Overseas markets, especially Africa, offer new revenue growth opportunities for businesses.
In the context of a global economic slowdown, Africa, with its strong growth momentum, has become one of the fastest-growing regions in the world, attracting the attention of numerous businesses.
01 Why is going to Africa becoming increasingly popular?
Africa, a continent of both opportunities and challenges, is attracting global attention with its rapid economic growth and large population base.
Even under the pandemic in 2022, Africa's GDP has reached nearly 3 trillion US dollars. Since 1990, its economic size has doubled, making it one of the fastest-growing regions in the world.
In terms of population, Africa already has over 1.4 billion people in 2023, accounting for 18% of the global population, second only to Asia, making it the second-largest continent in terms of population.
Since 2000, Africa's annual population growth rate has remained at least 2.45%, and it has a very young population structure, with 70% of the population under the age of 30. By 2050, the population of the African continent is expected to reach nearly 2.5 billion.
With rapid economic development, Africa's urbanization process is also accelerating. Since 1990, the urban population in Africa has increased by about 500 million. As of 2023, about 43% of Africa's population lives in urban areas, compared to only 14% in 1950.
At the same time, Africa's digital infrastructure is continuously improving. Although the penetration rates of tablets and fixed broadband are relatively low, the penetration rate of smartphones has approached 50%. Moreover, Africa's digital entertainment consumption behavior shows a growth trend, with the compound growth rate in the Internet TV sector exceeding 20% since 2020, and the total revenue in Africa is expected to exceed 100 million US dollars in 2023.
These developments not only bring new opportunities for economic growth in the African region but also open up vast markets and cooperation spaces for global investors and businesses.
03 How to systematically expand overseas markets?
However, going to Africa involves more than just that; systematizing and systematically expanding overseas markets is crucial for Chinese businesses.
The global economic slowdown and the absence of revolutionary technologies pose challenges at the overall external environment level. The increasingly complex global geopolitical situation, regional conflicts, and geopolitical games have caused severe impacts on global industrial chains, energy supplies, and international financial markets. These uncertainties require Chinese businesses to rethink the layout of global industrial chains during their overseas expansion, to enhance the resilience and security of supply chains, and to maintain and expand their overseas market share.
Furthermore, Chinese businesses also face unique challenges in overseas scenarios, such as increased local protectionism, heightened ESG responsibilities, low international acceptance of brands, regulatory compliance risks, difficulties in building overseas teams, and a lack of global concepts.
Systematization and systematic approaches are necessary because existing experiences show that Chinese businesses need to address many challenges when going overseas, which requires businesses to think and build response capabilities from dimensions such as strategic goals, market decisions, and execution system construction.
Next, we will start from practical experiences to dissect the implementation paths for systematically expanding overseas markets.*To better understand, this article only provides general information, and we will conduct more in-depth research and analysis in the actual project advancement process to obtain more accurate conclusions.
Step1: Define overseas strategic goals
Review the strategic development planning of the business under the global context, and form the strategic goals and top principles for going overseas.
Businesses can use the following questions to help assess their needs:
-- Business overview: Understand the business, main operations, and products or services; understand the competitive position in the domestic market, main competitors, whether there has been international experience, and the outcomes.
-- Motivation for going overseas: What motivates the business to consider 'going overseas'? Is it to seek new market growth points, or because the domestic market is saturated?
-- Long-term goals: Can you describe the current internationalization strategy of the business? Has this strategy been internally agreed upon? (What are the long-term internationalization goals of the business? How much does it hope to increase the business proportion in the international market?)
-- Risk tolerance: How much risk can the business tolerate in the process of internationalization?
Step2: Select target markets
The choice of destination for going overseas is a 'compulsory course' for businesses preparing to go overseas.
-- Based on the business characteristics to form screening dimensions, such as market demand, competitive environment, etc.;
-- Businesses should choose one or more regions that fit their situation and are suitable for market development, based on their strategic goals.
Step3: Research target markets, formulate entry strategies
Before deciding to go overseas, businesses need to conduct in-depth research on the target markets and formulate overseas strategies.
-- Identify the needs of the target market, customer/consumer characteristics, competitive landscape, entry barriers, etc.;
-- Customize the overseas strategy based on market research results, including choosing entry methods (such as direct investment, joint ventures, franchising, etc.), positioning products or services, and formulating pricing strategies;
-- Clarify the information the business hopes to convey to customers/consumers and the customer/consumer experience it aims to shape.
Businesses can use the following questions to help assess their needs:
-- Overall, what are the pain points and challenges at the market entry level?
-- Target market selection: Consider entering which international markets? Based on what criteria are these markets chosen?
-- Initial considerations for choosing target markets: Are they based on market size, growth potential, competitive environment, or compatibility with existing businesses?
-- Market research: Has sufficient market research been conducted on the target market? Including consumer behavior, market demand, competitor analysis, etc.
-- How do you view the cultural, consumer behavior, and business practice differences between the target market and the domestic market? How are you prepared to address these differences?
-- Product/service adjustment: When entering a new market, does your product or service need to be adjusted to meet the special needs of the local market?
Step4: Build an overseas team, clarify management and operation models
Identify the team and management model that can support the market entry strategy around the business's target market.
-- Clarify the organizational structure based on business goals, plan recruitment schemes
-- Build management and operation models to adapt to overseas market needs
-- Conduct talent training, build an international talent team, and ultimately achieve talent localization
Businesses can use the following questions to help assess their needs:
-- Internal resource assessment: Are funds, talents, technology, etc., ready to support the internationalization strategy?
-- Team building: How do you plan to build an international team? Is it by dispatching domestic teams, recruiting locally, or a combination of both?
-- Management and operation models: What management and operation models are planned for different markets? How to ensure the combination of brand consistency and local market flexibility?
Step5: Risk control and compliance process checks
Ensure the team is capable of meeting the compliance and risk control requirements in overseas markets.
-- Based on target market research, identify compliance and potential risks
-- Improve internal policies or workflows to meet risk control and compliance requirements
-- Establish a long-term risk control and compliance process check mechanism to ensure the business can respond to external regulatory demands over the long term
Businesses can use the following questions to help assess their needs:
-- How well do you understand the laws and regulations of the target market? Does the business have a clear compliance strategy and a team responsible for compliance?
Step6: Integrate into the local market, full-process localization
Through full business chain localization, truly integrate into the overseas market.
-- Through product service, marketing and sales, supply chain, production and research and development, and local partner construction, improve the company's business level and enhance global competitiveness
-- Further improve performance, occupy the local market, and ultimately achieve comprehensive localization
Businesses can use the following questions to help assess their needs:
-- Cultural and legal factors: How do you view the cultural differences and legal environment of the target market? How is your business prepared to address these differences?
-- ESG-related issues of the business
-- Sustainable/stakeholder communication
Summary
The African market, with its unique charm and potential, has become a new emerging market of global interest and a new blue ocean for businesses going overseas. However, its complexity and diversity should not be overlooked, including political stability, economic environment uncertainty, ESG construction, and cultural differences, all of which bring challenges to businesses going to Africa, requiring businesses to have professionalism and keen market insight when entering.
However, in the current constantly changing international economic and political environment, this is a challenging strategic move for businesses. Those businesses that can deeply understand the market and formulate effective overseas strategies will succeed in the market and establish their foothold.
