Wang Fengzhai (front left) and his team

Wang Fengzhai never thought that he would become closely connected with Africa through a business opportunity. A few years ago, as a student at Shanghai Finance University, his image of Africa was a continent shrouded in hunger, poverty and backwardness.

That image changed in 2012 after he met two Tanzanian students, Shafii Hamisi Swed and Justine Emanuel Luvanda, on campus. The acquaintance not only gave Wang a new insight into the continent, it also made him discover a huge business opportunity in e-commerce there.

While Chinese are used to shopping on the country's major e-commerce platforms like Taobao, e-commerce in Tanzania is still in its infancy. Over several months the three then students discussed the possibilities of doing business in Africa, which prompted them to register a trading company, Chinaworldbuz. At the same time they set up the first e-commerce website for the Tanzanian market. 

Into Africa

In December 2013 Wang officially registered his B2B company Chinaworldbuz at the China (Shanghai) Pilot Free Trade Zone, taking advantage of preferential policies, and receiving an initial angel investment of nearly 700,000 yuan ($114,754) for their startup.

Trade between Tanzania and China reached $3.7 billion in 2013, a 40-percent increase over the previous year, customs data showed. China is also Tanzania's largest trading partner. It was fertile turf for Chinaworldbuz. "I expect to set up a new convenient and direct trade channel between China and Tanzania," said Wang.

But to better understand the Tanzanian market, Wang knew he had to be on the ground, so together with his business partners embarked on a trip to the country in January 2014.

The trip was a big success. In more than two months in the country, Wang's team launched a series of promotion activities in four big cities, - Dar es Salaam, Iringa, Mbeya and Arusha, received 18 major newspaper, radio and television interviews, and set up their Tanzania office. The office was inundated with calls from interested businessmen. Luvanda and Swed helped develop local connections by using their knowledge of the local market and personal resources in Tanzania to market the country's first e-commerce website.

Those activities helped the company build brand recognition in Africa, and later became an important factor in gaining business in Tanzania. "The greatest benefit [from that trip] for us was to gain a good understanding of local economic development so we could make the right decisions on growing there later," Wang told ChinAfrica. The hard work paid off. Since the website was founded, it has attracted more than 40,000 visits.

But it was no bed of roses. There were several challenges - the scorching weather, poor traffic conditions and unfamiliar food. Wang hired two local drivers to drive them around different cities, trips that took up to 10 hours on sub-standard roads. "Several times, we were almost rear-ended by other vehicles," recalled Wang, who is still haunted by the scenes. 

Credibility and integrity 

The market research in several big cities helped Wang discover that many goods on the Tanzanian market come from neighboring countries like Kenya, or are transported from China by local traders who cash in on the big price difference.

The research also helped the team to narrow the range of their products to electronics. At present, the main products available on the site are electronic products from China, like mobile phones, portable power sources and tablet computers. Tsinghua Tongfang computers and CUBE's cell phones and flat panels are especially popular with local customers.

Secondhand electronic products take the dominant position in the Tanzanian market, but Wang's team was adamant to steer clear of used goods. "We are committed to build credibility in the website Chinaworldbuz, providing high-quality products at reasonable prices," Wang told ChinAfrica.

Yet, Wang's vision stretched further than just operating Chinaworldbuz as an online shopping platform like Taobao. "I want to create a 'Sino-African business community'," he said.

"It is more like Alibaba.com, a global wholesale and procurement e-commerce platform, offering vast opportunities and business-matching services for Sino-Tanzanian businesspeople," he said. "It is also a social networking site for interaction among users."

Entrepreneurship challenges e-trade

Chinaworldbuz is not Wang's debut business venture. In the fall of 2012, he registered a company in Hong Kong through an agent. Like many pioneering business ventures, his first attempt failed, but it provided rich experience for his current operation.

While the trip to Tanzania has given the company a good start, Wang said it is still far from being a complete success at this stage. He believes most daily challenges could be overcome, apart from under-developed e-banking services and credit card payment systems in many African countries. PayPal, the only online payment option in many places, comes with high handling costs, so the majority of ordinary consumers eschew it. E-commerce in Africa is also hobbled by poor Internet infrastructure, coupled with low rates of computer ownership.

"We came to realize that Africa is now in great demand of business information instead of online payments. Tanzanian people are not used to shopping online. They won't be willing to buy until they see the physical goods. Therefore, our website mainly adopts the O2O (online-to-offline) mode at this stage," Wang told ChinAfrica.

 Wang took one of his Tanzanian clients as an example. The trader carried 300,000 yuan ($49,180) in cash from Tanzania to Shanghai to seal a deal. "We thought he would arrange to wire the money from Tanzania after he returned, but he paid it off in cash before even signing the contract," said Wang, who was still greatly touched by the Tanzanian businessman's trust. 

Expansion

Wang plans to enlarge the area of existing showrooms in Tanzania from 100 square meters to 150 square meters, open more showrooms in Kenya and Ghana and recruit staff, further developing O2O business.

Apart from the brick-and-mortar company, Chinaworldbuz plans to continuously expand its online activities.

"The website's functions are limited at the moment, but we keep on updating it and adding new functions such as BBS, new products and business communities for our registered users," said Wang, adding that the upgraded website is expected to attract approximately 500 small and medium-sized enterprises with foreign trade experience.

The company is convinced the website will have a key role once e-commerce takes off in Africa. "We also plan a smartphone app," he added.

Zhang Shuyi, Associate Dean at School of Innovation and Entrepreneurship, Shanghai Finance University, is upbeat about the prospects for Wang's team. He said that in the past, most of the China-Africa cooperation projects focus on infrastructure construction, but now the service sector is the new trend.

"Wang and his team seized this opportunity to develop e-commerce in virtue of his team's global background, good knowledge structure, and the spirit of persistence, the most important thing for entrepreneurial success," he said.

At present, Wang's Chinese team members are studying Swahili, the local language spoken by most of East Africa. "We are going to open a Swahili version of the website to extend the e-commerce business into East Africa, and then Africa as a whole," said Wang.