A Forrester report points out challenges faced by some business-to-business firms working online.
Started by 24-year-old entrepreneur Wang Fengzhai, Chinaworldbuz.com is selling Chinese goods mainly to small retailers in Tanzania.
In their well-known book, “Blue Ocean Strategy,” authors W. Chan Kim and Renée Mauborgne argued that successful companies avoid the “red sea” markets where competition is fierce and search for “blue seas” that rivals have yet to penetrate. Some Chinese e-commerce companies, recognizing the stiff competition in North America and Europe, are searching for “blue seas” in emerging markets like Africa.
Among them is 24-year-old Wang Fengzhai. After graduating from Shanghai Finance University last year, he registered his company, China World Business Company, in Shanghai’s free-trade zone that’s designed to reduce red tape associated with foreign trade, and has begun selling Chinese products directly to online shoppers in Africa via his new English-language site, Chinaworldbuz.com.
This is not Wang’s first business. He organized a tutoring service while in high school and while in college built a web site for volunteer society ranked fifth in a national public welfare competition.
Two years ago, Wang encountered on campus two international students, Justine Luvanda and Shafii Swed, and they inspired him to explore the opportunities for trade between China and Africa.
“Before I considered Africa a place full of wild animals and tribal people, but I was shocked after Luvanda showed me the pictures of Africa,” Wang tells Internet Retailer. “Each African country has several large modern cities today and their economies are developing really fast. For example, there is construction everywhere and the number of cars is increasing. There are increasing needs for good products at affordable prices.”
Since Luvanda and Swed both come from the East African country of Tanzania and know that market very well, Wang made them partners in his company and focused first on selling to Tanzania. Tanzania had a population of 49.25 million in 2013 and its GDP grew 7.0% last year, faster than average 5.6% for the continent, according to the World Bank. China is Tanzania’s largest trading partner.
In order to get to know the market better, Wang traveled to Tanzania in January and spent two months there.
“Tanzania has no manufacturing industry and many products’ prices are very high, since local retailers have to wholesale products from nearby countries such as Kenya. I saw the potential of online shopping and decided to help Tanzanian buy directly from China.” Wang says.
After visiting many local marketplaces and stores, Wang concluded there was strong demand in Tanzania for mobile handsets, tablets and customized apparel, such as sports team jerseys and school uniforms.
“Chinese electronics products are popular in Tanzania and people trust Chinese brands such as ZTE and Huawei,” Wang says. “The bestselling products on our site today are personal computers, tablets and handsets.”
However, Wang also has found that Tanzania and other countries in Africa do not have the established e-commerce infrastructure of more developed markets. “For example, in many African countries it is hard to complete an order online as many local banks don’t provide online payment and credit card services,” he says. “Although PayPal is one payment option, it still rarely used by most Tanzanians.”
He also found that many consumers in Tanzania are not familiar with online purchasing and want to see products before buying. That led Wang to open a shop in the country’s capital city, Dar es Salaam, where shoppers can pay in cash. “It surprised me that one of our largest clients paid us 300,000 yuan ($48,361) in cash.” Wang says.
There are also culture differences. In one instance Wang and Luvanda visited a Tanzanian client, who served them iced mango juice. “There still some left in my glass when we prepare to leave,” Wang says. “Luvanda took my glass and drank all the juice. Later he told me it is very rude to leave any drink or foods served by Tanzanians and that we could lose orders by doing so.”
While there are many challenges Wang is also finding he has first-mover advantages. As one of the earliest e-commerce entrants in Tanzania, Chinaworldbuz.com has attracted a lot of attention. Almost all the major local media outlets have interviewed Wang and reported on his company, including the largest TV station TRA and Tanzania Daily News.
The site has attracted 50,000 visits in a few months, though Wang says sales remain low, without providing details. He notes that Internet access is expensive at more than $100 per month, and relatively slow. Those factors deter growth, he says. Most clients of Chinaworldbuz.com are small retailers and they often pay by cash at the end of the transaction. Wang hopes eventually he can sell more directly to online consumers.
Chinaworldbuz.com is currently only in English, but Wang says he is building a site in Swahili, one of the most widely spoken languages in Africa. He also plans to expand into more African countries, although he did not say when or where.
Readers who prefer to read in Mandarin can find Chinese e-commerce news on dianshang500.com.