, there is the honeymoon period, which happens during the beginning of a foreign assignment. It’s often perceived as overwhelmingly positive: expats and their families become infatuated with their new surroundings, the language, the people and the food. Every honeymoon ends. That’s when an initial wave of frustration crashes down upon foreign assignees – and the family. Navigating daily life in a foreign language is draining. Establishing routines at the new location takes time. Everyday tasks require conscious decision making; life doesn’t happen on autopilot. Small events such as losing keys, missing the bus or being unable to easily order food in a restaurant can trigger frustration. As expats and families begin to establish new routines abroad, they develop feelings of accomplishment. They try out new things, explore new places, rediscover their curiosity for the host location. Thus, expats feel they’ve adapted well. For example, they learn how the transport system works, and they no longer need a GPS to navigate around the area. Many transferees experience another frustration period which can be even more taxing than the first one. This often happens around six to nine months into the assignment. And it comes as a huge surprise to those who go through it. At this point expats and their families assume their adjustment is complete, with all the initial struggles behind them. However, it is typically at this juncture that the deeper differences between home culture and host-country culture become apparent. Up to this point, they only had to handle the various do’s & don’ts of the new environment. Now the underlying whys of unfamiliar behaviors begin to surface. The beliefs and value systems in the host culture become clearer and sometimes this leads to expats’ feelings of disappointment, mental isolation, stress, and even anger. “Why am I here?” or “Why did you accept this position?” are questions that can come up. In an ideal world, this would be the best time to take a short vacation. Their instincts will tell expats to go back to their home country to visit friends and family. Our recommendation is to go anywhere but home. This would only amplify the issue. Instead, we advise transferees and their families to travel to a new location — one where yet another language is spoken and where climate, infrastructure, topography, and culture are different from home and from the host location. This simple trick will provide another perspective. And when expats return from that trip to enter their expat house, in their expat country, in their expat city, it will feel to them more like coming home. Let me invite you to engage your meaning-making
Go Global: Tips to Localizing Your Market for the Global Marketing
International Localization for Global Businesses International Localization refers to the adaptation of a product, application or document content to meet the language, cultural and other requirements of a specific target market at a global level. No matter how prepared you are for a marketing campaign, failing to reach your target audience can lead to your demise. This ability to resonate starts with the translation of your message throughout your campaign. Whether it’s a difference in culture or language, it’s essential to provide content and services that translate internationally. Avoid Getting Lost in Translation International Localization means staying on target. Your online presence needs to translate correctly and efficiently. For example, you don’t want to face the embarrassing consequences of your slogan or pitch suffering in translation. A little effort goes a long way to achieving your ideal results. It’s vital that you familiarize yourself with who you’re talking to. Make sure that your translation doesn’t turn your audience off by making a cultural misstep. Set up shop locally where there is the opportunity or sell through e-markets. These are other options to localize your business within international markets. If you choose to be a vendor on different platforms, such as eBay and Etsy, the currency conversions will be done for you. However, make sure you don’t use the basic platform-translation features available. Translating correctly is a very difficult skill that requires knowledge of local customs – especially for B2C foods, clothing, household goods, and other daily-use products — as well as a broad base of terminology. A mistake in a local translation can lead to more than just embarrassment. See some of the translation bloopers we have discovered. You’re most likely focusing on specific regions around the globe because they have already shown interest in your product. By taking the necessary steps to set up localized marketing materials, you can quickly assimilate your business into the culture. This will help you to understand your target market on a more personal level and ensure your marketing is on point. Familiarize Yourself with Trends When you set up shop abroad, take advantage of any local presence you have to analyze what is trending in that country. By knowing the particularities of your target region, you’ll have a better idea of what speaks to this audience. After doing some research, you can shape your business and campaigns around the vibe and voice that your target market wants to hear. It’s crucial to understand your market by localization to achieve international marketing success. International Localization: Getting Started By implementing these factors we’ve covered and consulting with a professional, you’ll be able to better relate to your international target market and capitalize on the global marketplace. Ready to get started? We’re here to help! Contact us today for a consultation regarding your next global marketing campaign. Auerbach International helps expand businesses into countries and cultures through global marketing strategies and professional translations into 80+ languages World-Quest MarketingTMCountries. Strategies. Cultural Cues. Translations-Express!TM 80 Languages. Always Fast. Culturally Correct. Always Accurate.
