It is both a blue ocean and a slow ocean: The 25-year pioneering history of a Chinese e-commerce entrepreneur in Africa | Overseas Trailblazers

Introduction:

Looking globally to explore the second growth curve has become an established direction, but how to achieve overseas expansion still tests the wisdom and courage of every Chinese enterprise. Brand globalization, supply chain globalization, cross-border e-commerce... there are numerous paths, yet no one-size-fits-all answer; North America, Southeast Asia, the Middle East, Latin America... the markets are vast, each with its own set of challenges. Behind every long expedition is the down-to-earth exploration of Chinese enterprises; more and more figures from China are emerging on every distant coastline.

The "Overseas Trailblazer" column aims to find leading overseas expansion enterprises in different sectors, dissect practical operation cases from a professional perspective, precipitate methodologies from consensus, and discover new possibilities amid differences.

In a new book titled How Africa Works published this year, author Joe Studwell describes Africa as "the last blue ocean". Based on seven years of field investigation and literature research, he argues that Africa's past economic backwardness and low level of industrialization were caused by excessively low and sparse population density, which led to a fragmented consumer market, and the deployment of infrastructure such as hydropower networks could only cover a small number of people at high cost, making it difficult to form a professional 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 professional division of labor. More and more Chinese people and enterprises are also extending their business reach to Africa. According to data disclosed by the General Administration of Customs, 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 "Made in China" products are pouring into the African market. 3C products from Shenzhen's supply chain flow to the whole of Africa through distribution centers such as Lagos and Nairobi, and daily goods produced 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 and the most deeply rooted players.

Since 2000, LIAO Xuhui has been engaged in African trade, helping friends source goods (procure overstock textiles) in Shenzhen; in 2003, he quit his stable domestic job, used the 300,000 yuan principal he gathered together to wholesale VCD players in Shenzhen and sell them to Togo, Africa. At that time, Africa was a typical seller's market where electronic products were in short supply, so LIAO Xuhui quickly earned his first bucket of gold in Africa.

In 2005, the local situation in Togo fluctuated. Out of safety concerns, LIAO Xuhui arranged for his team to leave Togo and temporarily withdraw to the neighboring country. What he still remembers to this day is that during the days when they were away, a local African employee helped them take care of the warehouse until the 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 Africa 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 did not even know what e-commerce was. LIAO Xuhui had already made a new transition, 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 for digital economic cooperation with Africa recognized by the Ministry of Industry and Information Technology. The platform has set up local operation centers and overseas warehouses in Cameroon, Kenya, Togo, Côte d'Ivoire and many other countries, covering more than 30 major African countries, connecting 10,000 Chinese suppliers and more than 200,000 local African B-end merchants.

Starting so early, the difficulties were far beyond imagination: at that time, the network speed in most countries was only 5KB/S, and it took several minutes to open a product image; power outages occurred three or four times a day, and servers were frequently disconnected; outside the capital were all dirt roads, and logistics could not reach at all. Therefore, he tried to develop an offline database and build self-owned WiFi sites, and stepped into countless pitfalls. Finally, he came to the conclusion that: business innovation should not be too ahead of its time, and premature layout can only make you a "paving stone".

Over the past 20 years, LIAO Xuhui has never left Africa, and like Studwell, he has always believed that the African economy will eventually rise. He said: "Africa is a blue ocean but also a slow ocean, there is no quick money. More and more people are going to Africa, but few of them can settle down to do business well. Many people leave after staying for two years, leaving room for those who persist in the long run."

The following is our conversation with LIAO Xuhui:

01

First Steps in Africa

Ranking Top 3 in the Industry

Could you introduce the process of earning your first bucket of gold?

LIAO Xuhui: I first came into contact with Africa around 2000. A friend was stationed in Africa, and I helped him connect with domestic procurement 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 took 300,000 yuan of principal to start the VCD wholesale business in Togo, West Africa. At that time, Africa was a typical seller's market. A 20-foot standard container of goods had a domestic procurement cost of 300,000 yuan, and could be sold for 600,000 yuan after arriving at the port. After deducting costs such as freight and customs clearance, the net profit per container was nearly 200,000 yuan.

From 2006 to 2008, our business entered a period of rapid expansion, gradually expanding from Togo to Cameroon, Tanzania and other countries, covering nearly 20 countries in West Africa, Central Africa 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 we became top 3 in the West African industry in only three years.

When building your own brand LEADDER, how did you carry out market promotion?

LIAO Xuhui: We didn't engage in fancy high-profile promotions, down-to-earth practices worked best.

We had no money to invest in advertising when we first started the brand, so we cut into the daily scenarios that locals are most familiar with. For example, porters in the wholesale market carry goods through the market every day, so we gave them T-shirts printed with the brand logo, turning them into free movable human billboards; we also gave gifts to taxi drivers, asking them to stick brand stickers on their car bodies, which also became mobile advertising spots 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 advertising placements we are familiar with could not reach the core target users at all. Instead, this kind of offline communication method had the best effect.

What is the most common misunderstanding that Chinese merchants have when understanding the African market?

LIAO Xuhui: The most common misunderstanding is treating Africa as a monolithic unified big market. In fact, Africa, with a population of 1.6 billion, consists of 54 completely independent markets. There is no possibility of covering the whole of Africa with a single solution - many merchants have not even fully understood the market of one country, but they want to do business across the whole of Africa, which will inevitably lead to pitfalls.

