Sino-African e-commerce takes off

When Chinese foreign minister Wang Yi visited five African countries at the start of the year, the visit did not get half as much media attention as Facebook founder Mark Zuckerberg’s trip to Nigeria and Kenya last year. - See more at: http://africanbusinessmagazine.com/sectors/finance/sino-african-

With Africa’s IT innovations growing, it would probably create more hype if Jack Ma, founder of Chinese e-commerce giant Alibaba, kept his 2014 promise to Nigeria’s then minister of finance Ngozi Okonjo-Iweala to visit the country “soon”. Nevertheless, other Chinese web entrepreneurs are already heavily involved on the continent.

Fu Ruiqiang, who started his own Africa tour in February in Chad, before going on to Mali, Uganda and Kenya, is overseas department director at such an agency, Amanbo, launched in 2015 specifically for Sino-African cross-border trade. Amanbo is a business-to-business platform listing tens of thousands of companies supplying everything from construction items to mobile phones.

According to Fu, transactions in 2016 were worth nearly $200m. The briskest business is in Kenya, aided by Amanbo’s bilingual site in Swahili and Chinese, a showroom in Nairobi displaying over 5,000 products and its cooperation agreement with the Kenya National Chamber of Commerce.

Amanbo follows an “online + social + offline” business model. It boosts its business with offline offices in 10 countries – Kenya, Uganda, Egypt, Cameroon, Togo, Niger, Côte d’Ivoire, Sierra Leone, Burkina Faso and Mali.

The offices serve two purposes. They are showrooms displaying products on offer for buyers unwilling to place an order without seeing a physical specimen.

And since online transactions still pose problems on the continent, they handle payments as well. In 2017, Amanbo’s plan is to open branches in five more countries.

Fu says that’s the edge they have over Alibaba. “We are not just an online information platform like Alibaba,” he says. “We focus on person-to-person exchanges, supply the local offline office and showroom to display physical samples, [and provide] low transaction-cost, customised local service for our African users.”

Amanbo is run by Shenzhen Right Net Tech, a company headquartered in Shenzhen city, a financial hub in south China. It is the brainchild of its CEO Liao Xuhui, who ventured into e-commerce after doing trade in Africa for nearly two decades and is now looking at different ways to strengthen the African connection.

Amanbo established a Centre for China-Africa Sustainable Development in 2016 and intends to start entrepreneurship centres in Africa. In September, Amanbo hosted an annual importer-exporter meeting at the centre to bring African and Chinese businessmen together.

While Amanbo follows the business-to-business model, JMSA-Mall in Togo has adopted a business-to-consumer approach, promoting direct trade between African customers and sellers in China. “We want to be the pioneer in e-commerce in Togo and capitalise on the strong, multifaceted cooperation between China and Togo,” says Yuan Li, JMSA-Mall’s founder, who moved to Lomé when in his 20s.

The 38-year-old, whose company Sinocar sells China-made cars and motorcycles in Africa, including on JMSA-Mall, has offline offices in Togo, Benin, Ghana and Côte d’Ivoire. The plan is to set up showrooms in other African countries in the next two years.

Most of the platform’s registered users are from Togo and Côte d’Ivoire, and mobile phones, motorcycles and clothing are the articles it sells most. Between May 2016 and January 2017, about 9,000 orders were placed, Li says.

Such dedicated e-commerce platforms are used by both African and Chinese buyers and sellers. “More and more Chinese buyers are getting goods from Africa through us, such as agricultural products and African art,” says Fu. “Amanbo is a gateway to bring the African market and culture to the Chinese. For now, Chinese sellers outnumber buyers [with a 60-40 ratio] but we believe that one day, it will be more balanced.”

However, the e-commerce entrepreneurs have to brace for several challenges. An article posted on the Forum for China-Africa Cooperation last year emphasises the high internet security risk in Africa.

“African consumers lack confidence in online transactions due to the risks of false websites, internet viruses, personal information leaks, fake products as well as unauthorised online payments,” it says. “They traditionally prefer to shop in stores and making purchases through cash or debit payments which they deem safer.”

Poor infrastructure, unstable delivery and near-absence of e-payment methods, with low uptake of credit cards and e-banking, are the other barriers. Li says this is where localisation has paid off for his company.

While many e-commerce platforms are struggling over payments, JMSA-Mall accepts Flooz, the mobile payment available to Moov Benin handset customers, cash on delivery, and bank transfers.

Despite all the challenges, there is enormous potential once it all comes together. “Based on African population growth and demographic dividend, we can see the development potential of this huge market,” Fu says. “Africa made Amanbo, so we are going to grow in Africa and repay Africa.

We believe Africa will be the super engine of world economic development in the near future. We won’t focus just on China-Africa trading but build a bridge between the world and Africa. Any countries could [then] deal with Africa through Amanbo.”