The greater the problems you can solve, the larger the market you can capture.
In the new book *How Africa Works* published this year, the author Joe Studwell describes Africa as “the last blue ocean”. Based on seven years of field investigation and literature research, he believes that Africa’s past economic backwardness and low level of industrialization are caused by excessively low and sparsely distributed population density, which leads to a fragmented consumer market, and the deployment of infrastructure such as hydropower networks can only cover a small number of people at high cost, making it difficult to form a specialized industrial chain division of labor.
Today, Africa has a population of nearly 1.6 billion with an average age of less than 20, making it the continent with the youngest population structure in the world. Its population density is also increasing year by year, which can dilute the deployment cost of infrastructure such as hydropower, roads and logistics, and support a large-scale consumer market and specialized division of labor. An increasing number of Chinese people and enterprises have also extended their business reach to Africa. According to data disclosed by the General Administration of Customs of China, China-Africa trade volume has doubled in the past decade, and China has maintained its position as Africa’s largest trading partner for 16 consecutive years.
From smartphones to motorcycles, from solar products to daily necessities, a large number of Chinese-made goods are pouring into the African market. 3C products produced by Shenzhen’s supply chain flow to the whole of Africa through distribution hubs such as Lagos and Nairobi, while daily consumer goods manufactured in Yiwu fill open-air markets, community family stores and roadside stalls across Africa.
Among the crowds of people heading to Africa, Liao Xuhui is one of the earliest arrivals who has taken deepest roots in the local market.
Since 2000, Liao Xuhui has been engaged in Africa-related trade, helping friends organize supply sources in Shenzhen (sourcing leftover textile inventory). In 2003, he quit his stable domestic job, started the VCD wholesale business by raising a total of 300,000 RMB as initial capital, and sold the products from Shenzhen to Togo, Africa. At that time, Africa was a typical seller’s market where electronic products were in short supply, and Liao Xuhui quickly earned his first pot of gold in Africa.
In 2005, when the local situation in Togo fluctuated, Liao Xuhui arranged his team to leave Togo and temporarily withdraw to neighboring countries for safety reasons. What he still remembers vividly to this day is that during their absence, a local African employee helped them take care of the warehouse until local order was restored. This incident also strengthened Liao Xuhui’s confidence in developing his business in Africa.
From 2006 to 2008, he expanded his business from West Africa to more than 20 countries in Central and East Africa, and also built his own home appliance brand LEADDER locally, focusing on audio-visual products such as DVD players, speakers and televisions.
At that time, e-commerce had just started in China, and most Africans had no idea what e-commerce was. Liao Xuhui had already made another career pivot, founding the cross-border e-commerce platform Toafrica (upgraded to Amanbo in 2015), three years earlier than the emergence of local African e-commerce platforms such as Jumia, while the large-scale influx of Chinese sellers into Africa to do e-commerce did not happen until a decade later.
As one of the earliest cross-border e-commerce platforms in China focusing on the African market, Amanbo is a key project of digital economic cooperation with Africa recognized by the Ministry of Industry and Information Technology of China. The platform has set up local operation centers and overseas warehouses in many countries including Cameroon, Kenya, Togo and Côte d’Ivoire, with business covering more than 30 major countries in Africa, connecting 10,000 Chinese suppliers and more than 200,000 local African B-end merchants.
With such an early start, the difficulties far exceeded imagination: at that time, the network speed in most African countries was only 5K/S, and it took several minutes to load a single product image; the power went out three or four times a day, and the server was frequently disconnected; outside the capital cities, roads were unpaved dirt roads, and logistics could not reach at all. Therefore, he tried to develop an offline database, build self-operated WiFi sites, and went through countless setbacks, finally drawing a conclusion: business innovation cannot be too far ahead of its time, and premature market layout will only make you a “paving stone” for the industry.
Over the past 20+ years, Liao Xuhui has never left Africa, and like Studwell, he always believes that the African economy will eventually rise. He said: “Africa is a blue ocean but also a slow ocean, where there is no easy money. More and more people are going to Africa, but few of them settle down to do business properly, many leave after staying for two years, leaving enough space for those who persist in the long run.”
The following is our conversation with Liao Xuhui:
1. First venture into Africa and rank among top 3 in the industry
36Kr: Could you introduce the process of earning your first pot of gold?
Liao Xuhui: My first contact with Africa was around 2000. A friend of mine was stationed in Africa, and I helped him connect with domestic suppliers in Shenzhen. After shipping several batches of goods, I found that this was a market that had not yet received sufficient attention, with huge potential.
In 2003, I started the VCD wholesale business in Togo, West Africa with 300,000 RMB as initial capital. At that time, Africa was a typical seller’s market. A 20-foot standard container of goods cost 300,000 RMB to purchase domestically, and could be sold for 600,000 RMB after arriving at the port. After deducting costs such as freight and customs clearance, the net profit per container was nearly 200,000 RMB.