The most intuitive difference lies in product standards: former French colony countries use European standard two-pin round plugs, while former British colony countries use British standard three-pin square plugs. If the plug of the same electrical appliance does not match the local standard, it cannot be put on the market at all. Consumer preferences also vary greatly: East African consumers pay more attention to product practicality and prioritize models with USB card reading functions; West African consumers prefer products with complete functions, believing that the more functions a product has, the higher its cost-effectiveness. Cultural and religious differences are also significant: Muslims account for a high proportion of the population 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.

02

The Evangelist of African E-commerce:

Over 10 Years of Market Education

In 2008, you had already made your own brand rank top 3 in the West African industry. Why did you choose to transition to an e-commerce platform?

LIAO Xuhui: There are three main reasons: I was one of the first batch of people in China to come into contact with e-commerce, and I had engaged in e-commerce related business back in 1998, so I am quite sensitive to this track. At that time, the domestic 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 a channel conflict between the self-owned brand business and the wholesale business, and distributors had strong opinions. After comprehensive consideration, we decided to transform to an online platform.

But at that time, the basic conditions for developing e-commerce in Africa were far worse than imagined: the network speed was only 5KB/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 power outages three or four times a day, and the network could be disconnected at any time; road traffic conditions were poor, and there was basically no distribution capacity in most areas except the core capital regions.

In order to adapt to the local market, we tried many seemingly "stupid" methods: we developed an offline product database, allowing users to download the product library to their local devices at offline stores, select products, and then go back to the stores to synchronize orders; we built self-owned WiFi stations 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 money, and stepped into countless pitfalls. Finally, we summed up one sentence: business innovation can be one step ahead, but not too far ahead. If you make a premature layout before the infrastructure is ready, you are very likely to become a "martyr" of the industry. African e-commerce has only started to grow rapidly in the last three to five years. The previous ten years were all market cultivation periods, and most players who could not hold on have exited.

In addition to infrastructure problems such as network speed, power supply and roads, what other difficulties did you encounter when developing e-commerce back then?

LIAO Xuhui: The core deadlock was the inversion of local selling price and CIF cost. A T-shirt priced at 9.9 yuan in China has a cross-border air freight cost of 15 US dollars to be delivered to consumers. The logistics cost is higher than the value of the product itself - if the price is set high, ordinary consumers cannot afford it, and if the price is set low, you will definitely lose money. This creates an inescapable dead loop for African cross-border B2C: the conflict between low consumption power and high CIF cost will not disappear in a short time.

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 the cross-border freight again. As long as a return occurs, you will almost lose money.

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 small group of users with the smallest scale and the most demanding service requirements, so it is naturally difficult to achieve large scale.

If pure online business does not work, what kind of e-commerce is suitable for Africa?

LIAO Xuhui: After so many years of trial and error, we found that selling goods in Africa requires omni-channel layout. I have developed an OSO model, which is the combination of Online (online mall) + Social (social channels) + Offline (offline stores). The online end is the official mall, the offline end is the cooperative stores and outlets; the Social end not only includes online social platforms such as Facebook and TikTok, but also 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 offline traffic realize digital precipitation, and at the same time divert online traffic to offline to complete delivery. Only this model can adapt to the African market environment and operate sustainably in the long run.

Many people ask me whether Africa will have e-commerce platforms like Taobao and Pinduoduo in China in the future. I think it may happen, but definitely not now, we still need to wait. Wait until the infrastructure such as network speed and power supply is further improved, wait until the logistics network can cover counties and towns, wait until ordinary people develop the habit of online payment, wait until the consumption power of the general public rises to a new level. None of these can be fully achieved in three to five years.

I started doing pure online e-commerce back in 2009, a full 10 years earlier, and spent a lot of money on market education. Now if someone still has the idea of "copying the Chinese model to build Africa's Taobao", they will most likely end up being a paving stone. Business develops in line with the market stage, and you cannot skip necessary steps. First take root offline to develop omni-channel business, grow together with the market, and when the real trend comes, you are already deeply rooted here, so that you can seize the opportunity.

What services can Amanbo provide for merchants who want to find opportunities in Africa now? LIAO Xuhui: Based on the comprehensive judgment of China-Africa cooperation and the impact of AI on the industry, Amanbo is adjusting its product and service strategies. Strategically, we remain committed to the African market unswervingly. In terms of tactics, we will follow the trend of the times and technology, open the Amanbo platform to domestic and foreign users for free to the maximum extent, integrate domestic and foreign partners, and assist users to achieve efficient delivery and localized support with professional services. At the same time, we provide financial products (supply chain finance, cross-border settlement, installment payment, etc.), so as to build high-sticky interaction with users and partners, jointly build a smart China-Africa cooperation ecosystem in the AI era, let all parties achieve the goal of expanding overseas together, create win-win results, and help China-Africa cooperation achieve quality upgrading.

Specifically, in addition to the platform itself, we can provide services covering basic China-Africa business knowledge popularization, product diagnosis, market research, business opportunity verification, channel construction, brand globalization, project consultation, and industry operation support. Amanbo will no longer be positioned as an e-commerce platform, but a