According to the World Economic Forum, China is expected to have the largest economy in the world by 2030, just 10 years from now! Despite the undeniably negative toll that COVID-19 has had on the global economy, China’s diverse economy remains a huge global hub of profitable business opportunities and potential, especially for foreigners. How can you take advantage of the China’s economic rebound today and position yourself to participate in the largest economy in the world in the next century?
In this article, Africans on China shares with you 20 opportunity areas that Africans considering business in and with China can take advantage of. This article is segmented into three sections: The first is an overview of China’s current global economic outlook and why it has become the world’s new land of opportunity. The second is an introduction of China-Africa trade and economic relations. The third and final section will introduce you to 20 creative business opportunities and suggest practical ways to navigate the challenges and possibilities that surface within each industry.
CHINA: THE ‘ARISEN’ GLOBAL ECONOMIC GIANT AND BUSINESS DESTINATION
China has increasingly become an important factor in global economic progress. With a GDP of more than $13.37 trillion in 2018, China is currently the second-largest economy trailing after the US and is expected to account for about 20 percent of world GDP in 2050. The country has a population of 1.4 billion and has become the second-highest purchasing power parity globally. Four decades of transformative economic growth and development has made China a heavyweight in the global economy. The World Bank says that China has been the biggest contributor to global growth since the global financial crisis.
The East Asian economic giant is not only the world’s largest exporter, it is also the second largest importer of merchandise. HSBC found that there are 400 million young consumers in China and that not only is their spending power growing, but they are also increasingly interested in foreign brands. From agriculture sector to technology, pharmaceutical, tourism among other industries, China presents endless opportunities in its diversified thriving economic atmosphere. All fortune 500 companies like Apple, Microsoft, Nokia, etc have set up business extensions in China.
Major exports of China are electromechanical products and labor-intensive products like clothing, textiles, footwear, furniture, plastic products, bags, and toys. Electronic equipment, mineral fuels, oil, machinery, iron ore, copper aluminum, and soybeans are some of the country’s major imports. China’s leaders focus on the long term and large scale projects, making it a viable destination for potential investors. China ranked 78th in the World Bank’s ‘Ease of Doing Business Index 2018’, pints above the regional average for the East Asia & Pacific region.
CHINA-AFRICA TRADE AND ECONOMIC RELATIONS
In recent years, China has become the largest trading partner for most African countries, overtaking western partners like the USA. The trade volume between China and Africa has increased exponentially. China surpassed the United States as Africa’s largest trading partner in 2009. According to data from China-Africa Research Initiative (CARI) at the John Hopkins University, the value of China-Africa trade in 2018 was $185 billion, up from $155 billion in 2017. Per the same data in 2018, Angola is the largest exporter to China from Africa, followed by South Africa and the Republic of Congo.
In the same year, South Africa was the largest buyer of Chinese goods, followed by Nigeria and Egypt. This phenomenal growth of trade between China and Africa offers an opportunity to develop a new strategy to tap into China’s unique markets. CARI data revealed that from 2003 to 2018, China’s investment number into Africa surged from US$75 million in 2003 to US$5.4 billion in 2018. Since 2014, Chinese FDI flows to Africa have exceeded those from the U.S.. South Africa, Democratic Republic of Congo, Mozambique, Zambia, and Ethiopia were the top 5 African destinations of Chinese FDI in 2018.
It is important to note that Sino-Africa economic relations haven’t been a one-way street. Over the past few years, several African companies have also invested in the Chinese economy. By 2012, Africans had invested a cumulative $14.2 billion in China, a 43% increase from the $9.9 billion invested by 2009. The majority of the top African investors in China during that period were from Mauritius, South Africa, Seychelles, and Nigeria. It is well known that an African company, the South African Breweries (SABMiller), runs Snow beer, a popular Chinese beer brand as a joint venture with a Chinese firm, and produces many other popular Chinese beer brands as well.
The flourishing economic and trade relations between China and Africa, China’s increased global economic importance, and even more importantly, the ratification and the official launch of the African Continental Free Trade Area, makes thinking business with China now the right decision. Consequently, below are some of 20 of the best business ideas and opportunities to take advantage of especially at this time.
