5 steps to planning a business trip to China

By Fredrik Grönkvist

So, you’ve found a couple of suppliers online and want to find out if they are everything they claim to be. That’s a good first step.

But, boarding the next flight to China, with a list of three random suppliers you found online, is most often a complete waste of both time and money.

In this article, I explain how you need to prepare yourself before your business trip to China, and what to should look for while you’re there.

#1: Is the supplier able to show compliance with product regulations in your country?

In most industries, less than 5% of the suppliers are able to show previous compliance with American, European and Australian product regulations and standards. Assuming you don’t verify their compliance prior to your visit, you’ll waste a lot of time visiting suppliers that are neither willing nor technically capable of complying with the relevant standards.

Besides, compliant suppliers tend to be above average in other aspects. Apart from the obvious legal requirements, I also consider compliance a strong indication of the supplier’s technical expertise.

#2: Schedule meetings with as many suppliers as possible

All manufacturers are not equal. Expect at least 50% of them to not be what you expect. It’s bad out there. I’ve been taken to factories that have not been operational for months. Factories that would barely pass for junkyards.

I can even recall one really weird situation a couple of years ago, in Xuzhou, when I was taken to the same factory twice in the same day. First in the morning, when a representative of a Trading Company took me there. The second time in the afternoon, when the actual owner of the factory picked me up.

It felt quite awkward to tell the boss that I had already visited their factory earlier that day. Not to mention that I wasted my entire afternoon. Not that there’s much else to do in Xuzhou…

The lesson here is that you’ll return home empty handed if you visit one or two random suppliers. It’s not enough. Schedule visits with at least five or six suppliers, and list a handful of backup suppliers – in case the first round fails to live up to expectations.

#3: Make yourself familiar with the geography

China is a big country, with hundreds of industrial clusters on the east coast. If you’re lucky, you can limit your visit to a single city. Certain industries are in fact concentrated to single cities, such as Shenzhen. However, in other industries, suppliers are scattered all over a province – or even the entire east coast.

First of all, you need to make a traveling plan. Getting to China is easy, and there are direct flights to major cities such as Shanghai, Hong Kong, Shenzhen, Guangzhou and Beijing. But most suppliers are not located in these cities (with the exception of Shenzhen). Instead, you are likely to find yourself spending time provisional cities like Taizhou, Foshan, Dongguan and Changzhou.

Getting there is not that much of a hassle though, thanks to China’s high speed train network. You can get to basically any city on the east coast by train. And that’s about as far as you need to get on your own. Any supplier worthwhile visiting will take you from there to their factory by car.

#4: Confirm the suppliers factory address

It’s common that suppliers, even those who are manufacturers, trade products supplied by subcontractors. It’s not always a bad thing though, but I prefer to be aware of such arrangements before I make my way to whatever village the supplier is located in.

All Chinese companies have a registered address. If the supplier is actually manufacturing the products, the factory should be located at the same address as specified on their Business License. There are exceptions, but this is the general rule.

If the supplier brings you to another address, they are probably taking you to a factory that’s not theirs. But then again, sub-contracting is not always a bad thing. What’s important is that you make your supplier understand that they are going to be held liable for defective products. This is a relatively small issue when dealing with qualified and organized manufacturers, that are in turn outsourcing certain products to sub-contractors. They have assets, and it’s not so easy for them to “disappear” in case things turn out bad.

But that doesn’t apply to smaller trading companies, that consist of little more than an a small office and a few employees. Apart from old laptops and dusty product samples, these companies have no assets. They can’t afford to compensate you if they would run into quality issues. It may also be in their interest to align with the manufacturer, rather than you, in case of a dispute. Stay away from these companies.

That being said, there are also reputable Trading Companies that act as exporting platforms for tens, sometimes hundreds, of manufacturers.

#5: Prepare product related questions

When communicating with a supplier on the internet, you rarely get further up their organization than the sales agents. However, you can expect a lot more attention when you show up in person at the suppliers factory. This means that you’ll get access to their managers and engineers - the people who are actually qualified to talk about their products and manufacturing capabilities.

Whenever I go out to visit suppliers and sit down with their engineers, I get to hear things the sales agents never told me. Probably because they are more concerned with making the sale, rather than telling me the truth. But also because sales agents are not engineers, they spend their days drinking tea and gossiping with their friends on WeChat -  apart from a few occasional conversations with potential customers. The engineers, on the other hand, are qualified to tell you what they can do, and what they can’t. I can recall plenty of times when the sales agents had promised things the supplier was simply not able to deliver on.

