The Chinese are building major roads in Africa, including Kenya’s Thika Road (above) while also gunning for key projects across the world. They are determined to change the corporate scene. File
At the final dinner of an international conference, an American delegate turned to the Chinese sitting next to him, pointed at his soup and asked somewhat condescendingly, “Likee soupee?” The Chinese nodded eagerly. A little later, it was “Likee fishee?” and “Likee meatee” and always the response was an affable nod.
At the end of the dinner the chairman of the conference introduced the guest speaker of the evening, none other than the Chinese gentleman who delivered a penetrating and witty discourse in impeccable English, much to the embarrassment of the American neighbour. When the speech was over the speaker turned to his neighbour and with a mischievous twinkle in his eye asked, “Likee speechee?”
Principal partner
So the Chinese are taking over the world. What else is new? They’ve taken over our roads — construction that is — and in the process taken over demand for vegetables in the supermarkets (Have you tried buying Chinese cabbage lately at your greengrocers? It’s impossible to find – but makes a great soup by the way!) They will eventually become our principal trading partner and bilateral donor for infrastructure projects, not only in Kenya but, quite likely, across the sub-Saharan region.
Their impact on business is global. In August 2010, Chinese carmaker Geely Holdings formally completed its deal to buy Sweden’s famous brand Volvo from the American auto giant Ford. Li Shufu, the chairman of both Geely Group and Volvo Car Corporation was quoted as saying “After the takeover, Geely remains Geely and Volvo is still Volvo. The relationship between the two companies is brotherhood and not a parent-and-child relationship.”
A man will say anything to woo his target. The European Wall Street Journal on June 7, 2011 gave the true picture of the partnership which consists of a struggle to reconcile different management styles and, more critically, diametrically opposed visions of Volvo’s future. Volvo is renowned for its singular dedication to production of safe, family-friendly vehicles and its management, upon takeover by the Chinese last year, were still committed to the vision of producing smaller, fuel efficient and safe cars.
But that was not what got Geely interested in the Swedish auto giant. Geely saw an opportunity to tap into the luxury car market using Volvo as its springboard into the Chinese rich consumer market that was buying up expensive automobiles faster than they could be manufactured.
Geely’s initial plans were to put up three Volvo assembly plants in China which plans met with a lot of resistance from Volvo’s Swedish executives who feared their new owner was adopting an aggressive and risky approach.
It’s less than a year since the Geely-Volvo nuptials took place and the jury is still out on whether the Chinese have the capacity to manage a global brand that is built less on volume and more on quality. Only time will tell.
And why should we watch and learn? Because in the next 10 years, your children will be as familiar with Chinese provinces as we currently are with American states. The Chinese have proved that they are bullish on doing business with Africa and its citizens and that they are constantly looking for new frontiers to break. We have witnessed the seismic wave entry of the Indian multinational Airtel which established itself in a domestic mass market. Why Kenya and Africa? Because Airtel understands the tricky but lucrative low margin, high volume business and how to deal with largely low-income populations that have a primary need to communicate and transfer cash.
The Chinese also understand markets driven by low margin and high volume. That is what they live and breathe. Our population within the region continues to grow, becomes more educated with the free primary education and the middle-class is expanding. These are prime signs of a ripening consumer market ready for picking.
So look to your left and look to your right. Who is providing you with electricity? Who is providing you with telephone services? Who owns the supermarket where you buy monthly consumables? Is Onyango, the furniture fundi (artisan) in Dagoretti, still making your sofas and beds for your kids? Does your chapati pan still get manufactured in the jua kali sheds of Gikomba? Close your eyes and savour this status quo. It might not be the same in the next 10 years.
The question is, are we ready to accept the inevitable? That the person seated across from us in the boardroom will not be from Europe or America as we are accustomed to? That our teleconferences may now take place earlier in the mornings rather than later in the afternoons to accommodate a GMT plus eight time zone and beyond? Will our schools change their curricula to have Mandarin as the obvious foreign language of choice rather than French?
Our corporate world is going to change. Not maybe, definitely. We will have to wake up to the fact that our future shareholders will be more focused on driving volume growth than protecting and organically growing a brand. Impossible, you say? Look at all the private equity funds sniffing about the Kenyan market for deals.
Their strategy is typically to exit in five to seven years after initial investment. Who will they sell their stakes to? John Smith &Co, the American firm that still believes Africa is one country made up of several provinces and which is constantly fighting and poverty stricken?
Or will it be to Li Kwan & Co from China, who sees how your business can be scaled up and is willing to drive that growth? So next time you are at a dinner table, pay close attention to your Chinese neighbour, he may be your next Chairman of the board.