From 2006 to 2008, our business entered a period of rapid expansion, gradually expanding from Togo to countries such as Cameroon and Tanzania, covering nearly 20 countries in West, Central and East Africa. In the same period, we also launched our own home appliance brand LEADDER, focusing on audio-visual products such as DVD players and speakers, and it took us only three years to rank among the top three in the West African industry.
36Kr: At the stage of building your own brand LEADDER, how did you carry out market promotion?
Liao Xuhui: There is no need for fancy high-end marketing methods, down-to-earth practices work best.
When we first started building the brand, we had no money to invest in advertising, so we cut in from the daily scenes that locals are most familiar with. For example, porters in the wholesale market carry goods through the market every day, so we distributed T-shirts printed with the brand logo to them, turning them into free movable human billboards. We also gave gifts to taxi drivers, asking them to paste brand stickers on their car bodies, which became mobile advertising spaces all over the city.
At that time, the Internet penetration rate in Africa was very low, and even televisions were not widely popularized. The online and TV advertisements that we are familiar with could not reach the core target users at all. Instead, this kind of localized communication method had the best effect.
36Kr: What is the most common misunderstanding of Chinese merchants when they understand the African market?
Liao Xuhui: The most common misunderstanding is treating Africa as a single unified large market. In fact, Africa, with a population of 1.6 billion, consists of 54 completely independent markets, and there is no possibility that a single set of solutions can work across the entire continent. Many merchants have not even fully understood the market of one country, but they are eager to do business across the whole of Africa, which will inevitably lead to setbacks.
The most intuitive difference lies in product standards: countries that were former French colonies use European standard two-pin round plugs, while countries that were former British colonies use British standard three-pin square plugs. The same electrical appliance with an incompatible plug cannot be put on the shelves for sale at all. There are also huge differences in consumption preferences: East African consumers value product practicality more, and prefer models with USB card reading functions; West African consumers favor products with complete functions, believing that the more functions a product has, the higher its cost-effectiveness. Cultural and religious differences are also significant: Muslim populations account for a high proportion in North and West Africa, while East Africa is dominated by Christians. Product design and marketing content all need to adapt to local cultural and religious customs.
2. Evangelist of African e-commerce: Over 10 years of market education
You had already made your own brand rank among top 3 in West Africa by 2008, why did you choose to pivot to building an e-commerce platform?
Liao Xuhui: There are three main reasons. First, I was among the first batch of people in China who came into contact with e-commerce. I was involved in e-commerce related businesses back in 1998, so I am quite sensitive to this track. At that time, China’s e-commerce industry was developing rapidly, and Alibaba was about to go public, which made me see the possibility of the e-commerce model in Africa. Second, the 2008 financial crisis impacted the traditional wholesale business, and the growth of offline wholesale business hit a bottleneck. Third, there was channel conflict between our own brand business and the wholesale business, which caused strong dissatisfaction among distributors. After comprehensive consideration, we decided to transform to build an online platform.
However, the basic conditions for doing e-commerce in Africa at that time were worse than anyone could imagine: the network speed was only 5K/S, it took several minutes to open a web page, and product images could not be loaded at all; the power supply was extremely unstable, with 3 to 4 power outages per day, and the network could be disconnected at any time; road traffic conditions were poor, and there was basically no delivery capacity in most areas except the core capital regions.
In order to adapt to the local market, we made many attempts that seem very “silly” in hindsight: we developed an offline product database, allowing users to download the product library to their local devices at offline stores, and then go back to the stores to synchronize orders after selecting products. We built self-operated WiFi sites in large wholesale markets to solve the Internet access problem for merchants. We revised the interface for three versions in total, invested a lot of capital, and went through countless setbacks. Finally, we summed up one sentence: business innovation can be one step ahead, but not too far ahead. If you lay out too early before the infrastructure is ready, you are very likely to become a “martyr” of the industry. African e-commerce did not start to gain real momentum until the last three to five years. The previous dozen years were all market cultivation periods, and most players who could not persist withdrew from the market.
36Kr: Apart from infrastructure problems such as network speed, power supply and roads, what other difficulties did you encounter when doing e-commerce at that time?
Liao Xuhui: The core deadlock is the inversion of local market price and CIF cost. A T-shirt priced at 9.9 RMB in China has a cross-border air freight cost of 15 USD to be delivered to consumers, which is higher than the value of the product itself. If the price is set too high, ordinary consumers cannot afford it; if the price is set too low, you will inevitably make losses. This creates an inescapable vicious cycle for African cross-border B2C: the conflict between excessively low consumption power and excessively high CIF cost will not disappear in the short term.