While you got the manager’s attention, it’s also a golden opportunity to make them understand that you’re not a gullible idiot. Make them aware of planned quality inspections and lab tests. It’s always good to put pressure on a supplier to comply with your quality requirements and product specifications.

Chinese companies are top heavy, and the only way to make things run smoothly on the production line is by applying pressure on the people in charge.

Inspecting the factory

The production line tells a lot more about a supplier than their brand of instant coffee or what car the owner is driving. Perhaps his new Audit was (involuntarily) financed by the last customer who didn’t bother to hire a quality inspector. The first thing to look at is how well they monitor product quality during the different stages of production. This is what you need to take a closer look at:

#1: Incoming materials

Manufacturers are not “Santa Claus workshops” that make every single material and component in house. They purchase components and materials from tens, sometimes hundreds, of domestic and foreign subcontractors. When quality issues occur, these subcontractors are often to blame (and many suppliers try to use that card).

What really matters to you is that the supplier checks the quality of the incoming materials and components. They shall also separate components and materials that are compliant with certain standards (such as REACH), from those that are non compliant. A supplier that’s not able to manage such separation is a major liability.

#2: Production lines

Manufacturing is not a science, there are always quality issues. What differentiates a good supplier from a bad supplier, is that the former monitors quality during the production process – and minimizes the number of defect units that slips through unnoticed.

A supplier that cares about maintaining a high quality standard has several checkpoints throughout the assembly line. They shall also be able to show how they define and manage defective units. A supplier claiming to have a zero defect rate during production is simply not monitoring their production well enough – if at all.

#3: Assembled products

Products coming off the assembly line shall also go through a final check. While a supplier is not necessarily testing every single unit, a final quality check shall include 2-5% of the batch. Finally, the supplier shall also maintain quality control records. If they claim to be ISO certified, they are even required to maintain records.

Is the supplier’s production lines busy?

It speaks for itself. A supplier with empty warehouses and dozing workers is obviously not doing that well. There’s a lot of overcapacity in China. Plenty of suppliers barely get enough orders to make ends meet. Doing business with such manufacturers is a liability. Even if they have the best intentions, suppliers operating on the edge of bankruptcy are not liquid enough to compensate buyers in case serious quality issues occur.

Before you leave, check out the factory warehouse

Not all manufacturers in China are geared towards Western markets. Many, of not most, are primarily made products for the domestic Chinese market, and developing markets in Asia, Africa and Latin America. That’s not saying that these suppliers are “bad”, but it may indicate that the supplier is not that knowledgeable about Western quality requirements and product certification requirements.

That’s why spending some time in the factory warehouse is a wise decision. This is where the suppliers stack hundreds of cartons, before being loaded into containers and shipped to buyers around the world. There’s only one thing that’s better than a warehouse full of goods about to be delivered, and that’s a warehouse full of goods addressed to buyers in your country.

These are strong indications that the supplier is not only kept busy with regular reorders, but also that they are well aware of product regulations and quality expectations in your market. And that is something you shall never take for granted when doing business in China.

This article was first published here

Fredrik works at ChinaImportal, an e-commerce platform that assists businesses looking to import products from China.

Key dynamics in Kenya's upstream oil industry

Learn why the next 18 months could determine country's ambition of being a major oil exporter.

East Africa is poised to become the world’s next oil and gas export hub, with three countries – Kenya, Mozambique and Tanzania – harbouring big ambitions to make this a reality. 

In Kenya, further exploration is underway, and so is a US$25.5-billion infrastructure project focused on exporting oil and gas. The country hopes to be the first oil exporter in the region by 2017, going by the efforts of Tullow Oil and Africa Oil Corporation to submit a field development plan for their blocs in Turkana County by next year.

As investors rush in to claim stakes in the fast-emerging oil and gas frontier, a new report by Ecobank Research titled 'Key dynamics in Kenya's upstream sector' says the next 18 months are going to be important and could impact how Kenya’s upstream sector develops.

Click on this link to access the 'Key dynamics in Kenya's emerging oil industry' report

This report is brought to you in partnership with Ecobank Research. 

Follow Ecobank Research on twitter.

Growing a footwear brand in Africa

Nigerian footwear company, Maducho Luchi, saw a lucrative opportunity to supply luxury fashion products to the country's increasingly affluent middle class.

Africa's growth story is encouraging more people to start their own businesses, with the aim of taking advantage of the huge opportunities especially in consumer-facing sectors.

In Nigeria, footwear manufacturer Maducho Luchi successfully tapped the country's vibrant fashion industry to produce footwear for local and international markets. 