- Partnering to transfer China’s industrial capacity to Africa
With China’s “Going Out” policy, many Chinese enterprises and industries have ventured to invest and operate abroad, and most of them are looking towards Africa as their next destination. Since the majority of Africa’s imports are “Made in China’’, the market for these factories is already available. There is therefore a huge opportunity to partner with Chinese industries to begin manufacturing in African countries.
The constraint however is the opportunity for Africans to meet with Chinese companies looking for African partnerships. One suggestion is to engage with various industry associations in China and other African countries, by participating in their annual events. You can also attend China-Africa matchmaking and exhibition events like the China-Africa trade week organized annually by MIE events.
Watch out for Africans on China’s publications on avenues to find Chinese Business Partners. We will introduce you to several avenues to meet and negotiate business deals with potential Chinese companies and industries.
- Import and export Business
China is the largest exporter and importer of goods in the world with annual exports of $2 trillion and imports of around $1.6 trillion. This fact, therefore, makes it easier to build a profitable importing and exporting business. Moreover, China has become Africa’s largest trading partner, importing Africa crude oil, wood, among other raw materials. Africa on the other hand imports machinery, electronics, textile and apparel, tyres, automobile parts, stationery, perfumes, cosmetics, computer hardware, furniture, etc from China.
With this kind of active trade engagement between the two sides, it is safe to say that one of the easiest business ideas is to start import and export trade. You can source from China and sell in your country or sell African products to Chinese big companies.
- Provide English language services
The English teaching market is one of the biggest in China. All Chinese parents are willing to spend a lot on their children’s English learning education. There is therefore a huge demand for quality English tutoring services in different parts of China. Many Chinese professionals are also trying to increase their English-language skills as English is often the language spoken by business leaders around the world. You can therefore establish a school that teaches professionals how to speak English. Can you set up something virtually? Even better.
The high population of China, coupled with its massive manufacturing capacity makes it a destination in high demand for agriculture products like cocoa, cassava, hot paper, oilseed, peanut, corn, and soya beans among others. There are also opportunities to export the byproducts of some fruits/produce including banana peels, palm oil, corn oil, etc for the skincare industry. Many African countries and entrepreneurs have begun this endeavor.
5. Join the multi-billion dollar human hair business
Africa’s dry hair market — that is, the market for weaves, wigs and hair extensions — is currently worth over $6 billion a year and growing quite rapidly. With a 1.4 billion population and 50% being women, China presents a significant supply pool of human hair for the global market. Affordability of these hairs makes China a key player in Africa’s hair industry. The demand in Africa for ahir is huge. You can source from China to join this multi-billion dollar business of human hair.
6. Take advantage of online trading shops and platforms
There are opportunities to sell to Chinese consumers in China using e-commerce platforms such as Alibaba.com and JD.com that have a huge following in China. Online retail in China is one of the most advanced in the world. If you are internet savvy and especially resident in China, this is an opportunity for you to grab. An online platform will allow you to make agreements with manufacturers to get listed items on your site at a very cheap price. Join the online trading platforms now to make some good money.
7. Supply health or herbal supplements
Many Chinese middle-income populations have become health conscious and are not concerned about spending thousands and thousands of dollars on health and wellness. There is therefore an opportunity to export organic, natural, and healthy products. Africa is blessed in this regard. Moringa, African herbs, botanical herbal extracts, etc are health products you can deal in. Typical Chinese consumers think of ‘Made in Africa’ products in the sense of “wild, natural and culturally exotic”. African businesses can therefore position themselves in these lines to appeal to Chinese consumers.
8. Retail electronic products and accessories from China
China is one of the largest producers of electronic devices in the world, and most affordable electronic gadgets are made there. These electronic devices include but are definitely not limited to hones, memory cards, batteries, USB cords, MP3 players, LCD televisions, chargers, battery banks, phone casing. You may decide to deal in high-end items or go for affordable items that have a huge market, especially in African countries. You need to get business partners who can buy and supply these products.
9. Import/Export skincare and beauty products
There are wide ranges of affordable and depending on your budget, quality beauty products produced in China that you can retail to other countries or your home country. You can also export natural African skin care products to Chinese consumers. Chinese women have become more conscious of their appearance in general, presenting opportunities for cosmetics and skin-care companies. African raw organic Shea butter, oil shea butter, Aloe Vera Gel Shea Butter, raw black soaps, botanical herbal extracts butter can all be processed and easily penetrate the Chinese market, due to its good effect on the skin. All you need to do is convince yourself of the effectiveness of these products and why they differ from other skincare products from other parts of the world.
