The newest frontier for global business. A fusion of tempting opportunity and formidable risk. A China-India battleground. Come, watch the potboiler called Africa.
Prejudice dies hard. In 1972, Manubhai Madhvani was arrested in Uganda for being of Indian origin and jailed in a dungeon nicknamed the “Singapore Block”. Dictator Idi Amin snatched all his wealth and expelled him from the country. To this day, the 79-year-old businessman counts himself lucky for not having been killed then.
One slice of the opportunity is a middle class numbering anywhere between 350 million and 500 million, larger than India’s. And per capita income is growing. The continent clocked an impressive growth rate of 5.2 percent in 2008. Of course, with recession and a crash in commodity prices, the growth may taper to 2 percent. But its trade links with China and India hold out hope that it could recover in tandem with these countries, says a recent article in the Harvard Business Review (HBR). Besides, as Professor Vijay Mahajan of McCombs School of Business, The University of Texas at Austin and author of the book Africa Rising says, “When you look at [opportunities in] the world, and take out India and China, so where do you go next? The logical answer is Africa.”
Indian businesses that have made a beachhead in South Africa and to an extent Nigeria, are still coming to grips with the rest of Africa. Indians are much more comfortable in the English speaking countries. They have not yet fully ventured in the French or Portuguese speaking areas. “But the Chinese do go everywhere – they don’t speak English. Yet they do business everywhere,” says Somdeb Banerjee, head of Tata Steel KZN.
“India is probably where Japan was in the 1960s and 70s, trying to establish itself in the global marketplace,” says Vikash Salig, South Africa CEO at Dr. Reddy’s Labs (Pty) Ltd. “And sadly one of the strategies that we find emanates from vested interests and to some extent from innovator companies is to place concern around quality, safety and efficacy of generic products. And given the momentum India has created, they seem to be facing the brunt of it.”
CHINA-THE DRAGON’S CHARM OFFENSIVE
In Chinese mythology, the dragon is a benevolent superhuman with auspicious power. That’s the image China wants to win in Africa. Here is a sample of how the Chinese government is driving the strategy
(This story appears in the 28 August, 2009 issue of Forbes India. To visit our Archives, click here.)