In the second part of the Business and Partnership Opportunities in China for Africans, we explore five more opportunities that African entrepreneurs and investors can take advantage of in the Chinese market. China’s large population makes it a naturally large market for nearly everything. The Chinese market is diverse, thus presenting multiple opportunities for entrepreneurs to explore. A good number of the avenues that exist for Africa-China business partnerships have not been explored. This article seeks to expose those areas and highlight the key benefits they present.
So we begin with number one in this episode…
E-Commerce and Digital Services
While Africa’s digital space is largely untapped, it may seem unnatural for African entrepreneurs to venture into the same area in the Chinese market. But there are good reasons why this appears top of this list. A while ago, the Chinese e-commerce market share was very small, accounting for just 1% of global sales. However, as of 2020, China’s market size which is twice that of the United States, commands 40% of global trade. The sector contributed 38% to the country’s GDP, dwarfing the global average of 18% with e-commerce retail surpassing the combined total of the US and EU.
Talk about growth and you are talking about China. The numbers work for retail, especially with B2C volumes expected to clock US$3,674.6 billion by 2027 from the US$2,733.1 billion value in 2022. While it is not easy for foreign investors to thrive so well in another country, Africans can take advantage of the cordial relationship between their respective countries and China to establish businesses in China. African nationals can also target partnerships to easily forge local acceptance.
More importantly, China remains Africa’s largest supplier of finished products while the Chinese door is also open for African imports into the country. This presents opportunities for Africans to establish e-commerce platforms and provide digital services that target trade between China and Africa. An African investment cannot beat Alibaba or AliExpress or Tmall but an African e-commerce platform that targets import and export between China and Africa will be a more relatable platform for both Africans and Chinese seeking to cross-trade.
Health and Pharmaceuticals
China’s population is one of the fastest ageing populations in modern history. That presents an increased demand for healthcare services and products. Coupled with the increasing disposable income, the health sector in China is more than open to investment. The population of Chinese expected to be in the retirement age by 2050 is 39%. The healthcare industry in China commanded 6.7% of GDP while demand for healthcare products is expected to grow by 11% by 2031. The prospects are very high when you consider the market size which as of 2021 was estimated to be over US$1.5 trillion with healthcare services estimated at US$1.24 trillion. It is expected to grow at a 9.6% CAGR between 2021 and 2027.
Again, this is not going to be an easy area for Africans to venture but securing the right partnerships with local investors and entrepreneurs will be a good start for Africans venturing into this area. Also, taking advantage of the 73.7 per cent internet penetration, African entrepreneurs could consider digital healthcare delivery in the Asian country. This coupled with advanced technology and artificial intelligence, African entrepreneurs could cut through in the Chinese healthcare market.
Another area in health Africans can consider is investment in Traditional Chinese Medicine, TCM. There is a global demand for TCM and the market is expected to grow at a CAGR of 7.45% between 2022 and 2028. The market will reach US$310628.44 million in 2028 from US$201825.3 million in 2022. Africans can look at sourcing TCM ingredients, developing TCM-inspired products or establishing TCM health facilities to serve local and international customers in China.
Tourism & Hospitality
The tourism and Hospitality industry in China is on the rise and the market in 2023 US$80.15 billion. It is expected to grow by an 8.12% CAGR between now and 2028 expanding the market size to US$118.42 billion. In 2018, Chinese tourists spent US$277.27 billion overseas, making for 21% of the global spending. That figure has since plummeted in subsequent years with 2021 seeing a significant dip that left it at US$105.69 billion. Regardless of the decreasing numbers which were also affected by COVID-19, Chinese tourists still command a huge outlay in overseas spending.
While Africa is not the top destination of the millions of Chinese outbound tourists, the continent can improve upon its numbers. In 2017, the continent received 797,800 Chinese tourists with Egypt, Morocco and South Africa among the top destinations. Efforts by African nations such as giving discounts on airfare to Chinese tourists as well as direct flights to the various countries. This has been spearheaded by Egypt, Tanzania, South Africa and Kenya. These are all laudable efforts by national governments to encourage Chinese outbound tourists to choose Africa. Chinese outbound tourists in 2019 were 155 million but most of those were to destinations apart from Africa.
So how is this an opportunity for Africans? Africans can take the opportunity to establish tourist information centres, booking centres and travel support services targeting Chinese seeking to explore Africa and Africans seeking to explore China. Tourism marketing services is a service in need if Africa wants to attract Chinese visitors. This can be purposely spearheaded by African entrepreneurs either targeting African and Chinese markets for nationals of the two parties or open to international customers. These services could offer tourism support services for Chinese outbound tourists.
