It has often been said in many quarters that the business environment in Nigeria is tough, yet, many Asian companies are thriving in the country. From agriculture to manufacturing, automobile to Information and Communication Technology, from Fast Moving Consumer Goods, FMCG to the hospitality sector, they dominate the business landscape. BABAJIDE OKEOWO in this report takes a look at the magic wand of the Asian owned companies and the lessons Nigerian businesses can learn from them
The list of notable Asian businesses thriving in Nigeria under a seeming tough business climate is too many to mention. Western Metal Products Company Limited, WEMPCO, a Chinese-owned multi-billion naira integrated steel mill, situated at Magboro, on Lagos-Ibadan Expressway, Ogun State, is the first of its kind in Africa. Indomie, a brand of instant noodle produced by an Indonesian company; Indofood is the most prominent name amongst Noodle consumers in Nigeria. Outside its main manufacturing plants in Indonesia, Indomie is also produced in Nigeria since 1995 where it is a popular brand and has the largest instant noodle manufacturing plant in the whole of Africa.
Asian owned companies have also garnered a substantial share of Nigeria’s fast-growing Telecoms/ICT market. Chinese enterprises, in collaboration with telecommunications operators, are instrumental to the unprecedented growth of Nigeria’s telecoms sector. Big brands like Samsung from South Korea, Huawei, ZTE, all from China to mention a few are household names in Nigeria. Huawei came to Nigeria in 1999, it currently has over 5000 staff, 70 per cent of whom are local recruits.
On the hospitality and leisure front, they are not found wanting. The popular Eko Hotels and Suites owned by Lebanese, Nigerian born, Chagoury Group is the meeting point of the high and mighty in the society while the Golden Gate Restaurant is a notable name in the country. Not to mention the numerous Chinese Restaurants that dot the landscape of the country. Lebanese owned Zartech is also a household name in the poultry and frozen food sector. When it comes to the confectionery and the Fast Moving Consumer Goods, FMCG sector, Chinese companies are not left behind as Oasis Bakery and Viju Milk hold sway.
The Chinese have been visible and very prominent in the transport sector, especially in rail transport. The $1.49 billion Lagos-Ibadan railway contract was awarded to China Civil Engineering Construction Corporation (CCECC) and the Olokola Deepwater Port project awarded to the China Ocean Shipping Group. The CCECC is also handling the 27.5-kilometer Marina-Iddo-Okokomaiko Lagos Light Rail project. The list is endless.
Besides the rail and power plants, China is also instrumental in supporting Nigeria with financial arrangements and investments in strategic infrastructural projects including road, airport terminals and free trade zones, among others.
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For instance, China and Chinese companies are major stakeholders in the Lekki Free Trade (LFTZ), Lagos. On completion, the project will attract international investors in manufacturing, commerce,and tourism, among other sectors. The project is expected to provide 300, 000 direct and 600, 000 indirect jobs in the next few years. Little wonder former Industry, Trade & Investment Minister, Olusegun Aganga described the LFTZ as one of the biggest Chinese projects in the country.
How it all began
Going down the memory lane, the road towards improved Nigeria-China relationship officially started in 1971 when both countries agreed to establish a formal diplomatic relationship and exchange envoys. Before then, trade between the two counties was at its low ebb. But with the establishment of diplomatic relationship, Nigerian businessmen started traveling to the Asian country to do business. Conversely, the Chinese government began buying Nigerian oil, thus shooting up the trade volume between both countries. At some point, the Chinese government began offering Nigeria some economic, military and political support.
One of such efforts at fostering Nigeria-China ties was the establishment of Nigeria-China Friendship Association (NICAF) in April 1994. The organisation seeks “to promote friendship, political, socio-economic, cultural, educational, trade, industrial, technological, scientific and sporting collaboration between the government, corporate bodies and citizens of both Nigeria and China on the basis of equality and mutual benefits after the approval of appropriate arms of both governments.”
In 2004 and 2006, then Chinese President, Hu Jintao, visited Nigeria. While in Abuja, he addressed a joint session of the National Assembly, both countries signed a memorandum of understanding to establish a strategic partnership.
Before he left office, former President Goodluck Jonathan also visited China during which he sought to build bridges too.
“Nigeria and China have had strong economic ties in trade and investment over the past years. Beyond trade, China has been instrumental in supporting Nigeria with the financial arrangement and investment in strategic infrastructural projects like rail, road and free trade zones, among others,” he said
Upon assuming office, President Muhammadu Buhari has also paid several visits to China.These diplomatic shuttles had opened the way for both nationals of Nigeria and China to begin visiting the two countries on a larger scale.
Real reasons Asian owned businesses are thriving- Expert
According to Ola Brown, Founder, Greentree Investment Company, there are several lessons that can be learned from the way the Asian entrepreneurs conduct their businesses from their frugality, strong work ethics and several other factors which has made their businesses thrive despite the odds.
“Some of my favorite businesses in Nigeria are Lebanese, Indian and Chinese owned.One of these Lebanese entrepreneurs, a good friend of mine has a business that turns well over $10m a year, but every time I see him on a flight to London, he and his family are always sitting in economy class. Also, there is another Indian executive I know that can’t be earning less than $1m per year and whenever I see him, I wonder why he always behaves as if he can’t afford new shoes.
Another thing they have going for them is that they seem to have mastered a more frugal approach to doing business. They do not go for extra glamorous offices, usually on the mainland, no bogus jeeps as official cars and so on. This is not the case with many Nigerian owned businesses who will rather use profits and loans to show-off with cars, girls, houses and frivolous lifestyles instead of reinvesting. These Nigerian entrepreneurs have given young Nigerians an inaccurate picture of entrepreneurship. They seem to have convinced the younger generation that entrepreneurship is about easy money, fancy cars, side chicks, private jets, penthouse villas, designer clothing & champagne. This simply isn’t the case” she said.