Latin America Opportunities abound for US Businesses
As a global outreach firm, Auerbach International is both a premier language agency and a world marketing consultancy (research, strategies, cultures and skills to penetrate overseas markets). This article sheds some light on opportunities to help you expand your business. Eager buyers of US products Did you know that there is an entire continent eager to buy US goods and services right next to you? According to the US Census Bureau, the US has kept a positive trade balance with South and Central American countries for many years. This means the region buys more goods and services from the US than they sell to it. What’s more, American exports to the region have grown 8% per year, for the past 30 years! The top ten US exports to South America are auto parts, medical equipment and supplies, paper and wood pulp, fabrics, and chemicals, plastics and resins. However, opportunities are not limited to these industries and the right partner can help you identify potential buyers regardless of the business you are in. Investment Opportunities Latin American countries are not just attractive export markets; they can offer great opportunities for investment as well. Several Latin American countries feature in the United Nations Conference on Trade and Development’s ranking of most profitable destinations for foreign investments, with returns ranging from 12 to 27%. Unlike many other countries such as Nigeria, Angola or Kazakhstan that also feature in the list, Latin American countries are quite safe, their people are friendly towards North Americans, they operate in essentially the same time zones, and are just a short flight away. Keys to Achieving Latin America Business Goals Understand the diversity “Latin America” doesn’t really exist as a single, homogenous entity. Latin America begins south of the US at the border with Mexico and extends all the way down to the southern tip of the continent where Argentina and Chile share a border close to Antarctica. Latin America and Caribbean region consist of 33 countries. And while most share a common history and cultural institutions, they have significant differences in economic development, ethnic composition, cuisine, cultures and attitudes. Don’t assume that everyone eats tacos and tortillas, as this can come off as silly, or taken as offensive. In some countries, such as Argentina, showing off and being aggressive and vocal about your achievements is the norm. In other countries, modesty is more highly valued. You will need to adapt your message and your behavior accordingly. Adapt your language to the local dialect There are substantial differences between the Spanish as spoken in Spain and the Latin American dialects. For instance, the verb “coger” is extremely common in everyday European Spanish and means “to take” or “to grab”. The same word in Latin America means “to fuck”. The potential for misunderstanding or embarrassment is obvious. In addition to the differences between European and Latin American Spanish, each country in Latin America speaks its own variety of Spanish and the differences can be substantial. For instance, in Mexico the usual 2nd person pronoun (i.e. “you”) is “tú”, while countries in both Central America (Guatemala, Honduras) and South America (Argentina, Paraguay) use a completely different one (“vos”). In these countries, the use of “tú” can sound awkward and artificial. How would you react to a sales pitch that addressed you as “thou” or “thee”? The story with pronouns does not end there. In Spain, the most common 2nd person plural pronoun (i.e. “you” when addressing more than one person”) is “vosotros”. That word is not used at all in Latin America, and “ustedes” is preferred across all countries, regardless of whether the singular version is “tú” or “vos”. Find the right partner Institutions tend to be weak across Latin America, and this applies to both the government and corporate sectors. Official channels can be very ineffective, while personal relationships can work like magic. Latin Americans rely heavily on interpersonal relationships, and finding the right people is the best way to achieve anything. It helps a lot when you are being introduced by a mutual acquaintance or someone respected by your counterpart, as Latin Americans prefer to do business with those they know and trust. Auerbach International’s professionals have an extensive contact network that includes senior executives and respected businessmen in all the major Latin American markets, as well as the business knowledge and cultural sensitivity required to help you achieve your goals. Please contact us to discuss them. About the Author David Gonzalez is an expert in international business and investment. He has worked in the US and Latin America. He has experience in Agriculture, Health Foods, Oil & Gas, Telecoms and Real Estate. David is a former Fulbright Scholar and he holds an MBA in Finance and Global Management from Emory University. You can contact him through Auerbach International.
