Young Chinese entrepreneur runs brisk home appliance business in Africa

(Photo/passagegroup)

A young Chinese entrepreneur has been running a thriving business by selling both large and small home appliances of high quality in Africa.

Xu Ran, now in his thirties, founded a home appliance company called Mooved in Shenzhen, south China’s Guangdong Province in 2020. The sales volume of his company’s products stood at 30 million yuan (about $4.4 million) that year. In early May this year, the company announced that it had received tens of millions of yuan in a pre-A round of financing.

Xu joined renowned Chinese TV maker Skyworth in 2014 after graduating from Xi’an International Studies University in Xi’an, northwest China’s Shaanxi Province. In 2015, he started to explore new markets for Skyworth in East African countries, such as Kenya, Tanzania, Ethiopia, and Rwanda.

As a trailblazer in exploring African markets in the home appliance sector, Xu’s team was shocked by Africa’s everyday reality, including weak infrastructure, limited consumption levels and capabilities, as well as the cultural differences between China and Africa.

However, Xu was determined to build something from nothing, hoping to cooperate with local distributors as soon as possible to introduce the brand Skyworth to African markets. He faced a tough road ahead, since in 2015 most Africans recognized South Korean brands Samsung and LG, which accounted for 80 percent of the local market share, as preferable products. In addition, there was a period of time when some inferior products labeled “Made in China” in Africa tarnished the image of those products made and exported from the country.

Xu explained to African distributors that it is unrealistic for consumers to get high-quality products and service with low prices. More importantly, China also manufactures high-quality products while Chinese original equipment manufacturers produce products for brands such as Samsung and LG, Xu said.

Gradually, Xu reassured the African distributors and by 2019 he had entered into cooperation with at least 20 agents in East Africa and West Africa. Between 2015 and 2019, Xu explored markets in over 20 different African countries.

After resigning from Skyworth, Xu began to start his own business under a new brand name “Mooved.” He offered favorable conditions to many local distributors in Africa, such as preferential prices, signboards, and showcases to attract them and help boost sales. He also provided sound after-sales services and promised that distributors could return unsalable products.

In addition, Xu required that distributors purchase a certain pre-determined number of home appliances, like 300 sets for example, and that these purchases should be paid in cash, which provided a means to ensure the cash flow of his business.

Thanks to these measures, over 1,000 brick-and-mortar stores in Africa sell home appliances from Xu’s company. He then went on to renovate signboards for local distributors and replace their original brands with his brand “Mooved.” He also turned many of these stores into franchisees, which sell only his company’s products that range from TV sets to large home appliances like refrigerators.

Xu’s efforts paid off in the end. In 2020, his company sold over 20,000 TV sets in Africa, and the figure increased to more than 60,000 last year, accounting for about 6 percent of the market share across the continent.

Xu expects that his company will sell at least 100,000 to 120,000 TV sets in Africa this year. According to him, Mooved aims to sell 200,000 TV sets across the continent this year and expand its market share to reach between 20 percent to 30 percent. The entrepreneur explained that his company is now taking Ghana and Cote d'Ivoire as its priority and will explore Nigeria’s market in the second half of this year.

Xu said his company still has great opportunities. Africa lacks a well-known brand that can meet local people’s demand for quality yet inexpensive home appliances while ensuring sound after-sales services, as well as lacking a widely known chain-store home appliance retailer, he explained, adding that his company is striving to fill the gap.

However, Xu encountered many difficulties over the past years. At first, he couldn’t find an original equipment manufacturer for his brand due to the limited quantity in his first ordered batch of home appliances.

When those home appliances began to roll off the production line, the COVID-19 pandemic broke out and that took a toll on his business operations in Africa.

In order to expand his company’s business, Xu traveled back to China to seek financing at the end of 2020. At last, his company received initial funding from Shenzhen Lanhai Zhongli Capital Management Co., Ltd.

Due to the sharp rise in chip and screen prices, African markets witnessed price rises for home appliances in 2021. Xu had to offer subsidies as a way to keep sales channels active. As a result, although the sales volume of his company doubled year-on-year last year, approaching 60 million yuan, the company announced losses of about 4 to 5 million yuan.

Fortunately, the company received its second round of financing in February this year, thanks to Xu’s consistent efforts.

Xu also attributed his success in Africa to the company’s establishment of a plant in Ghana. In the past, Xu’s home appliances sold in Africa were imported from China, which led to a lead time of three months. The plant has shortened the lead time to seven days. Besides, the delivery costs have also been significantly reduced. “The establishment of the plant is a strategic move,” Xu said.

Going forward, Mooved plans to pursue its localization strategy in terms of products, personnel and brand building and aims to become the most favored home appliance brand among African consumers.