Brown also said a piece of valuable advice one of the Lebanese business owner gave her when she was starting out was to ensure to pay back each loan taken to build trust and confidence which will amount to access to credit line whenever the need arises.
“One of the pieces of advice he gave me when I was first starting out in business is to always pay the bank back before they expect it, he told me that he has a banking relationships dating back several decades and that he has never had a late payment, this will ensure that whenever he needs a credit facility he will be sure to get it to expand his business interests. They don’t owe the banks. They pay back on time and develop a reputation for reliability,that way our typically risk-averse banks are more comfortable taking risks with them due to their past record,” she said.
Brown has a piece of advice for Nigerian business owners and urged them to take a cue from Tolaram Group, a Singapore based business conglomerate behind several household brands in Nigeria, like, Minimie, Power Oil, Power Pasta and several other FMCGs.
“While most Nigerians claim that the business environment isn’t enabling enough for businesses to thrive, these Asians, leave their home environments, move to Nigeria and win. This suggests that there may be some things that Nigerian’s and perhaps other Africans, could learn from their success, after all, they work under the same conditions as Nigerians. First, they are patient with a long term view, secondly, they focus on customer trends, they target the bottom of the pyramid, develop effect supply chains and distribution networks amongst many other things” she said.
Speaking further, Brown said Tolaram didn’t break even till 2000. “In 1996, they even considered closing down due to lack of sales, but they stayed at it. They reinvested profits back into the business and managed their costs for over a decade before they became profitable, this is something probably lacking amongst many indigenous businesses.
On his part, Olatunji Ope, The CEO of Unlock Nigeria Limited, a consulting firm for businesses; discipline, professionalism, positive but aggressive disposition to business success, structures, processes, integrated systems, constant planning and periodical reviews are some of the factors that separate some of these Asian business owners from some of their Nigerian counterparts.
“You want to see workers at the Tolaram Group and Chi/Cormart at work, their level of industry is second to none. I admire them for their industry, the Lebanese can be ruthlessly shrewd while Indians can be merciless slave drivers while we are mostly risk-averse and prefer “safe” investments. We are totally resistant to business sustainability and profitability assurance mechanisms, and definitely not well disposed to strategic planning and behavior,” he said.
Efforts to get Asian business owners in Nigeria to speak to The Nigerian Xpress was not rewarded as many of them preferred to be silent.
However, Jackie Dai Hui, Deputy Managing Director of Senoria, a Chinese building material manufacturing firm based in Nigeria,said the Nigerian business climes is one of the most fertile and friendly in the world.
According to him, “in Nigeria generally, I think many companies have very bright future if they can uphold quality in what they do. Quality will always speak for you. Nigeria is the largest country in Africa, just like China is the largest country in Asia. I think Nigeria is seen more like China before, because when we came here, we found out that your country is investment and business friendly and we’ve been having a very good working experience with the people of the nation, and Nigerians are very welcoming. I think this was why our company and our country- China closed ranks with the people and government of Nigeria, and that was why we established our company- Senoria and our factory here.”
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In an earlier interview granted to the press, Chinese ambassador to Nigeria, Mr. Zhou Pingjian in giving reasons while his countrymen thrive in business in Nigeria said Nigeria has the potential to be a factory of the world. According to him, “China and Nigeria, both major developing countries, regard each other as important strategic cooperation partners. China-Nigeria relations have reached a stage of growth unmatched in history.”
He said since the establishment of diplomatic ties in 1971 and strategic partnership in 2005 in particular between China and Nigeria, the all-round, wide-ranging and high-quality bilateral cooperation has been a pace-setter for China-Africa cooperation, bringing tangible benefits to our two peoples” he said.
On his part, Sun Gouping, founder of the China Town, Ojota posited that Nigeria is such a green land and has the potential of becoming an industrial giant.
“Nigeria is such a green land, in the past 30 years, I have contributed a lot towards building a solid Nigeria-China relationship. Take for instance, in the year 2000, I went to China and spent over two million Chinese Yuan to promote Nigeria. Then, I told as many Chinese people as possible about the opportunities here. Since then, I have not ceased to be ambassador to both countries. At some point, I took some Nigerian food to China and to teach the Chinese how to cook and eat them. I also began teaching them Nigerian culture and tradition. It was wonderful,” he said
Why Nigeria is the destination of choice for Asian owned businesses
With an approximated 201 million population and growing at over two percent per annum, Nigeria is ranked the seventh largest country in the world. With a growing middle-class with quite a good spending power and a seemingly stable polity, among others, Nigeria has become irresistible to Asian investors.
One sore finger sticks out. There’s a popular perception in the country that Chinese companies are exploitative of local labour, in terms of wages and working conditions. Last year, a labour union for construction workers gave the government a 14-day ultimatum to address complaints of maltreatment of Nigerian workers by Chinese-run companies. The federal and state governments ought to do a lot more to ensure that workers’ rights are protected and that offending companies face sanctions.
Jonathan Coker, Nigeria’s former ambassador to Beijing, says Western warnings about Chinese investments are hypocritical.
“DIPLOMATS SAY WE WILL BECOME SLAVES OF CHINA. THIS IS THE PROPAGANDA OF THE WEST,” COKER SAYS. INSTEAD, HE ADDS, NIGERIA HAS MUCH TO LEARN. “CHINA IS 10 TIMES THE SIZE OF NIGERIA’S POPULATION BUT THEY HAVE DEVELOPED A SYSTEM THAT CAN TAKE CARE OF THEIR PEOPLE. THESE ARE THE EXAMPLES WE WANT TO ADAPT.”