The Final Frontier: Success Strategies – Part 4
STATS RECAP In a continent of over 30 million km2 and with a potential customer base of over 1.1 billion people, over 50% of Africa’s population less than 20 years old. Africa is home to over 100,000 millionaires and several billionaires, with a lot more people destined to be millionaires in the coming years. SUCCESS STRATEGIES Africa is not one country. Don’t treat it as such. Africa is a continent, not a country! It is made up of 54 independent and diverse nations. For example, Nigeria has a population of over 160 million while Djibouti has less than 1 million. The GDP of South Africa is over $400 billion while Guinea-Bissau has a GDP of about $1 billion. There are huge differences in culture, language, business practices and economic opportunities among African countries. It’s important to treat them as distinct entities and to be clear about the specific countries in Africa you wish to invest in. Design for Africa (Not customize for Africa). A key strategy for success in Africa is to treat it as its own market, not as a subset of another market. A number of companies have failed because they take their products from the west and then customize them to the African market. A better solution is to understand the specific market in Africa you are interested in and design products for that market. For example in the mobile phone category, one of the bestselling mobile phones in sub-Saharan Africa is the Nokia torchlight model. The phone is quite basic but it comes with a flashlight and has long battery life – perfectly suited for regions that have limited power supply. Be clear about what you will do and will not do. Before you start any business in Africa be very clear about your business values, your target customers and how you intend to operate. This will guide you in tough times when your limits are tested. Several potentially viable alternative opportunities will be great in themselves. Having a clear sense of focus will help you make decisions that will help you achieve your goals. This does not mean to reject new opportunities. However, it does mean that you should have a guiding principle that helps you filter through opportunities that come your way. Relationships matter a lot. Relationships make or break you in Africa. Africans will go the extra mile if they have a strong relationship with you. However, you need to be very selective in choosing whom to build relationships with, since the quality of your relationship will determine what transactions you gain access to. Establishing well conceived relationships with African elites who have a decent and verifiable track record will definitely be a plus for your business. However, you will want to shy away from moneybags who have very questionable characters and reputations. The middle class is elusive. Target either the high end or the mass market. The middle class in Africa is very tricky for foreign investors. They are either over- serviced by existing players in the market, with stiff competition, or they just do not exist. Most countries are segmented into high end and mass market. New foreign entrants stand a better chance if they target the luxury segment with premium/ luxury brands (such as Porsche in Nigeria) or the mass-market segment with affordable products (a number of Chinese products in Africa). CONCLUSION Doing business in Africa can be an investor’s dream with the huge market size, untapped opportunities, customers’ appreciation for foreign brands and the favorable regulatory conditions designed to attract foreign investors. However, that dream can only come true when an investor goes into the continent with a solid game plan for mitigating the challenges and taking advantage of the numerous opportunities. Africa awaits you. ABOUT THE AUTHOR Tunde (“Tun-day”) Ladipo is a consultant and an adviser to African Governments and the Private Sector on economic and investment issues. He has worked extensively in Africa, the US and Europe. He has experience in Extractives (Oil & Gas), Financial and Retail Services. Tunde holds an MBA and Masters of Engineering Management. He can be contacted through Auerbach International.
The Final Frontier: The Challenges of Doing Business in Africa – Part 3
STATS RECAP In a continent of over 30 million km2 and with a potential customer base of over 1.1 billion people, over 50% of Africa’s population less than 20 years old. Africa is home to over 100,000 millionaires and several billionaires, with a lot more people destined to be millionaires in the coming years. CHALLENGES Although filled with opportunities, Africa comes with several challenges. Four are most pertinent for foreign investors: Infrastructural challenges (Power & Transportation) The first is lack of an adequate road network between key locations. Transportation can add up to 30% to the total cost of doing business. Currently, however, aggressive road construction projects are going on in most parts of Africa. Insufficient electric power is also being remedied on many fronts. Most recently, President Obama committed US $7 billion of public funds to be combined with another US $9 billion from the private sector under his Power Africa initiative to boost electricity. Corruption Corruption is a fact of life that every investor in Africa must deal with. So, be prepared. Corruption comes in various forms — from Government officials seeking a bribe for services they are employed to render to sharp practices among business partners trying to get a buck or two from you. For the first time investor to Africa, these acts could be unnerving. Corruption could increase your operating costs by up to 20% and throw your financial projections into disarray. However, all challenges have solutions. First, bear in mind that like in marriage and dance, it takes two to tango. So, if you are resolved not to give, no one can extract a bribe from you. True, there might be repercussions like needless delays, exclusion from certain