JOHANNESBURG Oct 3 Samsung Electronics
is betting on a top-end refrigerator designed not to
lose its cool in Africa as a way into the continent's consumer
markets, where there is growing demand for prestige products
which meet local needs.
The refrigerator comes with a sticker saying it is "Built
for Africa", meaning that while it is basically the same
flagship product on sale elsewhere in the world it has been
tailored to suit local conditions.
The South Korean firm's strategy is simple, and increasingly
followed by a number of multinational firms looking to sell in
an expanding African market - lay off the cut-rate goods, launch
major products in Africa at the same time as the rest of the
world but give them local appeal to build brand allegiance among
consumers who are set to move up the income ladder.
"Africa is not a dumping ground for technology. You always
have to keep in mind that you are creating your market for the
future," said Thierry Boulanger, a director for Samsung at its
African headquarters in Johannesburg.
Samsung's "Built For Africa" refrigerators come with an
extra layer of insulation guaranteed to keep food in the freezer
frozen for a longer period of time without being powered.
Rolling blackouts are not uncommon in major urban African
centres as power-strapped utilities try to lighten the load
during peak demand.
As a result the "dura-cool" refrigerator has boosted
Samsung's standing in Africa's refrigerator market to a 23.5
percent share, with the company leading the sector for two
straight years, Samsung says.
Also in the "Built for Africa" product line are certain
flat-screen TVs and monitors and air conditioners with built-in
protectors to avoid damage from the power surges that follow
outages, and built-in solar panels for netbook computers.
SMALL BEER, BIG POTENTIAL
In the big scheme of things, Africa is still small beer for
major multinational firms, representing only a tiny portion of
global sales and profits.
A major drawback is rampant poverty and unemployment. Even
though per capita GDP in the richest economy, South Africa, is
about $7,500 a year, nearly 40 percent of the population lives
on less than $3 a day.
But the demographics, with young populations in most
countries seeing increased urbanisation, are stacked in Africa's
favour in attracting sellers of consumer products, especially as
markets stagnate or shrink in some developed markets already
saturated with products.
According to management consultancy Accenture, consumer
expenditure in sub-Saharan Africa is expected to grow from $600
billion in 2010 to nearly $1 trillion by 2020. The growth rate
of economies in the region is also expected to be double that of
the global economic growth rate during the same period.
Most African consumers still cannot afford to buy big-ticket
items from the likes of Samsung and Sony. But there are
still millions who now can and their numbers are set to grow.
And one factor making life easier for international firms is
that 10 countries - Algeria, Angola, Egypt, Ghana, Kenya,
Morocco, Nigeria, South Africa, Sudan and Tunisia - account for
an estimated 80 percent of Africa's private consumption.
"Interest in Africa is explosive but there is still a lot of
fear because of the risks," said an official in charge of
Africa-related matters for the Korea Trade-Investment Promotion
Agency (KOTRA) in Seoul.
Global consultancy McKinsey said African consumers are
optimistic about their future, pay keen attention to labels and
are in the early stages of developing brand loyalty.
"African consumers demand quality products and are brand
conscious, belying the view that the continent is a backwater
where companies can sell second-rate merchandise," it said,
based on a survey of 13,000 consumers in 10 countries.
"The options of African consumers have been limited to
cheap, poor-quality, unbranded products in many categories. Our
research indicates that companies operating in this way are
unlikely to succeed in the long term."
Instead Japanese car maker Toyota, which has a
presence in all 54 African countries, has been promoting its
vehicles as affordable but highly capable of handling the
continent's rougher roads as well as looking good on its paved
"People tend to think that if you sell things to Africa, you
can sell them inferior things. That will be the biggest mistake
you can make," Toyota Africa's chief executive Johan van Zyl
told the Reuters Africa Investment Summit earlier this year.
(Additional reporting by Tosin Sulaiman and Helen
Nyambura-Mwaura; Editing by Greg Mahlich)