In this interview, Graham Chike, sales and business development director at Maducho Luchi, narrates the company's challenging but rewarding journey of starting a contemporary African shoe line.

Tell us about Maducho Luchi

Maducho Luchi is a brand that is focused on designing and creating fashion products that are fused with a touch of African culture and a modern appeal. We kicked off the brand with men shoes and have plans to diversify in to other products in the near future. Our target is to create a system whereby fashion products from sub-Saharan African are appreciated overseas, thereby creating growth in several sectors of the economy on the continent. 

It all started in September 2012, when I met with my first creative director. Then there was no name to the brand. We just wanted people in the United Kingdom to experience shoes designed and made in Nigeria. They loved them, and in February 2013 when I returned home after completing my MSc degree, we started Maducho Luchi. The name Maducho Luchi came from a fusion of some African names. We had to think of something easy to pronounce, yet outstanding. Marketing brands today is different from what it was in the past. So one has to think of how a brand name can sell now and also in the future. It has been many ups and downs since then. We are over a year old now and I can say that we now have some good level of acknowledgement by users and celebrities. We have also managed to ship luxury shoes to many parts of the world and generated revenue that has kept the brand running smoothly. 

Why are most of your marketing campaigns focused on Europe and the Middle East? 

A lot of companies and brand facilitators really appreciate talent in these markets, so yes, we are deliberately focusing there. The fashion industries in Europe and Middle East are very keen to see new products. Smart designers take advantage and use that as a good path to success overseas which triggers success back home. 

How has the brand being received locally?

Brand appreciation in Nigeria has been wonderful. Some people love good craftsmanship here. And with little or no marketing, we have been able to grab a fair market share.

What strategies have you used to brand and market within Africa?

We have a big model waiting for good investors to buy in. We won’t let the cat out of the bag now. But once the investors come on board. It would spread like wildfire. A strong campaign that anyone who wants to copy would key into. But for now we only take on social media campaigns which is a growing trend in Africa. It has also done us well.

What challenges have you faced locally since starting Maducho Luchi?

Starting a brand in Nigeria is hard. We need more support but get less. The system doesn’t encourage good export trends. We don’t have a good market structure to engineer products so as to generate more jobs locally. You don’t get investors at the right time. And many others challenges.

How has Maducho Luchi managed to maneuver such challenges so far?

We have always set a goal and a target. The team has many technocrats, and most of us have schooled and worked in Nigeria and overseas - this has worked to our advantage. We leverage on this combined experience and education to overcome the challenges. We have firm goals - to produce and deliver an excellent product that will make our local and international customers happy. 

Is the market for luxury shoes sustainable in Africa? 

There is supporting data on the increasing demand for luxury products in Africa, and many international brands have already moved in to exploit the opportunities in countries like South Africa, Kenya, Angola, Ghana and Nigeria. So, there is definitely a big market for the shoes - we have done so well with very little marketing push. This is a profitable venture, and we really encourage investors to come on board. 

What advice would you offer potential startups in Africa?

A lot of fashion brands have come up in Africa and are now successful. In this line of business, it is possible to create a sustainable brand and profits. But one must have a firm plan, great passion and drive, and be ready to build a strong team because, as we say here, two brains are better than one. Find reliable and talented people who believe in your dream and you can make a fortune together. 

This article is re-published with permission from Frontier's content partner, Ventures Africa.

10 things to consider when planning your marketing strategy for Africa

By Tielman Nieuwoudt

When supply chain management in Africa is the topic of discussion, frequently used words include inefficiency, bottlenecks, bureaucracy, corruption, poor infrastructure and the occasional “chaos”. It is easy to fall into the trap of grouping all African countries into the same categories. The growth on the continent has sparked renewed interest in overcoming retail supply chain challenges. 

Below are 10 issues impacting retail supply chains in Africa:

Lead times - Importing products in Africa remains challenging and lead times could be anything from four to six months. The African continent has the most landlocked countries, further increasing lead times.

Outlet base - The numerous traditional trade outlets (e.g. spaza, dukas or souks) remain the biggest segment of the market and modern trade is still in the very early stages of development.

Fluid outlet base - The outlet base is fluid with new shops opening and closing. Seasonality also plays a part as some shops might stop selling ice cream and cold  beverages during the rainy season.  In addition, not all shops or selling points are permanent structures and some are roving hawkers.

