The intense competition in China's FMCG market is an indisputable fact. When the pie stops growing and brand growth mainly comes from competitors' decline, involution becomes a one-way street. However, Chinese FMCG companies have other paths. By looking globally, we can find more and better development opportunities. Today, New Distribution introduces a representative Chinese enterprise—CWAY Group in Nigeria. It is an FMCG company founded by Chinese investors, but its base for growth is not the domestic market but Nigeria, the most populous country in Africa.
CWAY Water: Nigeria's Version of Nongfu Spring CWAY Group is one of the earliest modern food and beverage enterprises invested by Chinese companies in Nigeria, founded by Mr. Che Chao in 1999. According to data, CWAY Group currently employs over 3,000 foreign employees and more than 100 Chinese managers, with food and beverage enterprises in Nigeria, Egypt, Kenya, and India. In 2021, CWAY Group's total revenue exceeded $1 billion. CWAY's products include purified water (5-gallon and small bottles), high-end water dispensers, juice drinks, tea drinks, fruity milk drinks, and cup milk tea.
In multiple country markets, especially Nigeria, CWAY products hold high market shares. In Nigeria, CWAY's barrel water market share is around 80%, and bottled water exceeds 40%, making it the preferred brand for local consumers. From this perspective, CWAY can be understood as an international version of Nongfu Spring. Undoubtedly, CWAY Group is an excellent representative of Chinese FMCG enterprises that made early efforts overseas and achieved outstanding results.
What experiences in market selection, investment construction, development and operation, and team building and training are worth learning from? To this end, New Distribution interviewed Mr. Wang Qinzhi, General Manager of CWAY Water Group Nigeria. He provided rich and practical experiences and suggestions for outstanding domestic FMCG enterprises going global, using CWAY Group as a sample.
Mr. Wang Qinzhi is a senior FMCG marketing expert with over 25 years of experience in the FMCG industry, having held senior marketing positions at Kirin Beer, Uni-President Group, and Zhongshang Huimin. He joined CWAY Water Group Nigeria in 2018, leading CWAY bottled water to ultra-fast growth and becoming the absolute leading brand in Nigeria's drinking water market. He currently serves as General Manager of CWAY Water Group.
Five Key Questions for Chinese FMCG Going Global What issues should Chinese FMCG companies consider when going global? How to find the right answers? We have organized Mr. Wang Qinzhi's interview content into five key questions covering investment, market, operation, team, and product, mainly using CWAY Group and the Nigerian market as examples.
Question 1: How should Chinese FMCG companies go global? CWAY Wang Qinzhi: Excluding order-based production and OEM, Chinese consumer brands mainly have three ways to go global: cross-border e-commerce, national agency, and investment in building factories. Cross-border e-commerce is more suitable for products with high value or high gross margins. FMCG cross-border e-commerce is possible, but scale and market operation efficiency will be significantly limited. National agency is a common model for some well-known old brands, but similarly, only products go out; market operations do not take root, and scale is limited. If going global is positioned as a long-term growth strategy, you must take the step of investing in building factories. Of course, in the early stage, cross-border e-commerce and national agency models can accumulate experience and talent for going global. Understanding this is easy—just look at international consumer brands in today's Chinese market. Any pure import brand that has not localized in China, no matter how strong, has a very small market share in China.
Question 2: What characteristics should the target country market have for Chinese FMCG going global? CWAY Wang Qinzhi: There are many factors in choosing an overseas market, involving politics, economy, culture, and market, but some basic rules can be followed. CWAY also chose Nigeria as its base market based on these rules. Political stability is essential. If a country's political situation is unstable, safety cannot be guaranteed, and the consumer market cannot be healthy and sustainable. Stay away. Why is the Chinese market so attractive to Fortune 500 companies? Besides the large market, sustained political stability is the most critical factor, no exception. Beyond political stability, the country must be friendly to China both politically and among the people. In a country hostile to you, building brand affinity is very difficult. The entire African continent is friendly to the Chinese people, and Nigeria is one of the most politically stable countries, which is the fundamental reason CWAY chose to establish its base there. Economically, it doesn't need to be developed, but potential must be large. For FMCG market potential, look at economic growth rate and population size and structure. From these two aspects, the African market is very suitable for Chinese FMCG enterprises. In terms of economic growth, Africa's overall economy has been growing well in recent years, with Nigeria, Tanzania, Rwanda, Ethiopia, and others ranking high. In terms of population, Africa has about 1.3 billion people, with Nigeria ranking first at about 200 million. Most importantly, the population structure across Africa is very young, with an average age under 20, indicating a huge long-term demographic dividend—just look at China's rapid growth over the past 40 years. Culturally, choose countries with greater inclusiveness; avoid places with extreme religious ideologies. In terms of market, try to choose markets in the early stages of market economy. Developed markets like Europe and the US are not recommended for Chinese FMCG companies to hit a wall.
