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Japan is back to Africa

August 26, 2016

Category : ABP's insight

Author: Yukari Umemoto


From between the 1960s to the 1980s, a number of Japanese companies had been doing business on the African continent. They had come to initially sell products such as electronics and home appliances; textiles and garments and other manufactured products. Some companies even had factories and plants in Africa.

I have seen a comprehensive list of the Japanese companies in the 1960's that were doing business in Africa. On the list were 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 sought to cement the survival of their ventures abroad.

After the economy had developed and the market had rapidly grown and matured, Japanese companies turned to concentrate on the populous 127-million, high-density domestic market. There was a decline in light manufacturing and a surge in complex and high-tech manufacturing processes. The products came to compete small differentiation to correspond to the maturity of the market. As such, the number of light manufacturing Japanese companies developing products and basic need goods in Africa progressively reduced.

Toyota's automobile is one of the jewels of Japanese industry history with their resilience, precision, high-efficiency and user friendly vehicles. Since the company first produced its domestically built saloon car in 1935, the quality of their automobiles, and their system of procurement and operations have been polished among the competitive market crowded by about 10 automobile manufactures and had perfected to one of the highest and most efficient levels globally.


Strong industrialization partner in Africa with reliable machinery

The hallmark of Japanese business can be summarized as trusted products and services combined with the organized and efficient operation. This culture is perpetuated through the highly competitive and demanding domestic market. In the medical equipment sector, Simadzu, 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 had started 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 deal its products on the continent. The largest zipper manufacturer in the world, YKK supplies high quality garment material to African factories from their factory 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 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.

The Noodle making machinery used to produce Indomie, (the market leader in instant noodle in Africa) are products by Japanese manufacturers. In Lagos, the management of Indomie told me "We do not use machinery other than Japanese one". African ladies' hair extensions are made using raw material of high-tech and affordable synthetic fibers by Japanese chemical manufacturers. Japanese products would 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 making a return 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 obvious from looking at "List of Japanese Enterprises Doing Business with Africa" published by our company, Africa Business Partners. Half a century from the 1960s, again, we reviewed and edited the list of Japanese companies doing business in Africa. The list can be found on our website.

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 Japanese company, Rohto Pharmaceutical. The popular "Lucozade" and "Ribena" drinks, which are preferred by children  in Africa, are currently products of a Japanese beverage maker, Suntory food international. Seiko Epson began selling their innovative printer in Africa that use ink-tank 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 would be a gateway to the World. The CEO of paint manufacturer, Kansai Paint explained the importance of the African market for their company. Even though they were an established and profitable market leader not only in Japan and other Asian countries, but also in the world, they needed to expand their market into bigger, untapped markets. As such, they acquired a top South Africa paint maker in 2011. 

"Ever since the acquisition, our managements and operation system has since changed. We realized that we were doing business with a primarily Japanese style, even though our market was outside of Japan. The African market conveyed to us international behavior and practice."

JT International, a subsidiary of Japan Tabacco known for its aggressive acquisition in Africa and also in the world invested in the 100 million populous 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 their global strategy especially as they are facing fierce competition globally. 

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 company, Germany's Grohe. 

Panasonic, a global electronics manufacturer of home appliance and personal computer was reported this month that they plan to break into the highly competitive and growing smart phone market in Sub-Saharan Africa in seeking to emerge as a strong firm in emerging market. 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 African countries.

I am currently building a partnership in the animation industry between Africa and Japan, which is one of Japan's specialties with more than 60% of production of animation in the world. The variety in terms of the type of industry, size of company, business strategy in each and every area in the continent with regards to  Japanese business in Africa is expanding.

List of Japanese Enterprises Doing Business with African Continent and Countries

Japanese companies' list doing business in Africa, edited by ABP[Detail]

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