Machine-for-hire company digs into Kenyan market

Dennis Wu, general manager of Eastern Unity Investment Ltd, came to Kenya as a representative of Beijing Dongfang Changlin in 2014, part of the wave of Chinese enterprises flocking to the country.

The company has been an agent for many big-name machinery producers such as Atlas Copco, Dynapac and JCB for 20 years. As many Chinese and foreign construction machinery companies entered the African market, it followed suit to explore possibilities.

The company first went to Uganda and then to Kenya in preparation for setting up a company in 2014. During his stay, Wu paid visits to local representatives of Caterpillar, JCB, Komatsu, XCMG, Sany, and CATICBJ-Shantui in Kenya and decided to concentrate on construction equipment, a sector in which the company had 20 years' experience.

"Kenya has a steady economy and the development of its infrastructure has been relatively fast among the East African countries," says Wu.

However, although the demand for construction machinery was high, the country did not have a base for leasing. In Uganda there were good facilities for leasing construction machinery.

"We did a survey of the leasing market, including prices, methods and demand," Wu said. "We found there was a lot of potential."

"In May 2015, we registered the company Eastern Unity Investment. In October that year we introduced many Komatsu machines, manufactured in China, to Kenya," he said.

"The equipment we introduced was all refurbished, having lain idle on the second-hand market in China, which helped bring down the leasing price," Wu says. "Although there are many agents for new machinery in Kenya, there is no company concentrating on second-hand."

As with the auto market, Kenya boasts a large number of second-hand construction machinery consumers.

The company decided to set up a yard for leasing machinery, with prices at between 60 and 80 percent of those for new equipment, which was attractive to local consumers.

"Not every step in Kenya was smooth," says Wu, adding that he had to abandon an attempt to become engaged in a construction project soon after the company settled down, due to malpractice.

However, the experience was valuable. He learned more about subjects such as transportation, construction materials and supplying a construction project.

"I set up a group with WhatsApp, a popular social media in Africa, under the name of Kenya Equipment Alliance," Wu says. "I frequently provide business information for around 100 members in the group and I also benefit from taking part."

Currently, his company has 50 pieces of equipment, up from 28 in 2016. Of them, 30 are used for leasing and 20 are for sale.

"We sell the equipment after two years so that the leased machinery is relatively new," Wu says. "This makes up part of our profit as, in general, the cost of machinery is covered in less than one and a half years."

The company has also set up a workshop to recondition some components.

"This helps localize manufacturing," Wu says. "Some parts are rather difficult to find locally and the cost of imports is high."

The company has now approximately 50 local staff, mostly trained by National Youth Service, a government department in Kenya. However, more on-the-job training is needed before they are assigned to work, says Wu.

panzhongming@chinadaily.com.cn

(China Daily Africa Weekly 03/31/2017 page27)