Question 3: New Distribution: If choosing to go global by investing in building factories, what should Chinese FMCG companies pay attention to? CWAY Wang Qinzhi: First, the choice of country, as mentioned earlier. Second, study the target country's investment policies and laws. This second point is very critical and very professional. It is recommended that companies conduct in-depth research with professional institutions and individuals before investing. China's relevant commercial departments can also help companies solve this problem. Finally, the scale of investment in building factories must be combined with the actual local market situation. Let's analyze CWAY's investment in Nigeria as an example. Like other African countries, Nigeria's logistics infrastructure is very poor, incomparable to the Chinese market. For FMCG, especially beverages, logistics cost and efficiency are decisive factors. For example, Nigeria has huge urban-rural differences, with super cities like Lagos with over 20 million people, and rural markets scattered across vast areas. Choosing to build factories near developed cities with concentrated populations is a strategy of "eat meat first, then drink soup." CWAY's principle for investing in factories in Nigeria is to build small factories with small investments around developed cities. Small investment and small factories are to meet demand within a 150-kilometer radius. Given Africa's logistics conditions, water and beverages lose money beyond 150 kilometers. For beverage factories, including land and equipment, the single-factory investment should not exceed 20 million RMB, with no more than 100 employees per factory, and investment can be recovered in two to three years. CWAY Group's factories almost all recover investment within 18 months.
Question 4: New Distribution: After becoming a localized enterprise in other countries, how should the market be operated? CWAY Wang Qinzhi: In this regard, we can copy the homework of European and American multinational companies—just look at how they entered the Chinese market. We must recognize that the marketing models and levels of Chinese FMCG brands have overwhelming advantages in many countries globally. After coming to Nigeria, I found that the country's marketing development level is similar to China's in 2000. Any few of our domestic marketing models and methods, when implemented here, have very good market effects, and local international brands cannot compete with us. In recent years, global presidents of international brands often have served as China regional presidents. Why? Because the intensity of competition in the Chinese market is rare globally and very training for marketers. It trains not only Chinese but also foreigners. Therefore, when Chinese FMCG enterprises localize marketing in overseas markets, they should trust excellent domestic marketers. The marketing experience and models generated by China's marketing development and competitive evolution in recent decades are sufficient to cope with competition in most global markets. FMCG enterprises only need to solve their language and living issues.
Question 5: New Distribution: After going global, how should Chinese FMCG companies build teams and solve talent problems? CWAY Wang Qinzhi: Team building after going global actually involves talent issues at three levels. For core executives, it is recommended to select excellent professional managers from outstanding domestic enterprises. On one hand, it's about ethnicity and trust. Needless to say, in all overseas Chinese enterprises, the decision-making layer and core executives are basically Chinese. European and American multinationals are basically the same. On the other hand, Chinese marketers are absolutely excellent on a global scale and more effective than European and American managers. This was mentioned earlier. For director-level management, if in Africa, Chinese marketers or Indians can be used in the short term, but in the long run, it should be internationalized. Why? Our Chinese characteristic is that one person works abroad, sends money home, and wants to return home when they've earned enough or when children grow up. Indians, on the other hand, have families that move with work; wherever an Indian works, wife and children follow, making them relatively more stable. For middle and grassroots marketing personnel, it is recommended to recruit locally. First, they are more familiar with the local market and more easily accepted by local channel and retail partners; second, costs are generally lower.
Take Nigeria as an example: local salespeople earn about 700 RMB per month, while Chinese in the same position earn at least 15 times more. There's no need to be surprised; multinational companies entering the Chinese market did the same. But for local middle and grassroots staff, our expectations should be lower. Due to the lack of market economy atmosphere and necessary professional training, expectations can only be based on "obey and follow." Long-term localization of talent should be built gradually through "campus recruitment + training." Of course, local team building also involves complex issues such as wage and welfare systems and union systems in the host country. Many countries' labor policies differ from China's, and some policies may seem strange to us. Due to time constraints, I won't elaborate further. For more detailed questions about FMCG going global, you can attend the "China FMCG Expedition World Salon" held by New Distribution during the "7th China FMCG Channel Innovation Conference" in Chengdu on March 17, where we will provide detailed explanations.
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