As Africa ascends, elevator sector booms

A Chinese elevator firm is banking on Africa for growth as it strives to catch up with its competitors

China's elevator industry is on the rise, with annual growth of 20 percent.

As of the end of 2012, there were 2.45 million units in service, the largest number in the world. China was also the world's largest producer of elevators, according to industry reports.

It all adds up to a wealth of opportunity for Chinese elevator makers, both domestically and overseas.

One of these companies is Shenyang Brilliant Elevator Co Ltd, which is looking to Africa for expansion as it strives to catch up with better-established rivals on the continent.

The company, a subsidiary of Yuanda Enterprise Group in Northeast China's Liaoning province, has grown rapidly in Africa in recent years.

Big energy programs, infrastructure construction and government building programs and housing projects have taken off in countries such as Kenya, Nigeria, South Africa and Tanzania, feeding demand for elevators and escalators.

In contrast with weak sales in the United States and Europe, more than 7,600 elevators were installed in Africa last year, up 12 percent, the China Chamber of International Commerce said in a report.

Shenyang Brilliant Elevator said it sold more than 245 elevators in 13 African countries last year. In the same period, it sold 11,000 units in China. The company has opened more branches and dealerships in Africa.

Cong Jun, general manager of International Trade Co, a subsidiary of Shenyang Brilliant Elevator, said compared with the US and Europe, buildings in Africa are low-rise but most have elevators.

"Even though many buildings in Africa are only three or four stories tall, people in Ghana, Malawi and Tanzania are not really used to walking up stairs," Cong said.

The African market has been dominated by companies from the US, Europe and Japan, such as Otis Elevator Co, Schindler Group and Mitsubishi Electric Corp, which have more than 80 percent of the market, the China Chamber of Commerce for the Import and Export of Machinery and Electronic Products said.

Africa is growing faster than many other places and has not been badly affected by the global economic slowdown, Cong said.

Li Shoulin, president of the China Elevator Association in Beijing, said Africa's modernization and the growth of services will keep the continent's demand for elevators high over the next decade.

Li, who was in Africa twice last year promoting sales, said: "Many African countries are spending a lot on boosting industries such as transport, hospitality and tourism, so a lot of infrastructure building projects are needed.

"That means more elevators will be installed in public places such as office buildings, shopping malls, hotels, airports, railway stations and residential areas sooner or later," Li said.

Most governments in Africa are acutely aware that undeveloped infrastructure is one of the biggest obstacles to growing their economies, said Zhao Ying, a researcher at the Institute of Industrial Economics of the Chinese Academy of Social Sciences in Beijing.

Lack of office space, hospitals, public services and modern housing have made it difficult for many businesses and government bodies to operate and develop in many parts of Africa.

Many large Chinese contractors have moved to Africa to cash in on the continent's need for government buildings, hotels, stadiums and residential blocks. That means more elevators.

"Because many elevator producers in Europe and the US are still focusing on Asia and South America, this offers Shenyang Brilliant Elevator an opportunity to diversify and expand its services and sales channels in Africa," Cong said

Shenyang Brilliant Elevator is working with large State-owned enterprises - such as China Communications Construction Co, China State Construction Engineering Corp and China Road and Bridge Corp - to expand in Africa.

Power outages are common in some sub-Saharan African countries, so a big challenge for elevator companies is to cope with that situation and reduce energy use.

For example, Shenyang Brilliant Elevator puts extra storage batteries in its elevators.

Zhao said rising demand for elevator repair and maintenance has provided Brilliant with another avenue for increasing its business. About 220,000 units that need maintenance are installed in Africa, he said.

Countries such as Kenya, Malawi and South Africa have strict regulations on maintenance. Their standards are helping drive the industry.

"It's hard to say what the average life cycle for elevators in Africa is," Zhao said. "But most Chinese-made units can be used for between 30 and 35 years if are they properly maintained and serviced."

Many elevators in Africa are fairly new, he said.

Cong said: "We want to be a service-oriented company instead of just making and installing equipment."

In Africa, where customers are sensitive to price, third-party maintenance is usually the cheapest, but original equipment suppliers normally provide the best service, Cong said.

Both kinds of service have their place and should be supported to promote a market where fair pricing and competition rule, he said.