transactions, and being forced to go through official bureaucratic (rather than shortcut) channels. However, if you choose to operate ethically at all times, you will be respected for your integrity in the long run. But remember that refusal to be involved in any form of bribery does not preclude you from giving a tip for good quality service, when it is deserved, just as you would do in other parts of the world. Second, advance research and preparation help. Knowing what the official process is and what it costs help to minimize the likelihood that you will be involved in corrupt practices. Part of your research should entail getting a reputable attorney who is knowledgeable in your planned field of investment. Third, build a strong in-country network quickly, and preferably with Africans who have lived in your country before and who understand both sides of the fence. They will be extremely helpful in helping you navigate some tricky situations. Begin your networking from your home country so you have a good head start. Finally, the US Foreign Corrupt Practices Act and the European Anti-Corruption Law and the Foreign Corrupt Practices Act (FCPA) officially prohibit companies from engaging in bribery abroad. Their usefulness is very situation-dependent but in general, companies can use these acts to justify not engaging in unethical practices. China China is gaining inroads into Africa, in several cases edging out long-standing US and European companies. Why is this happening? Possibly the Chinese changed the rules of the game, from seeing Africa as an aid destination to seeing it as a trade partner; as a child needing guidance with rules and regulations to seeing Africa as an adult that makes its own rules; and as one homogenous entity to seeing it as different countries with unique situations. Yes, some Chinese practices in Africa and worldwide fall short in terms of fair play and business ethics. But it is also undeniable that they have worked in expanding China and Chinese business footprint in Africa. US companies can learn a thing or two from the Chinese to beat them in their game in Africa: Business is a team sport. Chinese businesses did not come to Africa alone; they came with their government support and funding. Beijing mobilizes its vast state financial resources to invest broadly in infrastructure projects across Africa and extract natural resources in return, with the added benefit of opening business opportunities for Chinese companies.US businesses can develop closer partnerships with US government agencies already in Africa. For example, agencies such as US Agency for International Development (USAID) need to provide more support to US businesses to aid them in investing in Africa. Change the game; Don’t play someone else’s game. In Africa, the US and the EU are perceived as having high standards in terms of products and services, while the Chinese are perceived as the very opposite, i.e., cheap mass-market products. Given that the African market is segmented along the lines of rich and mass market, western companies should ideally target the high end of the market both for services and products. Wholehearted commitment required. The Chinese are doing well in Africa because they see Africa as an integral part of their strategy, not just a fringe concern. They want to invest in everything in Africa from roads to the pen for signing the road contract. By contrast, the US directs only 1 percent its worldwide foreign direct investment to Africa, and half of that is in extractive industries. So clearly US companies need to show more commitment; you can’t win halfheartedly. As a global outreach firm, Auerbach International is both a premier language agency and a world marketing consultancy (research, strategies, cultures and skills to penetrate overseas markets). This series on Africa presents unfamiliar ways to help you expand your business. Part 1 presented Opportunities. Part 2 presented Challenges. This part presents challenges. Companies that have done so have often reaped enormous profits because competitors are relatively scarce.
The Final Frontier: IT Opportunities in Africa – Part 2
As a global outreach firm, Auerbach International is both a premier language agency and a world marketing consultancy (research, strategies, cultures and skills to penetrate overseas markets). This series on Africa presents unfamiliar markets to help you expand your business. Part 1 presented Non-IT Opportunities. Part 3 will present Challenges and Part 4 will present Success Strategies. STATS RECAP In a continent of over 30 million km2 and with a potential customer base of over 1.1 billion people, over 50% of Africa’s population is under 20 years old. Africa is home to over 100,000 millionaires and several billionaires, with a lot more people destined to be millionaires in the coming years. INFORMATION TECHNOLOGY OPPORTUNITIES The Economist in its May 2000 issue described Africa as the “hopeless continent”. Fast forward eleven years to December 2011. The Economist described the same continent as a “hopeful continent”. How time changes. During this period, many factors have transformed Africa, among the most significant of which is communication. From digital to mobile, communication has grown in leaps and bounds across the continent. Internet connection has ballooned from about 4.5 million users in 2000 to over 167 million users in 2012. Mobile phones are even more prevalent with a penetration of about 80%. Close to 800 million Africans now have mobile phones and over 52 million are on Facebook. No wonder The Economist now uses the term “Africa Rising”. Money transfers From being a laggard in the mobile space, Africa has leapfrogged the world in many ways. The most obvious is mobile payments. And the most developed mobile payment system in the world is Kenya’s M-Pesa. This system allows users with a national ID card or passport to deposit, withdraw, and transfer money easily with a mobile device. M-Pesa has over 25 million