Alternative channels - Beyond the traditional outlets, companies also need to understand alternative channels. For example, in Nigeria, “Table Tops” and the “Go-Slow” channels are important channels.  “Table Tops” are tables, set-up as temporary sales points to sell a limited number of stock keeping units (e.g. mobile phone carts). The “Go-Slow” channel or hawking channel, sells various types of merchandise that is normally easy to carry or transport (e.g. biscuits).

Markets -  Markets in Africa plays an important role. In some cases products flow from agents, who sell product directly to wholesalers based in  markets. For example in Lagos (e.g. Idumuta) and Addis Ababa (e.g. Mercato), markets remain a primary purchase channel for a number of product categories.

Moving away from trading - As African markets become more attractive, companies are moving away from trading (e.g. export agent and wholesale) and adopting a more organised Route-to-Market system, employing distributors to directly service the outlet base.

Route-to-Market considerations - Moving goods to a large fragmented outlet base is difficult and costly. Small groceries often have limited cash flow and  space to stock products. Finding the right model can take time and patience. Outlets are often  situated in high density and congested areas and companies are increasing looking at alternative distribution means, including micro distribution to reach these hard to reach areas.

Poor execution and stock out - What happens in the last 10 meters of retail supply chains is really important. In African markets, customers often experience stock outs because of poor planning and in-store execution. As small groceries have limited space and cash flow, they often require more frequent deliveries, in some cases daily.

Intermediaries - As small groceries have limited cash flow and space, they often require an intermediary, such as wholesaler, to break bulk. The wholesaler is often in close proximity to these outlets and provide a basket of goods, and in some cases credit.

Consumer satisfaction is availability - Retailers that sell undifferentiated products compete on the basis of product availability. Having the right product in the right place, at the right time (and frequency), with the right brand, at the right price, may be what really drives customer satisfaction.

Guide to investing in Côte d’Ivoire

Free download: Gain expert insights into the economy and investment opportunities in Côte d’Ivoire.

Frontier markets have garnered a lot of attention, as international investors continue to search for new growth opportunities. 

One frontier market with immense potential is Côte d’Ivoire. Situated in West Africa, the country is the top producer of cocoa beans in the world, and is one of the most diversified and fast-growing economies in Francophone Africa.

GDP growth of 9.8% is expected in 2014, from 9% last year.

Download the "Investing in Côte d’Ivoire" report to get expert insight on this market.

The report covers:

• Côte d’Ivoire’s reinvention journey, from a conflict-ridden country to rising star in West Africa

• The top four sectors with the best potential for investment and growth

• The business and investment climate

Click on this link to get the report.

 Brought to you in partnership with Developing Markets Associates.

5 new laws that will impact business in South Africa

Whether your business is big or small, it would be wise to keep track of new laws that can potentially affect your operations. Below are some new business-related laws that President Jacob Zuma recently signed into law.
Special Economic Zones Act       

Sectors concerned: Manufacturing, import and export
Overseeing department: Trade and Industry

Key provisions

• The Act seeks to boost industrialisation in South Africa through the establishment of Special Economic Zones (SEZs) that are envisioned as “one-stop shops”. The zones will provide enhanced infrastructure, bureaucracy support and incentives to attract domestic and foreign investment.
• The Act allows private companies to operate and manage SEZs through public private partnerships.
• There was broad consensus by members of parliament that the special economic zones were a key reform measure for South Africa, and a necessity for the country to achieve its economic growth targets under the National Development Plan.

Legal Metrology Act

Sector concerned: Manufacturing and retail
Overseeing department: Trade and Industry

Key provisions

• The Act regulates the measurement of products and services, and the use of the instruments that measure them.
• Historically, measurements were of concern in the sale of goods such as maize, milk and petrol. Today, with advancements in technology, accurate and standardized measurements are critical in new fields: e.g. energy (electricity meters), communication (data usage) safety (breathalyzers), transport (road overload) and medicine (blood pressure analysis).
• The Act allows for authorized market surveillance inspectors and verification officers to enter public and private premised to ensure that measurement instruments, goods and services comply with the Act.
• Non-compliance may result in a fine (not prescribed) or imprisonment of up to 10 years, or both.

National environmental management: Air quality Act amendment

Sector concerned: Industries whose operations result in atmospheric emissions
Overseeing department: Water and Environment

Key provisions

• Under the Air Quality Act of 2004, an atmospheric emission licensing system was set up to regulate emissions and protect the environment while allowing for socio-economic development. The Amendment Act of 2014 seeks to resolve problems within the licensing system that have been detected over the last decade.
• The Amendment establishes an Air Quality Advisory Committee to advise the minister on air quality issues.
• A R5-million penalty is prescribed in the Amendment Act for unlawful activities resulting in atmospheric emissions

Marine Living Resources Amendment Act

Sector concerned: Small-scale fisheries
Overseeing department: Agriculture, Forestry and Fisheries

Key provisions

• The Amendment allows the minister to give official recognition to fishing communities, and to put in place measures to support their livelihoods.
• Protection afforded to communities will include prohibiting non-community members from fishing on waters allocated to the community.