Avenues for African entrepreneurs and investors include Wildlife Safaris and Nature Expeditions, Off-the-Beaten-Path Destinations, Sustainable Ecotourism Initiatives and Cultural Tourism. Africans could leverage the rich Chinese and African cultural calendars of festivals, carnivals and cultural events to attract prospects from both sides. This two-way service offering would provide room for innovation, integration and growth. Aside from the above, Africans could also consider investment in business and professional travel services, luxury travel and VIP services and MICE (Meetings, Incentives, Conferences and Exhibitions) such as corporate retreats and incentive trips for Chinese and African businesses.
As a way to implement, Africans can leverage partnerships with locals, exploring digital advantages and government support.
Entertainment and Media
China is the largest entertainment and media market after the United States. The estimated market value in 2023 was US$241 billion with an expected CAGR of 6.1% until 2027 according to Statista. The per capita expenses on cultural and entertainment was 2,469 yuan (approx. US$313) in 2022. That is about a third of the expenses on food and non-alcoholic beverages in the same year. These figures demonstrate that the ordinary Chinese spend a fortune on entertainment, thus an avenue to invest.
Considering that the Chinese entertainment and media industry is expected to remain higher than the global average of 3.5% CAGR and present a total revenue of US$479.9 billion by 2027, investment in the area is lucrative if well managed. Investment could segment the audience into two major categories; young and the ageing. With tailored content to meet targeted population segments, African entrepreneurs can stand a chance of breaking into the Chinese entertainment and media landscape.
Collaboration and investment by Africans could be targeted at co-productions of music videos, documentaries and movies showcasing both Chinese and African stories. Cultural narratives, folklore and myths through animations and virtual reality could also present interesting options for entrepreneurs. Africans can also look to establish joint ventures with Chinese production and distribution companies to co-create content and build distribution networks. Also, Africans can look to develop immersive augmented reality or virtual reality experiences showcasing African culture, wildlife, or historical sites for the Chinese market.
Digital Advertising
Last but not the least on our list is advertising. All the above areas when developed need to be marketed. One way to reach the targeted audience is through advertising. With China’s huge numbers and growing consumer tastes, advertising is a lucrative business that has numerous customers waiting to serve. From e-commerce to brick-and-mortar businesses, everyone needs to reach the diverse consumers in the Chinese market. The Chinese advertising market size in 2023 is S$213.40 billion.
Now considering the digital advertising space, it is expected to generate at least $173 billion, placing it as the second largest globally. Meanwhile, at least 81.5% of Chinese ad spend in 2022 went to digital advertising, the highest globally with the United Kingdom trailing with 77.2%, according to Insider Intelligence. This indicates how much Chinese businesses are investing in Digital Advertising. The numbers are expected to increase in the coming years with a CAGR of 7.19% through 2028 culminating in a total revenue of US$245.7 billion.
African investors have various penetration options including the provision of target niche advertising services that specializes in delivering to the African businesses in China or Chinese businesses in Africa. Also, African entrepreneurs and investors can target the development of mobile ad solutions, partner with Chinese influencers to promote Chinese and African businesses and develop specialized demand-side platforms (DSPs) or supply-side platforms (SSPs) to target African advertisers and publishers seeking to reach the Chinese market. Investors could also look to establish businesses and offer services that help to promote African businesses on Chinese marketplaces such as Alibaba through targeted advertising campaigns and social media marketing.
Conclusion
While this is not an exhaustive list, we believe the key themes in this list provide enough opportunities under each of them to help Africans who are seeking to venture into the Chinese market. Business opportunities evolve and this list may not be current by the time you are reading if you are accessing it at a very later date. However, we can guarantee that this is a foundational step towards your journey into starting in the Chinese market regardless of what year you are reading this.
If you have not read the first part of this series, do so to read part one of Business partnership opportunities for Africans and Chinese.
Editor’s Notes:
1. This is journalistic work aimed at helping Africans who aspire to start businesses in China. The list is by no means a statement of endorsement from any government or international business regulatory authority with oversight responsibility to the Chinese market.
2. If this list inspires you and you decide to venture into the Chinese market, consider that each country has its internal business operational laws. Seek to familiarize yourself with those laws and also do more research about the industry you intend to venture into.
3. Seek professional business and legal support from credible service providers if you ever wish to start a business in China after reading this list.
4. Your feedback is very crucial to our progress so we know how to serve you better. Kindly leave a comment under this post or send us an email using the details on the contact page with any concerns, clarifications or contributions you wish to make based on the content of this article.