Secondly, the return cost is very high. The average return rate of cross-border e-commerce is 20%-30%, and the returned goods have to bear another cross-border freight. As long as a return happens, you basically make a loss.
36Kr: What is the current scale of online transactions in Africa?
Liao Xuhui: From the perspective of Africa’s overall retail structure, online retail currently only accounts for 5%-8% of the total social retail sales, which basically comes from the middle and high-income young groups. More than 90% of the transactions still take place offline, in wholesale markets, bazaars, supermarkets, family stores and roadside vendors. If you only do pure online business, you are voluntarily giving up 95% of the market space, only capturing a very small group of users with the smallest scale and the highest demand for services, so it is naturally very difficult to expand the business scale.
36Kr: If pure online business does not work, what kind of e-commerce is suitable for the African market?
Liao Xuhui: After years of trials and setbacks, we found that selling goods in Africa requires an omnichannel approach. I developed an OSO model, which is the combination of Online (online mall) + Social (social channels) + Offline (physical stores). The online end is the official mall, and the offline end is the partnered stores and outlets. The Social end not only refers to online social platforms such as Facebook and TikTok, but also includes offline social scenarios such as churches and bazaars. We provide users with a social marketing platform called AMP (Amanbo Marketing Partner).
The core of this model is not to compete with offline merchants for business, but to empower offline merchants: help digitize and precipitate offline traffic, and at the same time divert online traffic to offline to complete the delivery. This model can adapt to the African market environment and can operate sustainably in the long run.
Many people ask me if Africa will give birth to e-commerce platforms like Taobao and Pinduoduo in China in the future. I think it might happen, but definitely not now, we still have to wait. We have to wait until infrastructure such as network speed and power supply are further improved, until the logistics network can cover counties and towns, until ordinary people get used to online payment, and until the public’s consumption capacity reaches a higher level. None of these can be fully achieved in just three to five years.
I started doing pure online e-commerce back in 2009, a full 10 years ahead of the curve, and spent a lot of money on market education. Now if someone still comes in with the idea of “copying the Chinese model to build an African Taobao”, they will most likely end up being a paving stone. Business development follows the stage of market development, you cannot skip steps. You need to take root offline to build an omnichannel business, grow together with the market, and when the real industry trend comes, you have already taken deep roots here, so that you can seize the opportunity.
36Kr: For merchants who want to find opportunities in Africa now, what services can Amanbo provide?
Liao Xuhui: Based on our comprehensive judgment of China-Africa cooperation and the impact of AI on the industry, Amanbo is adjusting our product and service strategy. Strategically, we will stay fully focused on the African market without any change. Tactically, we will follow the trend of the times and technological development, open the Amanbo platform to domestic and foreign users for free to the maximum extent, integrate domestic and foreign partners, and provide professional services to help users achieve efficient delivery and local support. At the same time, we will provide financial products (supply chain finance, cross-border settlement, installment payment, etc.), so as to build high-viscosity interaction with users and partners, and jointly build a smart ecosystem for China-Africa cooperation under the background of the AI era, so that everyone can truly go global together, create win-win results, and help China-Africa cooperation achieve higher quality development.
Specifically, in addition to the platform itself, you can turn to us for services ranging from basic China-Africa business knowledge popularization, product diagnosis, to market research, business opportunity verification, channel construction, brand globalization, project consulting, and industrial operation support. Amanbo will no longer be positioned as a pure e-commerce platform, but a comprehensive service platform for China-Africa cooperation built on the Amanbo digital infrastructure.
3. More opportunities in Africa beyond e-commerce
36Kr: Apart from e-commerce, what other opportunities are there in Africa?
Liao Xuhui: Don’t only think about e-commerce when it comes to Africa, there are far more opportunities out there.
In the next 5 to 10 years, industrial globalization is the general trend. The Southeast Asian market is already a red ocean with extremely fierce competition, while the 1.6 billion population African market has much lower competition intensity. You can also do entrepôt trade relying on the African Continental Free Trade Area, which covers 54 countries with zero-tariff trade within the region. If you set up a factory in one country, your products can be sold to the whole of Africa without tariffs, which brings huge market space.
Site selection for industrial landing mainly depends on several dimensions: stable political environment, support from free trade zone policies, low labor cost, preferably with a port near the sea to facilitate logistics, and close to customers or the market. At present, major industrial gathering areas include Morocco and Egypt in North Africa, Kenya in East Africa, Lagos and Ghana in West Africa, and South Africa.
Secondly, there are import trade opportunities. Many African products now enjoy zero-tariff policy when entering China: African beef and mutton processed into beef jerky and shipped back to China have much lower cost than domestic products, and the quality is also very good. There are also resource products such as coffee, cocoa, nuts and minerals, which have high quality and low price in Africa and are very competitive when shipped back to China. It is best for