Language Practitioners’ Council Act

Sector concerned: Language practitioners (translators, interpreters, language planners, terminologists, lexicographers, text editors and related fields)
Overseeing department: Arts and Culture

Key provisions

• The Act establishes the South African Language Practitioners’ Council (SALPC) whose core functions will be to regulate the training of language practitioners and control their accreditation.
• The SALPC will prescribe rules governing the conduct of language professionals and set procedures for compliance, monitoring and enforcement.

The hottest selling oil and gas products in Africa

The oil and gas sectors will continue to thrive due to the rising demand for energy on the continent.

By John-Paul Iwuoha

The severe shortage of electricity in many parts of Africa is causing people who can afford it to spend more on petrol and diesel to generate their own electricity. Millions of individuals and companies in Africa now spend a lot of money every year on oil products like petrol (gasoline), diesel and kerosene to provide their own electricity, and the demand is expected to continue increasing. 

There are more than five major products that result from refining crude oil, but I will focus on the top four that are highest in demand and most popular with consumers in Africa. There are many other products that are applied for various uses such as road construction, aviation and marine fuels, and in chemical and manufacturing industries.

Petrol

Petrol (technically known in the oil business as Gasoline, Premium Motor Spirit or ‘PMS’) is one of the most popular and widely consumed oil products in Africa. It is estimated that Africans consume more than 100 million litres of petrol every day. The number of vehicles (especially private cars) is increasing across Africa. The volume of petrol Africans buy will continue to increase as more people buy cars or depend on petrol-powered buses and other means of transportation. The electricity problem is also likely to encourage the petrol business as most individually-owned power generators run on petrol.

Diesel

Diesel is technically referred to in the oil business as ‘AGO’, an abbreviation of ‘Automotive Gas Oil’. It is commonly used by heavy-duty engines which power many of the large trucks, tankers and trailers that transport heavy goods (and people). Diesel may not be as popular as petrol (or gasoline) but it remains a very important fuel to the economy. It helps to move most of the heavy goods (like agricultural produce, building materials, imported goods and raw materials) that drive trade and commerce. There is growing potential for trucking and haulage businesses across Africa. As the demand for trucking and haulage increases, so will the volume of diesel that will be consumed. Diesel is also commonly used as fuel for bigger power generators that produce electricity for factories and medium-large companies. As more of these factories and companies demand more electricity and (if) the electricity supply situation worsens, the demand for diesel is also likely to increase.

Kerosene

Technically known as ‘Household Kerosene (HHK)’, Dual Purpose Kerosene (DPK) or Paraffin, kerosene is one of the most widely consumed fuels in Africa. It is commonly used in homes and households to provide heating, lighting (in kerosene lamps) and for cooking food. Especially in low and middle income households, kerosene remains the cleaner, more effective and often cheaper alternative to charcoal and firewood. Kerosene is very likely to remain a hot-selling fuel as environmental awareness discourages more people from destroying our forests to produce wood for firewood or charcoal.

Cooking Gas

Cooking gas, also known as ‘Liquefied Petroleum Gas’ or LPG is expected to become the preferred fuel for household cooking and heating in Africa’s future. Although cooking gas is not yet as popular as Kerosene in many parts of the continent, it is considered a cleaner, more efficient and cheaper option than kerosene. Unlike Kerosene, charcoal and firewood which produce soot and other harmful particles when they burn, cooking gas burns more efficiently and is much safer for the health of humans and the environment. 

As more Africans join the economic middle class and migrate to the cities, the demand for cleaner and cheaper fuels like cooking gas will surely increase. Climate change concerns and a growing consciousness to preserve our natural environment will lead to higher adoption of cooking gas as the preferred fuel for households.

Tips for succeess in the oil and gas business 

You may need a lot of start-up capital

Most entrepreneurs often do not consider the oil and gas business because they think it’s exclusive to the ‘big boys’ who have a lot of capital at their disposal. While this is not entirely false, it is not impossible for individual entrepreneurs and small businesses to play in the oil and gas business. You don’t have the money? Start small. Look for like-minded partners to invest or you could consider other proven ways to raise capital for your business. You could start a low-capital kerosene retail business in your neighbourhood or invest in a cooking gas refilling station. If you can find the capital, you could become a supplier of diesel or petrol to businesses in your area who will need it to power their generators.

