African building materials demand or structural material dominant

Reporter: the first batch of private capital research group went to Africa shortly before the inspection, through this expedition, what specific results? Do you think the investment environment and market in Africa?

Cai Lihua: this time we are only investigating Garner and Cote d'ivoire. But from a large environment, at present, the vast majority of African countries tend to stabilize the political environment, the investment environment continues to optimize, rapid economic growth, and steadily enhance international status. According to the latest annual report of the United Nations Trade and development organization, Africa achieved foreign direct investment (FDI) of $50 billion in 2012, an increase of 5% over 2011, the only increase in the world. The International Monetary Fund (IMF) predicts that Africa's GDP will grow at an average annual rate of 5.7% over the next five years. According to relevant data, African consumer spending grew at an annual rate of 4%, and is expected to exceed $1 trillion by 2020.

Reporter: what are the competitive advantages of the building materials industry in Africa? What do you think is necessary for building materials enterprises to advance into Africa?

Cai Lihua: Africa has a lot of resources, but also has great market potential, but the lack of advanced production technology and production equipment. Taking Ethiopia as an example, due to the lack of local industrial base, building materials products rely on imports, resulting in the shortage of building materials products, such as 500 yuan to sell ordinary wooden doors in China home in Africa would sell 2000 yuan; in Chad, a bag of cement 50 kg, the retail price of up to 200 yuan. A ton of steel is 6 mm, nearly 8000 yuan, the price is quite amazing. Therefore, China's building materials enterprises in Africa, an important factor is the advanced production technology and advanced enterprise management concept, the output of our equipment and the necessary raw materials for the production of building materials products, help the local implementation of the localization of production. Of course, not to say that enterprises with these simple hardware conditions will be profitable, and management personnel, marketing strategy and other factors will affect the success of the project.

From the general point of view, I believe that China's building materials in Africa is still dominant structural materials, Africa generally applicable. Such as cement, ceramics, glass, composite materials, whole houses, etc.. And decorative materials and special materials, a small number of varieties of better sales, such as paint, paint, colored tiles, waterproof materials. Due to the economic situation, demand and geographical location of the more than 50 countries in the African continent, the price gap of building materials is relatively large. But on the whole, China's building materials in sub Saharan countries are more competitive and have obvious advantages.

Reporter: what do you think should be done before the enterprises enter the African market? How should they avoid investment risks and protect their own interests to the greatest extent?

Cai Lihua: Africa is the most difficult area for business activities in the world, especially in sub Saharan Africa, according to an annual research report by the world bank. On the one hand, there is a certain risk of African countries and political environment; on the other hand, the comprehensive investment environment also exists in some countries such as bureaucracy prevailed, poor traffic conditions, low level of productivity and many other issues. Therefore, I think, the enterprise must fully understand the local situation before investment, good preparation, such as: bilateral political, economic and trade relations; investment in the investment policy, investment environment; choose marketable products; enterprises should have including manpower, equipment, software and hardware conditions, technology etc..

In avoiding risks and safeguarding their own interests, enterprises in Africa need to do their homework because of the different economic, cultural and natural environment in africa. I think we can consider it from 3 aspects: first, when choosing an investment place, we should try to choose a country with stable political situation and better policy continuity. Due to the economic development of African countries is not balanced, must fully understand the economic, political, folk and market demand in the actual investment, according to political stability, development, overall economic infrastructure, whether the regional economic organization members examine the elements, measure screening investment objectives; second, the use of the law, seek third party security. When our enterprises cooperate with African countries and enterprises, they may add to the contract the safeguard clauses of the contract when the political situation changes. At the same time, you can also ask some independent institutions, certification bodies, insurance companies for enterprise guarantees, the purchase of related commercial insurance, and resolutely put an end to luck; third, careful inspection, without leaving a dead spot. In non investment, do not blindly sign the contract because you are eager to enter the market. Understanding of the co credit should be more channels, said the partners of the land, plant and equipment must inspect and evaluate, but also check the relevant documents and materials to prove what he provided is true and effective, whether adverse or do not understand the terms etc..