10. Invest in mobile phone and accessories
China is popularly known as the country that has revolutionized mobile phone production and cost, a place where one can always get mobile phones at cheap prices. Official data shows that Sh15.5 billion worth of Chinese phones were shipped into Kenya in 2015. Exporting smartphones from China is a no-brainer.
11. Direct Marketing
This is an opportunity for people with great communication, marketing, and business networking skills. There are thousands of business activities and transactions happening in China on a daily basis. This can be a very lucrative and profitable venture, especially for Africans in China with Mandarin speaking skills.
12. Start a freight forwarder business
The increased Sino-Africa trade makes freight forwarding business rewarding and lucrative. Who is a freight forwarder? Simply put, freight forwarders clear the movement of freight from one country to another, forwarding shipments through the legal requirements in each location, consulting on shipping arrangements and documentation. Freight forwarders typically ship freight under their bills of lading. They also perform assembly and consolidation services.
13. Become a Chinese manufacturing company representative in Africa
Many Chinese brands are looking for an opportunity to penetrate Africa’s 1.3 billion markets. You can get in touch with Chinese companies to sell and promote their products in Africa. Chinese companies, according to Jinghao Lu, project director at the ‘Sino Africa Centre of Excellence (SACE) Foundation’ particularly need legal, tax, human resources, marketing, communications, and public relations services from local organizations that have a better understanding of regulations and cultural issues.
14. Establish an export management company
With the astronomical increase in trade between China and Africa, it will be very profitable to start an export management firm. An EMC is an independent firm which facilitates the distribution of other firm’s goods to overseas markets.
15. Start an Africa-China Import and Export Consultancy
Import/export consultancy is a professional business opportunity that can be lucrative, even though daunting. Import/export consultants handle the complexities of importation and exportation. From legal issues to government policies, international business policies, trade restrictions, marketing and many others.
16. Export leather products to China
Depending on the access of raw materials in your home country, you can export leather into China to make finished goods, where manufacturing companies and skilled labor are in abundance and cost-effective. Or better still, you can partner with Chinese companies to set up manufacturing factories in your home country to produce leather products.
17. Establish a shipping company
With a busy trade environment between China and Africa, a shipping business service is a great option to consider. If you enjoy logistics work, pay attention to details, and have great networking skills, this could be a very lucrative business.
18. Go into clothes export business
China is a clothes production and manufacturing hub. Have a design idea you want manufactured in China or want to export made in Africa clothes into China? This would be a lucrative business as Chinese people get more exposed to African wear and look for more artisanal work.
19. Set-up a Tourism agency
China’s middle class is looking forward to improving quality time and spending their hard-won money discovering the world. The volume of international travel by Chinese travellers grew from 10 million in 2000 to nearly 100 million in 2013 to 68 million by 2016 and this figure is expected to reach 100 million by 2021. Getting these Chinese middle class to visit nice and wild places on the African continent is a gold mine. You only need to provide quality service and branding.
20. Export natural honey and bee products
In recent years, honey consumption in China has been ranked very high. There is a growing demand for honey and bee products in China. Known for its health value, the aging population, young and infant foods make honey to be in high demand. Many middle-to-high-income earners have increasingly developed a taste for food products that contain the honey ingredient. While niche, this could be a very lucrative business.
In conclusion, this article has among other things, introduced you to 20 well thought-through business opportunities you can consider with China as an African.
It is important to state that the biggest challenges for African enterprises doing business with China, particularly those engaged in import and export, include financial constraints, language and barriers and differences, timing, loyalty, and lack of trust.
In our upcoming resources, we shall introduce you to avenues to meet potential Chinese business partners. We will also talk about how to do business with China, including exposing you to the Chinese business culture.
Today, we are excited to announce our online mandarin course which is designed to introduce Africans in business or those planning to take advantage of some of the above business opportunities, to a solid foundation of Mandarin and Chinese culture for doing business in China. Please visit our website to read about this intimate, intensive course and register now.