Watch out for the risks

While there is money to be made in the oil business, you shouldn’t forget that the products you will be dealing with are very high inflammable. So, safety should always be a priority for you. Applying safety procedures at all times and using the right safety gear (like fire extinguishers etc.) are very important. Theft and loss (through spillage) are also common ways to lose your products. Taking out an insurance cover is always a good strategy to protect you in this regard.

Get the necessary licenses and permits

The oil and gas sector is usually well-regulated. In most countries, a permit or license may be required for anyone who wants to start an oil and gas related business. You will need to contact the relevant government office in your country to find out the required registration, licenses or permits for businesses that operate in the oil business. If you don’t comply with the rules, your products may be seized, you could pay a fine or serve jail time for running an unauthorized business. In countries that offer subsidies to operators in the business, it may be difficult (if not impossible) to claim these subsidies if you’re not registered with the relevant government agency, trade or workers’ associations.

It works best if you can find a niche for yourself

There already exists a huge demand for oil and gas products on the continent. However, there is a lot of competition because it’s relatively esasy to start if you have the capital. To avoid the crowded marketplace and unhealthy competition, this business will work better if you can find dedicated customers or an undersupplied area of town and dominate it. For these two customer segments (dedicated customers and areas suffering from scarcity of oil products), there is a good potential to make more profit. Rich homeowners, businesses, factories, schools, office buildings and shopping malls are just some examples of customers who can become dedicated to a supplier who can meet their needs for petrol and diesel. You just need to think of creative ways to separate yourself from the crowded competition.

Browse insights, credible business opportunities and investment opportunities in the oil and gas sectors here 

John-Paul is chief editor at www.smallstarter.com, Frontier's content partner. 

The ultimate guide for importers of auto parts

By Fredrik Grönkvist

Learn insider tips on getting the best deals for auto, ATV & motorcycle spare parts in China

Looking for Auto, motorcycle or ATV spare parts?

Chinese suppliers might have exactly what you’re looking for. While this is a product that can be purchased both from manufacturers and “off shelf” from Trading Companies, the industry is infested with unscrupulous and disorganized suppliers. In this article we look into the do’s and dont’s when buying vehicle spare parts from China.

Buying from a manufacturer

Buying directly from the manufacturer comes with some obvious benefits. The product selection is wider (I explain why in a minute) and the prices are lower due to the lack of middlemen. However, it’s not viable for most small businesses importing vehicle spare parts from China. The reason is spelled “MOQ”, or “Minimum Order Quantity” Requirement.

A supplier must produce a certain minimum quantity of a product in order to make the production run viable. This “minimum quantity” tends to be 300 – 500 pieces for each part. Assuming that you wish to offer a wide range of different parts, the required investment can skyrocket to several millions of dollars if you would buy every single spare part directly from a manufacturer. However, there are other ways to do this.

Advantages when buying spare parts directly from a Manufacturer

• Lower prices
• Product certification compliance (when required)
• Full product availability
• Disadvantages when buying spare parts directly from a Manufacturer
• High MOQ requirements (300 – 500 pcs per part)

Buying from a Trading Company

While it’s in general not possible to find “off shelf” products in China, vehicle spare parts can be purchased “off shelf” from Trading Companies. A Trading Company offers smaller volumes compared to manufacturers. Sometimes the MOQ requirement is as low as 5 to 10 pcs per spare part model. However, these Trading Companies are not working for free. The prices are often two to three times as high compared to if you would’ve purchased the spare parts directly from the manufacturer.

But that’s not where your trouble ends. I’ve had my fair share of dealing with auto, motorcycle and ATV spare part traders in China and it’s been far from pleasant in most cases. The main problem is that they are in general very disorganized. While the Trading Companies may have product catalogues, far from all are in stock at any given time. Basically, you get to buy the parts that are available. This can cause major disruptions in your supply chain and it can take months before you’re able to restock on certain spare parts.

While it would be fair to assume that a Trading Company should be able to deliver spare parts faster than a manufacturer (well, the parts have to be manufactured before they are delivered, right?) – it’s often the opposite Trading Companies often purchase spare parts from other traders. In most cases it takes at least a month before the Trading Company has gathered all the ordered parts.

Advantages with buying spare parts from a Trading Company

Click on this link to read the full article 

Fredrik works for Frontier's content partner, ChinaImportal - an e-commerce platform that assists businesses looking to import products from China.

