Chinese brands on quantum leap in the Nigeria market
As the relationship between China and United States worsens because of the on-going trade dispute, China is already turning its attention to emerging markets, especially Nigeria, where its investment is now estimated at over $20billion according to the President, China Chambers of Commerce in Nigeria, Ye Shuijin.
Mr Ye Shuijin made the disclosure in a recent interaction with the press where he added that over 160 Chinese brands are jostling for market share, alongside other foreign and indigenous brands in different segments of the Nigerian market.
The activities of these companies have seen the volume of trade between China and Nigeria grow from less than $2billion in 2000 to the present level of $20billion, (about N38.01 trillion in 2014), according to Mr. Shuijin.
“I believe the Chinese investment in Nigeria now is about $20b and we have employed over 200,000 Nigerians. Our workforce is 95 per cent Nigerians,” said the CCCN president
Specifically, one of the sectors where China’s identity is very strong is the phone segment where Chinese brands have become so dominant to the point of forcing other western brands to close shop.
In 2018 alone, more than 12 million units of features phones were sold across the country, recording 5% retail volume growth. Smartphones also grew by 10% in retail volume terms in 2018 to reach six million units according to a Euromonitor International report.
The proliferation of smartphone in Nigeria as seen in the country was began by the infiltration of some international phone manufacturers into the Nigerian market through their production of high-end phones at a cheaper rate for consumers. These phones mostly from Chinese manufacturers have dominated the market since the introduction of dual-sim android phones.
Leading the market is Tecno, Infinix and itel brands. While Tecno smartphones have turned to favourites among consumers who represent a larger percentage of Nigeria’s population, Itel brands have overtaken other brands in the feature phones sphere as consumers opt for a portable multi-sim phone at a cheaper price.
These three brands have become so successful that they now control 75 percent of the market share while other manufacturers are left to battle with the remaining 15 percent.
According to Seye Olatunji, a GSM trader at GSM/Computer Village, Ikeja, the business of selling China products has been exciting and rewarding.
His words: “It is usually more expensive to buy products from other western countries, but that is not the same for China. Most of us here can now go to China ourselves and buy products under very flexible terms and conditions.”
Even buyers share the same feeling. “If you compare the China smart phones with those from other countries, there is little or no difference at all. And the China ones are even cheaper. So, why should I spend more money on something equivalent to this one?” Audu Hassan, a customer at the Computer Village, asked.
General merchandising is China’s forte
Scores of Chinese businesses dominate the retail segment of the market in various parts of the country. Brands such as Viju Milk, Huawei, ZTE, Alcatel and others are household names. Chinese restaurants, such as Golden Gate and Oasis Bakery, all in Lagos and several other retail outlets dot the landscape and they are enjoying tremendous patronage.
Since 2005 when it was established, China Town in Lagos, has been serving as a one-stop-shop for goods and services, ranging from textiles, shoes, jewelleries, electronics, kitchen utensils and other items. Visiting China Town, with its competitive pricing and accessibility has become a must for most Nigerian shoppers.
But if trade relation between USA and China continues on its present trajectory, then Chinese investors themselves may look for ‘alternative destinations’ for their own investments, in order to circumvent tariffs on commodities originating from China, analysts have said.
If one casts the trade war as simply a confrontation between the world’s two largest economies, then the trade war “would impact the global economy negatively,” Director General of the Lagos Chamber of Commerce and Industry Muda Yusuf told This Day Live.
But, he continues, out of this comes a positive opportunity for Nigeria. Increased tariffs on Chinese brands going into the United States “will create supply gaps in the U.S. market.” In other words, exports from other countries become “more competitive” thanks to the tariffs on China. Yusuf sees this as an advantage favoring Nigeria as more Chinese will find new home in Nigeria.
“Within the context of the African Growth and Opportunities Act [AGOA], this situation presents new opportunities for Nigerian export in the United States market,” Yusuf said. It remains for Nigeria to position itself to take advantage of the opening.
In the same vein, Carmen Ling, Managing Director and Global Head of RMB Solutions, said, “China is likely to boost imports from African countries as it seeks new sources of commodities in the wake of a trade war with the United States.”
“We believe that countries such as Kenya and Nigeria will benefit because China will look to import more from Africa; some agricultural products from Kenya, some oil products from Nigeria,” Ling predicted.
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