Firm boosts Kenya links with China through trade fairs

After two years as an entrepreneur dealing in consumer goods, Mr James Kibathi decided to seek new source-markets in a bid to boost his profit margins.

Up to now, Dubai has been his sourcing point but the margins were not attractive.

For every shilling he invested he got a 50 cents in profits.

But the rising costs of doing business locally kept eating into Mr Kibathi’s profit margins.

This pushed him further east to China, in a bid to source affordable goods. Mr Kibathi is not alone, other entrepreneurs and business people have also turned to Far East Asia especially China.

According to the Economic Survey 2009, Asia dominated Kenya’s import in 2008 contributing to a significant change in the trade pattern. The value of imports from China increased from Sh45.7 billion to Sh 63.5 billion in 2008.

As Mr Kibathi turned to China, there was one big hurdle; he had never done business in a country which is much more complicated than Dubai, in terms of size and language barrier.

Through a newspaper advert, Mr Kibathi saw an opportunity to tour the far East for the China Import and Export fair in 2007, also known as the Canton Fair.

What he did not know was that the company advertising the fair, China Information and Culture Communication Kenya was formed as an initiative of the Chinese embassy to assist investors like him.

Mr Kibathi ranks among Kenyan businesspeople who have managed to work with ease in China as a result of the assistance of the company.

He was in the first group of 34 individuals who the company led to China in October 2007. 

Since then, Mr Kibathi has visited the China fair three times and he says his last visit eight months ago, the group had more than doubled.

However the growing demand for the service has forced the company to change their strategy. Initially the company targeted high end businesspeople for the fair.

Ideally they would network with over 350,000 other entrepreneurs who attended the fair and over 15,000 exhibitors for a fee of Sh135,000.

“Many small to medium entrepreneurs visited the embassy asking for referrals to companies they can trade with and logistic issues. We realised this market has more specific needs,” said Gao Wei managing director China Information and Culture Communication Kenya.

While the fair happens twice a year, Mr Gao introduced a package that caters for small entrepreneurs.

Now modest entrepreneurs can tour the far east four times a year. At a fee of Sh 99,000, they get a two way ticket and a two day tour of Guangzhou, five days personal shopping, cargo arrangements and eight days in three star hotel accommodation.

“Shipping is one of the challenges that entrepreneurs face while in new markets. Entrepreneurs give us their receipts and we pick goods from the various shops, inspect and ship to Mombasa,” said Mr Gao.

He added that since the company has a network in China, shipping is not a problem and is much more affordable compared to entrepreneurs operating by themselves.

Since language is the biggest barrier Kenyans face while in China, the China Information and Culture Communication Kenya also provides an English speaking tour guide.

However, Kenyan language training centres have registered a high demand for Chinese especially among business people.

Tourist destination
So far a total of 75 businesspeople have made their way to china since 2008. This one of the ways the Chinese embassy has sought to bolster its trade relation with Kenya. However, India is still the top source market for Kenya in the East.

Speaking to Business Daily, Mr Gao said many of the Kenyan traders source electronics, textile, motor bikes especially after duty was removed in the 2007/2008 budget, spare parts and fast moving consumer goods.

But the trade is not only one way. Some savvy Kenyans are now exporting goods and services to China. Such is the case of tour operators promoting Kenya as a tourism destination.

Already, the June trip to China is fully booked with 40 entrepreneurs. Several banks now have similar initiatives in the form of business clubs where they pick their best business clients to explore other markets.

For instance, Barclays club member pay Sh 1100 per month. Club members enjoy discounted air and accommodation rates and most of the bank clubs tours coincide with international trade fairs.