- Is Africa really hard to crack and a place to set up a booming business or there is a fundamental flaw in international firms strategy for Africa?
- Who’s better to ask than one of the richest men alive and China’s richest man, Jack Ma, Alibaba founder and Chief Executive, who in recent years has been crisscrossing the continent giving talks and
The script is always the same, a big foreign company would, with much fun fare, announce its entry to the world’s last frontier market and home to more than a billion people, Africa.
For days, they would treat government officials and media personalities to high life, busy selling them their companies’ vision and mission and promising them just how things would change now that the big boys are in the field.
However, after two years of continuous loss making they would quietly close down the business and exit the African market not with so much fun fare though this time around.
Who’s better to ask than one of the richest men alive and China’s richest man, Jack Ma, Alibaba founder and Chief Executive, who in recent years has been crisscrossing the continent giving talks and eyeing a piece of the African market.
Alibaba was founded in 1999 and since then has created more than 33 million jobs in China and delivers almost 65 million packages per day across the world.
#1. Think like a local company, act like a foreign company
Globalisation is great and has been instrumental in driving development in far flung areas which would have taken years to develop but as history has clearly shown, it has been exploitative to say the least.
Jack Ma agrees Africa’s relations with international firms have been exploitative in the past with Africa holding the shorter side of the stick.
“Globalisation in the past and for the past 30 years has been about getting cheaper labour cheaper costs, cheaper materials, the next 30 years globalisation will be powered and will be about creating jobs, enriching communities because cheaper labour and materials will no longer be sustainable.”
Jack Ma advices foreign firms to now change their strategy and begin thinking like local companies and with their deep pockets act like a foreign firm.
“If you go to another country you have to think like local companies, create jobs for local people, pay taxes to local people and enrich the local people. If you are a Chinese company, for instance, make sure your local customers are really happy and hire local people.”
#2. Complement, not compete, with local companies
Most international firms usually enter the African market with a bang and within a few years quietly exit the under-exploited African market because as Jack says their business strategy was not sustainable in the first place.
They want to make a quick kill instead of putting proper and sustainable systems in place which can ensure they not only thrive but their company’s social responsibility can go a long way in uplifting the lives of the locals.
“So if I come here wanting to set up my company I should be thinking what are the things that I can do here that local companies cannot do but must do, those are the things international companies setting bases in Africa should be doing but no one is doing.
By the way in this 21 century every company must think about three things they can sustain in their business model in order to thrive, the first is be inclusive second, sustainable and third happy and healthy, you must be a happy company in order to thrive in this era, these are the three rules of doing business in the 21 century and what every company ought to think about.”
#3. Hire the right talent not a clueless proud foreign boss
This is sadly the biggest and most common reason why foreign companies fail in Africa.
In their ignorance foreign companies CEOs while swinging in their leather seats inside their swanky offices in New york, London, Switzerland, Beijing, etc. normally appoint clueless and proud managers who are itching for ‘a little African adventure’ to come head their African offices.
Experienced African talent who have been in the space for long, know how to beat the system bureaucracy and always thinking and improvising on their feet are more than often cast aside and instead mediocre Africans who pose no threat to the new bosses, are put in leadership positions to ensure status quo is maintained.
Jack Ma says this is not only wrong but akin to shooting one’s foot.
“Many people come to me and say Jack but it is so difficult to do businesses in other countries like China, we never have a chance to do business in China, first I always tell them doing business anywhere in the world is difficult, doing business across nations is even more difficult, but for a start send the entrepreneurs’ there not professional managers.
Most of the professional managers’ people sent to African and other countries while there only strive to make their bosses happy and not the customers’ happy and that is where they go wrong,”
Jack Ma was speaking during a public lecture at the University of Nairobi on empowering African Young Entrepreneurs and small businesses.
He was in Africa for the first time as part of his ambassadorial role with the United Nations Conference on Trade and Development (UNCTAD).