10 best-selling building and construction products in Africa

Africa's booming construction sector is creating new opportunities for distributors and manufacturers to supply products.

By John-Paul Iwuoha

Building and construction activities are often signs of growing economies. Africa is home to six of the world’s fastest growing economies in the world. It also has the world’s fastest growing population which is expected to reach 2.3 billion in less than 40 years. It’s no surprise then that Africa’s richest man, Nigeria’s Aliko Dangote, has made a fortune manufacturing cement - one of the most important and hot-selling building materials in Africa. Entrepreneurs, investors and governments are spending billions of dollars on real estate projects in a bid to satisfy the huge demand for residential and commercial accommodation across Africa.

Factors responsible for the growing demand for building and construction materials across Africa.

• Economic growth
• Fast-growing population
• Rapid urbanisation
• Expanding middle class
   

The top selling building and construction materials and products 

Cement

Cement is one of the most widely used building materials in the modern world and nearly six billion tonnes of this very important commodity is produced every year. It is the main ingredient used in the production of blocks, which are the single-most used items in building and construction work. Cement is combined with aggregates (sand, gravel and stones) to make concrete and used as slurry for filling cracks in all kinds of structures. It is also used for masonry work, plastering and pointing. This versatile capability allows cement to be used in all kinds of structures including buildings, bridges. dams, docks, harbours and roads. Manufacturing cement is capital-intensive and requires huge investment in quarries, labour, plants and equipment. As a result, only national governments and businessmen with deep pockets are able to set up cement manufacturing plants. However, small-scale businesses and entrepreneurs can get involved in the cement business by joining the distribution chain. You could become a major dealer who buys directly from the cement manufacturers or major importers. Or you could start up as a retailer who sells the product directly to home builders and contractors. Depending on the volume of cement you decide to deal in, it’s likely you will need a sizeable store or warehouse to keep your stock. It is important that you know the cement brand(s) that are favoured and preferred by builders in your area.

Wood

Wood is one of the oldest and most commonly used material in building and construction. Despite the growing threat of deforestation, wood has remained in high demand as a building material because of its reasonable cost, availability, attractive appearance and long life (if protected from insects and moisture). Wood used in building and construction work is commonly referred to as timber (or ‘lumber’ in the US and Canada). Timber is sawn into planks or poles and used as supporting materials (beams and pillars), in roof and ceiling construction, door and window frames, and exterior cladding. Timber is also commonly used in flooring, paneling and general finishing. It is most commonly used to form the mould in which liquid concrete is poured, compacted, and allowed to harden. Before wood is used for building and construction work, it has to be felled in the forest, processed and seasoned (the process of removing moisture from wood). It is then sawn into logs and planks and sold on the market. Although Africa has extensive (but fast depleting) forest reserves, the conservation efforts in many countries are forcing builders to look for alternatives to timber. In Kenya for example, innovative entrepreneurs like Lorna Rutto of EcoPost are using waste plastic to produce a strong and durable substitute to timber; and making a lot of money in the process. Entrepreneurs who intend to harvest trees to be used as timber will likely require a permit or license from their government’s forestry department or agency responsible for forest resources. Permits have become necessary to avoid indiscriminate logging that cause damage to the environment. If you intend to buy wood from loggers and process them to timber, it’s likely you will need to invest in machinery and experienced labour who know the techniques of treating, seasoning and curing wood to avoid damage caused by moisture and insects.

Aggregates

Aggregates are raw earth materials which have been used since prehistoric times in building and construction. Aggregates fall into two broad categories - coarse aggregates (such as crushed stones, gravel, pebbles, and granite) and fine aggregates (usually sand and clay). In modern construction work, aggregates are combined with cement to produce concrete and mortar. Using aggregates gives volume, stability, resistance to wear or erosion, and other desired physical properties to all kinds of structures – buildings, bridges, roads etc. As you may have guessed, aggregates are the most mined materials in the world. Operating a mine (or quarry) is very capital-intensive and requires large earth-moving equipment, belt conveyors, and machines specifically designed for crushing and separating various sizes of aggregates.  Entrepreneurs who intend to play in this space could buy aggregates from quarry operators and sell them directly to builders in truck loads or much smaller sizes.

Roofing materials

All buildings (especially houses) usually have a roof over them. Roofing materials form the outermost layer on the roof of a building and provides shelter from the natural elements (wind, sunlight and rain) and insulation against heat and cold. Commercially available roofing materials can range from corrugated iron and aluminum, clay tiles, plastic, fiberglass and concrete. In choosing roofing materials in Africa, builders and home owners usually consider cost, style and quality, suitability of the material to the climate, low maintenance and long life span. Materials like asbestos (which used to be very common) are becoming increasingly undesirable due to its adverse health effects. Entrepreneurs who intend to start a business in roofing materials must constantly look out for changes in taste and trends in the market. New products are constantly being developed to overcome the shortcomings of older roofing materials, meet the demands of modern building techniques, and conform to increasingly stringent building codes. 