users in East Africa, and the concept has been successfully replicated in other parts of the world such as Afghanistan and India. South Africa, Nigeria and Ghana are all in various stages of the mobile-payment revolution and within 15 years, the continent will be the world leader in this banking technology. Apps Beyond mobile payments, the continent is also riding the global craze for apps. Several African grown apps are emerging, targeting and solving problems such as poor access to quality education and infrastructural challenges. Some of the most innovative solutions are: Obami, a social media platform that lets people create or join learning communities. It marries the concept of social networking with e-learning, to bring about “social learning,” enabling educators and students to connect digitally, and share and access educational resources. Jumia, known to many as the “African Amazon,” offers cash-on-delivery in the populous Nigerian cities of Lagos and Abuja. Ordered online or via mobile phone, the products are delivered by motorcycle couriers to buyers’ homes or businesses where cash is then collected. iROKOtv. The Nigerian movie industry, Nollywood, is surpassed only by Hollywood (US) and Bollywood (India). iROKOtv brings Nollywood to the world via mobile apps and it is currently the world’s largest online distributor of African content. Western clones Africa has also been busy cloning western applications, and customizing them to suit the African market. Some examples are: NikoHapa (“I am here” in Swahili). Foursquare’s African cousin is a social-location app allowing users to discover new locations and connect with friends. It also acts as a loyalty program by rewarding users who visit certain establishments often. mPawa, a sort of automated LinkedIn, matches employers with potential employees via skills and experience. It’s also SMS-based, which is ideal given that much of Africa is mobile. Kopo Kopo, a combination of Square and Intuit, enables small and medium enterprises (SMEs) to accept, process and manage mobile money payments (e.g. Safaricom, M-Pesa, and Airtel Money). The African innovative spirit is constantly kept alive by an ever growing number of innovation hubs springing up across the continent from Kenya to South Africa. One notable innovation initiative is the recently-launched Startup Bus (http://africa.startupbus.com/), a 30-man, five-day bus ride from Harare in Zimbabwe to Cape Town in South Africa. The goal of Startup Bus is to launch several business start-ups by the time the passengers finish the journey. Several innovative companies such as Microsoft, Google, IBM and HP have set up offices in Africa to ride this wave of technological innovation. Indeed, the world anticipates the next major wave of innovation will come out of “Africa Arising.”
The Final Frontier: Non-IT Opportunities in Africa – Part 1
THE FINAL FRONTIER: DOING BUSINESS IN AFRICA As a global outreach firm, Auerbach International is both a premier language agency and a world marketing consultancy (research, strategies, cultures and skills to penetrate overseas markets). This series presents unfamiliar opportunities to help you expand your business. Does your business need a boost? Are you looking for new growth markets, where you can make double digit returns? Investors like you have found a region that fits the bill. This region is as big as the USA, China and the European Union combined (over 30 million km2), with a potential customer base of over 1.1 billion people and over 50% of the population less than 20 years old. This is home to over 100,000 millionaires and several billionaires, with a lot more people destined to be millionaires in the coming years. This region is Africa – but not the Africa of occasional coups, wars and strife that fill the news. The less known news is that African countries are typically very open to foreign investors who can benefit from tax waivers and trade incentives that are not so readily available to foreigners in other countries. OPPORTUNITIES Africa has several relatively untapped high growth opportunities including: Agriculture Agriculture has been the traditional mainstay of Africa albeit a subsistence one. The continent is gradually waking up to modernized farming methods and ramping up its food production. Several African governments grant waivers and incentives for processing agriculture produce with the objective of significantly increasing their value in the world market. Furthermore, these governments are working aggressively to provide power at a competitive rate to these processors. Retail The increase in purchasing power among consumers has resulted in significant increase in shopping online and in brick-and-mortar stores. Africans generally appreciate the good things of life and place premium on foreign brands. Natural resources Africa has an abundance of minerals – Gold, bauxite, cobalt, diamonds, phosphate rocks, platinum-group metals (PGM), vermiculite, zirconium etc. In addition, the continent is blessed with huge oil and gas reserves with a number of large oil producers in countries like Nigeria and Angola. Recently, crude oil in commercial quantities has been discovered in several countries such as Ghana and Uganda. Services The service industry is picking up in Africa. Several countries are specializing and building niche markets where they can compete effectively. For example, Gambia is focused on tourism, while Nigeria is modernizing its banking and other financial services. TO BE CONTINUED… Future parts of this series will present IT Opportunities, Challenges and Success Strategies. ABOUT THE AUTHOR Tunde Ladipo is a consultant and an adviser to African Governments and the Private Sector on economic and investment issues. He has worked extensively in Africa, the US and Europe. He has experience in Extractives (Oil & Gas), Financial and Retail Services. Tunde holds an MBA and Masters of Engineering Management. You can contact him through Auerbach International.