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South Africa | The Ma, the merrier

By Nicholas Norbrook
Posted on Wednesday, 22 August 2018 09:23

It did not take very long for Lars Veul to decide. After all, an invitation from Jack Ma, China’s most successful tech entrepreneur, who founded Alibaba, an e-commerce group with a $580bn market capitalisation, does not arrive every day. “It was inspirational,” admits Veul, whose parcel delivery company, Pargo, was one of 24 African start-ups selected to send representatives to Alibaba’s headquarters for training and mentoring in November 2017.

“There were lectures at their campus in Hangzhou by top Alibaba executives, including Ma himself, as well as site visits across the country,” says Veul. “The role that e-commerce has played there is huge, with internet and mobile, apps and technology which made things accessible for Chinese people that previously weren’t.” And, by the sounds of it, the African start-uppers were kept busy. “It’s a beautiful city, with a lake. But between the talks and the trips, we didn’t really get a chance to look around”, Veul says.

Getting Africans to grow their own successful businesses will make the difference between another half century of dependency and genuine industrial growth, argues United Nations Conference on Trade and Development (UNCTAD) secretary-general, Mukhisa Kituyi. He says: “African entrepreneurs should not be asking successful businesses, ‘How can I distribute your products?’ Africans should be saying ‘I have an idea I want to grow. How can you help me to grow it? How can you help me market it?'”

Ma, who advises UNCTAD on youth entrepreneurship, agrees on that point. On a visit to East Africa in July 2017, he launched his $10m African Young Entrepreneurs fund to help businesses get hands-on experience: “I want them to go to China, meet our people, see all the things we have been doing, all the great ideas China has,” he said.

What the 24 business leaders saw certainly can be applied back home, says Veul. He explains, for example, how 91% of all payments done on the Alibaba site take place on mobile phones, not a million miles from how mobile-­money platform M-Pesa is revolutionising commerce in Kenya. But there are more profound changes taking place in China. Alibaba and other e-commerce players have connected Chinese producers and businesses in far-flung villages deep in the rural areas to consumers in the cities.

A big business-to-consumer platform in China is Alibaba’s, “and they have named some of these places Tmall villages”, says Veul. He explains how government funding and e-commerce companies like Alibaba are co-­funding centres where farmers and rural producers can come tog­ether to form small companies and learn how to market and package products for sale into, for example, the rapacious Beijing market.

Selling to China

Beyond Chinese examples, the African entrepreneurs also saw how Alibaba is using ‘big data’ to structure its businesses – an idea that Veul wants to apply to his business back in South Africa. “We are now more actively using data, asking our partners and our customers, and using that data to really find answers to the problems we face,” Veul says.

But key to a real blossoming of the China-Africa commercial relationship will be the growth of African exporters selling into the Chinese market. “With Taobao and Tmall, it is absolutely possible for a Cape Town winery to set up an account and start selling their wines, or for a Kenyan tea farmer to start selling Kenyan tea on that platform,” says Veul. “Global ecommerce is already happening, and I think that’s going to take off in the future.”

For that to happen, a step-change in marketing and packaging will have to take place in Africa – but here too, solutions are available. “There are a huge amount of Chinese companies who advise. We would call them digital marketers. So if you, say, want to sell some wine but don’t speak Chinese, don’t know the price range, appropriate quantities or the right shipping channels and packaging to penetrate the Chinese market, they can help you,” says Veul.

None of this will happen without bandwidth, the lifeblood of the digital economy. “Not being connected to the internet today is worse than not having electricity 100 years ago,” as Ma puts it. For Veul, there is at least slow progress: “By 2025, about 600 million people in Africa will have a smartphone, that’s about half the continent.”

Government has a role to play, both as a catalyst for businesses and an infrastructure provider. From China’s large investments in fibre networks and ­partially state-run telecoms operators to small e-­commerce cooperative centres, Beijing is not shy about using the state to power its digital transformation.

African countries, too, are not being left behind. Nigeria’s investment in cheap, reliable internet was essential for Yaba, the tech hub in Lagos, to flourish (see TAR98, March 2018). In South Africa, “government is really very active in trying to make Cape Town a tech hub for Africa,” says Veul. “Everybody is realising the power and the opportunity that tech can have, and, as in China, that can be much bigger than just a few companies but actually a complete ecosystem of small and medium-sized enterprises taking the next step.”

As for his own company, the China visit could be the start of that next step. Pargo has asked Alibaba if it can help provide last-mile logistics solutions for Chinese importers. “We are in discussion to see if there is an opportunity to use our services to get parcels into South Africa and help streamline their processes,” says Veul. That makes his two weeks in Hangzhou well spent.

From the April 2018 print edition

Top Photo: Alibaba Group headquarters in Hangzhou, China. The city has become a tech hub on the back of the e-commerce giant

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