This is a Short Note.
China is really changing the global order of many things. Africa is part of the ecosystem where the impacts are felt. Now, it is making movies positing itself as the savior to the African populace. According to Quartz, in a new movie, Wolf Warriors 2, China chronicles how Chinese special forces entered an unknown African country to save the local people from white mercenaries who have come to do no good. This movie is the highest grossing movie of all time in China. It is showing the image of China saving Africa from dangerous white people. Simply, the Western world has lost the monopoly of saving the black people! If you have watched the Red Scorpion, on how an American saved the local Africans from the bad Soviet, you will understand. Now, China is doing the same thing: saving Africa.
Indeed, China is not stopping in movies, as it bulldozes itself in the real business world.
First, according to Fortune from a Reuters report, Chinese firms are piling pressure on Ericsson. The equipment giant will cut 25,000 – yes twenty five thousand people – as it battles for a position in the world of Huawei, a Chinese IT equipment giant.
Mobile networks equipment maker Ericsson may slash its workforce by nearly a quarter—some 25,000 jobs in all—in what would be a dramatic expansion of its cost-cutting efforts. The next big investment cycle for mobile carriers, an upgrade to 5G networks, is still years away, and emerging markets—a key prop to growth for many years—are getting tougher due to competition from the likes of Huawei. The company had warned it would cut faster and more deeply after missing expectations in the second quarter. Ericsson has announced 3,000 job cuts already. However, it didn’t confirm the Svenska Dagladet report
Also, another Western company is seeing pressure from Chinese businesses to issue margin warning. China is pushing wind technologies across many African countries and beyond, and Vestas is feeling the heat, competitively.
Shares in Vestas Wind Systems, the world’s biggest maker of wind turbines, fell 8% after it warned of shrinking margins—a reflection of increased price pressure in China. Neither a healthy rise in orders and backlogs nor the announcement that it will buy back nearly 9% of its stock cushioned the fall. The development makes it all the more important to the Danish company that it continues its current run of success in the U.S., where it has nearly half the market and competition from Chinese rivals is less acute—but where it also faces a patent lawsuit from GE, which sued it for improperly using its technology earlier this month
China is not a movie. It is for real. Beyond the movies, Africa is feeling China in business. Huawei is a force, and challenging companies like Cisco. China is winning; Africa needs to learn from China. It has proven that anyone can take up the competitive West. China has shown that it is possible. We need to understand the Chinese secret to compete in the world of technology and commerce.
This also tells another important story. In the age of China, it is a hopeless business model to run a hardware business without platforms. Sooner or later, China will come and attack. In a hardware business, you need a platform to secure your flanks.
There is no hardware business that will survive by itself in this age of Internet without an element of customer post-purchase relationship. You have to find a way to keep customers in your ecosystem. The old model of carry and go will be challenged by cheaper rivals.
Click to join Tekedia Capital and build Next Africa with min of $10,000 co-investment in startups.