Challenges for Asian Companies in African Markets

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Entering the African markets can be intimidating for Asian companies, but with the right strategic partners, entry can be simplified and successful. Lack of African market data and statistics is often regarded as a challenge to Asian companies seeking market entry in Africa. International databases tend to provide information on larger African markets, overlooking smaller markets where potential may exist. The good news is that entering the larger African markets is often a great strategic starting point for Asian companies. Larger markets tend to have better developed political and legal frameworks, easing entry into the market. Once established in the larger African markets, Asian companies will find it easier to expand to smaller markets through local business connections.

Distribution itself is often regarded as a challenge to reaching the vastly expansive African market. However, investors will find that the cost of distribution is relatively low, making distribution more manageable than initially perceived. Furthermore, the African markets are largely concentrated in major cities, with around 43,8% of the African population being urban. Distribution to remote areas should not be necessary and focus on continuous supply to major business centres should be prioritised.

Foreign clients often express concern over language barriers in the African market. Although there are over 2000 spoken languages in Africa, it is important to realise that most African countries have English as their first language. Other African countries often have English as a second language. Regardless, most commercial business in Africa is undertaken with English as the medium of choice, particularly with international relations.

These challenges and others which may arise can be addressed by partnering with local companies for strategic advice, business development and legal assistance. Smit & Van Wyk can assist from an intellectual property (IP) law perspective – obtaining IP protection across Africa before entering the market here – as well as connecting our Asian clients with our trusted network of agents across Africa.