Webinar Recap: Understanding China-Africa trade and its impact on business growth

Klasha facilitates seamless cross-border payments for businesses. With Klasha, global and African businesses can move money to and from Africa using local African currencies and methods.

On April 26th, 2024, we hosted a webinar to discuss the impact of China-Africa trade on business growth. This event featured Jess Anuna, the CEO and founder of Klasha, Justin Fan, the VP for Growth and Revenue at Klasha, and Leona Gan, the Senior Business Developer at FOMO Pay.

Here are some significant points from the webinar:

Trade relations between China and Africa

China is Africa's biggest trading partner, with trade volumes consistently increasing yearly. Nigeria, in particular, receives roughly 25% of China's export volume to Africa, growing at an annual rate of 7.5%. By 2023, the value of goods imported from China into Africa was $12.8 billion.

The trade between China and Africa is bilateral, as China has also become a high export destination for African countries, generating extra revenue for Africa. The major imports from China into Africa are beauty products, machinery, electronics and finished products, while exports from Africa to China are made up of raw materials, minerals, crude oil, cotton, natural resources and primary goods.

Overall, trade relations between the two regions are worth $257 billion annually. Facilitating free trade movement between the two areas is crucial to promoting trade relations.

How businesses can leverage the China-African trade

It's important to understand that China is currently the biggest trading partner with Africa in order to leverage the China-Africa trade. This is a good starting point, as knowing this guides your business decisions.

To leverage the China-Africa trade, one has to have domain expertise in his chosen sector, understand the market (market entry and market share), and know how to move money between the two regions.

For example, we have merchants in the construction industry who use Klasha to move money seamlessly between China and Africa. Similarly, e-commerce merchants with customers in sub-Saharan Africa use Klasha to capture transactions in local African currencies and get payout in hard currencies of their choice.

What are the key considerations for African businesses entering the China-Africa trade landscape, especially in building sustainable partnerships?

African businesses who want to enter the China-Africa trade landscape and build sustainable partnerships need to consider a few things, such as;

The Chinese market: It’s important to research and understand it extensively. This will help you determine what strategies you can adopt to navigate through. Depending on the sector, you should define your objectives and goals for expansion.
Partnership: Establishing partnerships with Chinese locals who know and understand the market terrain makes market entry easy and fast.
Chinese culture: Understanding the culture of the Chinese people is also vital, just like anywhere else. One advantage of studying Chinese culture is that business relationships can be established from a cultural perspective.
Legislative requirements: Legal requirements and legislation vary across different Chinese cities. Thus, it’s essential to understand these requirements depending on the city you intend to operate in.

How can the China-Africa trade relations can help businesses in Africa grow?

The Chinese market has over 1.5 billion consumers with great growth potential. This means many opportunities to help businesses grow in Africa, including tapping into the Chinese market. Some of them include;

Exportation: By exporting African produce and goods to China, businesses in Africa can take advantage of the commonwealth of the Chinese market.
Technology transfer: China is also advancing globally with its technological innovations. African businesses can leverage trade relations to learn about these innovative technologies and benefit from technology transfer opportunities.
Financial opportunities: Entering the Chinese market presents a new economic opportunity, as there are corporations in China looking to invest in foreign entities that have the potential to grow in China. Foreign entities are also receiving funding from Chinese investment.

How does technology facilitate China-Africa trade partnerships, and what digital solutions are utilized?

Globally, technology is playing an increasing role in facilitating global trade. Africa is the next big growth engine for digital payments and digital markets. Although its market is in its early stage, there is enormous potential to be tapped, especially in the high growth rate and the surviving digital payment landscape. The annual growth is more than 8%, and Africa’s digital market in 2025 is expected to be $180 billion.

Some technologies beyond digital payments facilitate the journey, including cloud and SaaS service, which is 25% in Africa and 21% worldwide, and technology delivery is 21% and 9% worldwide. Online retail is 18%, while worldwide, it is 11%. Digital Advertising is 14% and 11% globally.

What payment solutions are available for businesses involved in China-Africa trade?

Cross-border payment between the two regions has been challenging historically. However, with increased trade activities between the two continents, digital payment solutions have been made available to Chinese and African merchants.

For instance, with Klasha Wire, African merchants can seamlessly pay Chinese suppliers using local African currencies and payment methods while the recipient receives the equivalent in their preferred currency. The same applies to Chinese merchants repatriating funds to their home country from Africa.

With Klasha payouts, Chinese merchants can easily pay their business associates in Africa using their Chinese currencies while the African receiver gets the equivalent amount in his local African currency.

Chinese merchants with websites can integrate an API to capture payments in local African currencies and get payouts in CNY, while those without websites can capture payments using Klasha Payment Links.

To learn more about these payment solutions, visit our website.

How to partner with Chinese companies and get investors

Partnerships are crucial for success in the China-Africa trade. To build a relationship, it is essential to find reliable local partners. To find reliable partners, do the following:

Attend trade shows and events in China to network and connect with potential partners.
Utilize social media platforms like LinkedIn to connect with industry professionals who operate in the China-Africa trade.
Participate in incubator or accelerator programs in China to easily find and connect with investors interested in supporting your business.

How to start a business in China

Starting a business in China can be challenging, especially if you're a foreigner who needs Chinese literacy. To successfully start a business in China:

Partner with Chinese locals to get help easily.
Choose a Chinese city from which you wish to operate.
Learn about the business laws, taxes, and other requirements.

Starting a business as a foreigner in China is not common. Most of the time, you'll partner with existing businesses or individuals and decide on the shareholding structure and the terms for capital investments.

How to source for trade goods in China

To source products from China, you can start by attending industry events and networking with manufacturers. You can also use reliable platforms like Alibaba and 1688 to connect with suppliers directly.

These platforms offer various products, making it easier for you to communicate with suppliers, compare prices, and negotiate terms. By leveraging these resources, you can find quality products and establish fruitful partnerships with manufacturers in China.

The Klasha Business webinar on the China-Africa trade and its effect on business growth was quite insightful. To learn more about Klasha Business, visit our website or speak to our sales team.