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Globalization and Outsourcing to Africa

Globalization 1A few days ago, I came across an article posted by a friend of mine on Facebook. The article discussed the business of Rachel Stewart, a Black American businesswoman and her brand of Afrocentric themed designer jewelry which is also named after her, Rachel Stewart Jewelry. Her brand has grown quite well since the establishment of her business and she has made a name for herself in both entrepreneurial and cultural circles.

However, in the past few years her creations have been copied and plagiarized to the extent that many of her former and potentially future customers are now purchasing these products from websites such as Alibaba.com and others. Thus, in turn, her own company has seen declining revenue and she’s considering closing her business.

While every business is different, and I don’t want to give this advice solely based on Miss Stewart’s personal model, I feel that Black entrepreneurs in sectors which require the manufacturing and production of goods should look to Africa as a place to outsource some aspects of their business.

The precedent is in the general American business model which changed drastically in the 90s. When the NAFTA (North Atlantic Free Trade Agreement) was signed, it signaled the shifting of many American companies to establish facilities in Mexico and parts of the Caribbean. And while it inevitably led to the loss of thousands of jobs, it saved thousands of businesses and likely kept millions of people employed. This agreement also heralded the trend of American companies establishing factories and manufacturing facilities in Asia, particularly in places such as China, Thailand and Indonesia.

Thus when I look at the product of a Rachel Stewart Jewelry, my advice is for her and others like her, is to outsource aspects of their business to places in Africa for some of the production of her products. The cost of goods and services is far cheaper and by regularly visiting the location, they can ensure the quality of their products are maintained.

And while I’m using her jewelry line as an example, the same holds true for hundreds of other Black owned businesses particularly in the clothing and skin care sector. There are a good deal of small companies who use shea and cocoa butter in their products, but how many are actually linked to production and manufacturing centers in Ghana and West Africa?

Many customers love to purchase Black hair and skin care products but will note that the costs are generally higher than other brands. This is because in most instances, most of these products are solely produced in the United States, which has much higher business costs as it relates to employee salaries, taxes and shipping.

If your clientele base has the capital to continually pay for your products, regardless of the costs, than that is fine and good. However, many consumers are becoming more conscious of prices and if they can find an item which is similar to yours but cheaper, they’ll purchase it. They may feel bad for switching brands but will feel better because they saved a few dollars and this will be another lost client.

The main reason so many American clothing companies are located in Asia is because the labor is cheaper and most global textiles are located in this region. With numerous Black entertainers and small business people producing clothing lines, why not consider establishing their manufacturing center in Africa? There are numerous port cities such as Mombasa, Kenya which have free zones, which allow for the importation of items duty free, as long as the product is manufactured locally and a large percentage of it is reshipped to other locations. Such opportunities allow the owners to create job opportunities in a developing country, while also maintaining a healthy profit margin, due to cheaper production costs.

Establishing a production base in Africa would also provide the opportunity for your company to expand into the African market itself. Many young Africans also follow American fashion trends, thus your handbag line which is doing quite in the Brooklyn demographic, may also appeal to the young and trendy of Lagos.

In today’s globalized world, Black American entrepreneurs have to think bigger than traveling from Boston to New York’s Canal Street to purchase goods to take back home and sell. If Africa isn’t a viable location for your company to source products from, then make a trip to China. If your company is small and the cost of traveling to China is too big for you to consider, than identify four or five other businesses who are in the same market, pool your money together, and arrange for one of you to travel to Hong Kong or Guangzhou identify a reliable wholesaler and ship the products back.

As it relates to the issue of relocating an aspect of your business and the fate of your current employees, there are options. For one, it doesn’t help anyone if your company goes out of business because your prices are no longer competitive. Secondly, the better option is to retrain your employees in areas such as sales, marketing along with clearing and forwarding of goods from Africa and Asia, enabling them to remain a valuable member of your company.

In essence, the nature of Black-owned businesses, many of which are small to medium sized enterprises, needs to adapt to the changing nature of this globalized world. There are numerous options for people to consider and outsourcing services and the manufacturing of products is one, which will allow individuals to continually maintain a sustainable business.

I applaud the entrepreneurial efforts of Rachel Stewart Jewelry and the numerous other Black-owned businesses who are making a name for themselves. My suggestion to the Black American business community is to constantly be on the lookout for new ways to enhance your value to customers, maintain the integrity of your product and keep track of the margins in your financial bottom line.

Whether part of that solution is in Nairobi, Accra or Shanghai, know that the competition is always looking and trying to figure out a way to get ahead of you.

Jamal Bradley is an American businessman and writer from Philadelphia who is currently based in Kenya.

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One thought on “Globalization and Outsourcing to Africa

  1. Kira Smart says:

    Thanks for sharing! I like the way you lay out the information. As for me, outsourcing can give you a pool of talented individuals that can cater to your outsourced tasks. My father used to address to https://www.indeema.com . He says they are good guys!

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