Japan is back to Africa

Japan is back to Africa

From 1960s through the1980s, a number of Japanese companies had been done business on the African continent, selling products such as electronics and home appliances, textiles and garments, and other manufactured products. Some companies had even established factories and plants within Africa.

Looking at a comprehensive list of the Japanese companies in the 1960's that were doing business in Africa; I see young, adventurous, enthusiastic and ambitious Japanese companies looking to spur the growth of their ventures and overcome the devastation of the World War II. They also sought to cement the survival of their ventures abroad.

After the economy had developed and markets had rapidly grown and matured, Japanese companies turned to concentrating on major population (127 million), high-density domestic markets. There was a decline in light manufacturing and a surge in complex and high-tech manufacturing processes. Their products came to compete through small differentiations, which corresponded to the maturity of the market. As such, the number of light manufacturing Japanese companies developing products and basic need goods in Africa progressively declined.

Toyota's automobile is one of the jewels of Japanese industry history with their resilience, precision, high-efficiency and user-friendly characteristics. Since the company first produced its domestically built saloon car in 1935, the quality of their automobiles, and their system of procurement and operations, has been refined within a competitive market crowded with close to10 automobile manufactures, and was perfected to one of the highest and most efficient levels globally.

A strong industrialization partner in Africa with reliable machinery

The hallmark of Japanese business can be summarized as trusted products and services combined with organized and efficient operations. This culture is perpetuated through a highly competitive and demanding domestic market. In the medical equipment sector, Shimadzu deals in medical diagnostic imaging equipment in 16 countries in Africa.

Termo sells artificial heart - lung machines; Horiba sells diabetes and blood component testing equipment in 38 countries; Sysmex has a presence on the whole continent with their blood testing equipment; and Fujifilm (responsible for the development of the Ebola treatment drug) also sells medical imaging equipment in several African countries.

Global agriculture machinery manufacturer Kubota has business in some African countries, including Kenya. In the construction sector, Komatsu and Hitachi Construction Machinery are selling reliable construction and mining machinery. 

Makita, which is renowned for its power tools, provides its products on the continent. The largest zipper manufacturer in the world, YKK, supplies high quality garment material to African factories from their factories located in Swaziland.

A large number of Japanese equipment and machinery is used in the manufacturing sector in Africa because factories require accuracy, efficiency and reliability without issues affecting production. In my trips to African countries, I have visited over 200 factories and I have found a lot of Japanese equipment in the garment factories (textile machinery like Murata and Toyota, sewing machines by JUKI, Brother, etc.), food factories (bread and confectionery automated machinery, automation system by pneumatics, compressors and cooling system, food packaging label printers, auto-inspection machinery, brix-acidity meters, etc.) and other related sectors.

We do not use machinery other than Japanese ones"

- A management of Indome Nigeria

Noodle-making machinery used to produce Indomie, (the market leader in instant noodle in Africa) are manufactured by Japanese manufacturers. In Lagos, the management of Indomie told me "we do not use machinery other than Japanese ones." African ladies' hair extensions are made using raw material of high-tech and affordable synthetic fibers of Japanese chemical manufacturers. Japanese products will be strong partners as the African manufacturing industry continues to develop more and more.

New list of Japanese companies doing business in Africa after half a century

The timing is perfect for Japanese business to mesh and match with the African market once again. Japanese companies are returning to the continent. 

As the African market has developed and matured since the turn of the millennium, so has the interest and appetite from Japanese companies in conducting business and engaging in collaborative partnerships on the continent. This is observable from looking at "List of Japanese Enterprises Doing Business with Africa" published by our company, Africa Business Partners. Half a century out from the 1960s,  we reviewed and edited the list of Japanese companies doing business in Africa.

One of the largest apparel retailers in Japan, Stripe International, recently produced 300,000 T-shirts in Ethiopia and exported them to Japan this February. They believed that the improvement in the skill of the workforce in Ethiopia would enable them to sell the garments in the most severe consumers' market of Japan. To-date, the 300,000 t-shirts have sold out, meaning that there are 300,000 Japanese people wearing made-in-Ethiopia t-shirts in Japan.

"Deep heat" in supermarkets in Kenya is produced by a Japanese company, Rohto Pharmaceutical. The popular "Lucozade" and "Ribena" drinks, which are preferred by children in Africa, are products of a Japanese beverage maker, Suntory Food International. Seiko Epson began selling their innovative printers in Africa, which use ink-tanks instead of the frequently changed ink cartridges.

A gateway to the world for Japanese companies

For a number of multinational companies based in Japan, Africa could be a gateway to the world. The CEO of paint manufacturer, Kansai Paint, iterated the importance of the African market for his company. Even though they were an established and profitable market leader in Japan and other Asian countries, as well as in the world, they needed to expand their business into bigger, untapped markets. As such, they acquired a top South Africa paint maker in 2011. 

"Ever since the acquisition, our management and operation systems have changed. We realized that we were doing business in a primarily Japanese style, even though our markets were outside of Japan. The African market conveyed to us the need for international behavior and practice."

JT International, a subsidiary of Japan Tobacco, known for its aggressive acquisition in Africa and also in the world, invested in the 100 million population East African nation of Ethiopia. The company acquired the Ethiopian National Tobacco Enterprise in July at the highest price of Ethiopia's privatization history with a view towards their global strategy, especially as they are facing fierce competition globally. 

The African market conveyed to us the need for international behavior and practice

- CEO at Kansai Paint

LIXIL group, the largest housing products manufacturer in Japan, which acquired a South African sanitation products maker in 2014, is expanding its business worldwide. LIXIL is doing business in Kenya with one of their group companies, Germany's Grohe. 

Panasonic, a global electronics manufacturer of home appliances and personal computers reported this month that they plan to break into the highly competitive and growing smart phone market in Sub-Saharan Africa, seeking to emerge as a strong firm in emerging markets. They plan to start in Kenya, Nigeria and Ghana.

A new era of Japanese business in Africa is open. I know at least 20 Japanese entrepreneurs who have individually started business in the industries of agriculture, ICT and manufacturing in Kenya, Uganda, Ethiopia, Senegal, Mozambique and many other African countries.

I am currently building a partnership in the animation industry between Africa and Japan, which is one of Japan's specialties accounting for more than 60% of animation production in the world. The variety in terms of the types of industry, size of companies, and business strategies in each and every area of the continent in terms of Japanese business in Africa is expanding.

Yukari Umemoto

Managing Director, Africa Business Partners