Plumbing materials

Plumbing usually refers to the system of pipes, drains, fittings, valves, valve assemblies, and devices installed in a building for the distribution of water for drinking, heating and washing, and the removal of human and domestic waste (sewage). The main categories of plumbing systems include: potable cold and hot tap water supply; drainage venting; septic systems; rainwater, surface, and subsurface water drainage; and fuel gas piping. The common materials used in modern plumbing include copper, brass and plastic. In fact more than 70% of materials used in today’s plumbing are made of PVC or PEX plastic. This is because plastic is very flexible, easy to install, has a low cost, does not rust like most metals and can last for a very long time. A lot of the plumbing materials supplied to local African markets are manufactured locally or imported from overseas. Depending on the taste and requirements of customers, the quality and cost of plumbing materials in the market can vary considerably.

Steel and metal products

Steel and metal products are widely used in building and construction. Steel is commonly used to make reinforced concrete that supports structures in buildings, bridges, dams etc. Steel is made up of iron combined with a small percentage of carbon. High-carbon or ‘hard’ steel is used to make tools with cutting edges. Medium- carbon steel is used for critical structural components of buildings such as I-beams, reinforcing bars and frames. Low- carbon or ‘mild’ steel is used for pipes, nails, screws, door and window hinges, wire, screening, fencing and corrugated roofing sheets. Metals such as aluminum and copper have become popular building materials due to their ability to resist rust and corrosion. Copper is used for electric wires, tubing for water supply and for flashing. Aluminum is most commonly used for roofing sheets, gutters and the accompanying nails. Brass is another corrosion-resistant alloy of copper and zinc used extensively for building hardware. Like cement, running a steel production plant is expensive. The opportunity for entrepreneurs lies in retail and distribution of steel products to home builders and construction contractors.

Electrical materials and accessories

Electrical materials are the parts and elements used in the electrical system of any building and construction project. This includes a huge inventory of materials used to supply electric power or telecommunications to different parts of a building and will typically consist of: electrical conduits and fittings, wires and cables, explosion proof enclosures, meters, circuit breakers, connectors, and electrical products such as wiring devices (switches, plugs) and lighting (bulbs). Solar energy products are becoming a popular way of providing electricity to millions of Africans who are not connected to the grid. Entrepreneurs, like Tanzania's Patrick Ngowi of Helvetic Solar Contractors, are building million dollar fortunes from providing solar electricity to residential homes and government buildings. While some of the electrical materials mentioned above are made locally, a variety of brands are imported from North America, Europe and Asia and may be preferred for their higher quality. Before entering this business, entrepreneurs must ensure that they are well aware of customer preferences in their area.

Glass

Glass is fast becoming one of the most preferred materials of modern building architecture. Clear windows have been used since the invention of glass to cover small openings in buildings and provide us with the ability to both let light into rooms while at the same time keeping undesirable weather outside. Glass controls light, letting in the good rays and keeping out the bad ones; it also saves on energy costs by providing natural day lighting. As a result, more designers are finding that glass fits quite nicely into today’s green building environment. Other qualities that make glass such a hot-selling building material include its roles in heat, sound, fire and solar protection. It also provides an interesting means of design and electromagnetic dampening. Glass sold on the market is of varying types (reinforced, laminated and tempered) for all kinds of uses. Glass has also found popular use as a decorative material in designing building exteriors. Entrepreneurs can source glass from both local and foreign glazers.

Paints

Paints are the colourful substances applied to interior and exterior walls of buildings to make them beautiful, enhance texture and protect from cracks, wear and tear. There are paints of all colours and types in the market which typically include : emulsions (water-based paints), matte finish, gloss, varnish, enamel and lacquers. A growing number of local businesses now manufacture paints to compete with dominant foreign brands. We advise that you understand the tastes and preferences of home builders and construction contractors in your area before you go ahead to invest in stock.

A final note…

The materials and products on this hot-selling list are just a handful of the opportunities that exist in building and construction market. Depending on your location and the preferences of home builders and contractors, the types of materials required may differ considerably. It’s important that you study the existing materials and products in your market before you decide on which ones you will start a business around.

John-Paul Iwuoha is chief editor at www.smallstarter.com