Sourcing for foreign exchange (forex) is not easy for businesses. This is why some firms patronise the parallel market, which sells at a cut-throat price. The resultant effect, according to Mr Chinedu Nwokolo, Chief Executive Officer of Pedini Nigeria, representative of European retail brand Bosch, is the high cost of goods and services. ADEDEJI ADEMIGBUJI met him.
How would you assess the local economy?
It is actually very receptive. Even though we have a downturn and the economy is experiencing a kind of stagnation now but the good news is that we have an incredible president who’s doing a marvellous job trying to turn things around. There is now a deliberate and sincere effort to revamp the economy through diversification and other sound economic policies that will turn things around. I think with the measures that the government has put in place now and its disciplined approach to setting the economy on the right path, I can assure you that the horizon is bright in spite of what we are passing through now. Even though things are slow now, we believe there is a future in it.
Our firm believes in the economy. On the home appliance market, it is actually a huge category. We have an emerging middle class that is growing and will continue to grow. Right now, based on J.P Morgan’s studies, we have between 24 and 30 million middle class people that can afford our products and they are growing. Most of them are urban highly educated people and they put quality first; and Bosch is synonymous with quality.
How did the tight foreign exchange regime affect your operation?
Foreign exchange has been a big issue. It’s actually made the products 30 per cent more expensive. Also, sourcing for the forex is a big issue; the good thing is that they at Bosch understands the economic climate of Nigeria, and they are willing to give us enough time to source for the foreign exchange to pay them. They know that the foreign exchange is only got through the Central Bank of Nigeria (CBN), that’s when we send our repayment so there is a bit of flexibility there; so that’s helping us as well.
How huge is the home appliance market?
From the last data I received, about $400 million worth of goods are imported yearly into Nigeria. And when I say appliances, I mean everything ranging from TV to freezer. For Bosch, what this means is that we have an opportunity to dominate the market. In the market, there are two types – the integrated and the stand alone markets. The integrated version is the area I believe Bosch will be dominant because there are really no players in that industry. Those are the appliances we integrate in the kitchen but in the other one as well, we are also very strong and we are hoping that we can dominate at least 10 per cent of that market in the next one year.
Do business men trust your products?
The relationship between a Nigerian business man and a foreign business man is actually one that should be based on integrity. But once you have the right partner, it is easy to trade properly in spite of the negative environment we have. So I think Bosch made a good choice in selecting us as their sole distributor for Nigeria because over the years, we have taken time to build trust and integrity as a business philosophy. It is also a very good company that keeps his reward. So once they make a promise to us, we keep it and once we make a promise to them we keep it. So we have been able to have a symbiotic relationship.
How do you intend to cope with competition?
From my vantage point, I think LG & Samsung are going to be the major players out there and I think either LG dominates the market right now with a huge percentage of market share; so we are hoping that we will begin to distinguish our products and begin to tell our clients why our products are better and why they should purchase our products and then try to hinge it on that market share. Our ultimate competitors that we are looking at are LG and Samsung but because of the pedigree of our brand and its German heritage, there is actually no basis of comparison.
How resistant are your products to unexpected power surge?
Our products are actually built for life. And where other people give 12 months warranty, we give 24 months and we even give extended warranty up to five years. So we are sure of our brand; we are sure about the durability of the product so we don’t have any product.
How long have you been in business?
I’ve been in the furniture and kitchen industry for the past seven years but particularly in the appliance industry in the last three years.
How will you assess the market so far in the country?
Before I came in, I would say there were three segments of the market. There wasthe entry segment and there was also the luxury segment. Pedini as a brand operates in the luxury segment and the Bosh brand also is in the luxury segment. However, there is a product that is about to be launched into the Nigerian market which is Vurn kitchen. Pedini and Bosch have come together to leverage each other’s strength. Pedini has always been known for quality kitchen and Bosch on its own over the years has been known for its timeless, durable and reliable home appliances. These two brands coming together with a combination Pedini kitchen fitted with Bosch appliances is a redefinition of that category and I can assure you that the Vurn kitchen is going to revolutionise the market for kitchen because they are bringing in this Vurn kitchen an amazing price that is unbelievably affordable. I mean a product that is really affordable and within the reach of Nigerians.
What effort are you making to move into other geo-political zones?
We just launched in Lagos and we are already getting a lot of businesses because of that. Major companies have started asking for our products. In the next three months, we are going to open our Abuja branch, we just secured a location there and construction is going on right now. That should be ready in about four months. We are also going to launch in Port-Harcourt, we are hoping that would be before the end of this year if not it’s going to be early next year. The next one we are going to launch in Ikeja, Lagos as well, in Lekki, in Ibadan. After that, we are going to begin a franchise drive that will allow us to have up to 100 stores within five years. So we want to have 100 Bosch branded stores; we want everybody to have a Bosch store.
How achievable is that?
On my own part, as Pedini, the proprietor of this distributorship, we intend to have retail outlets of our own apart from partnering with existing mega stores such as Mega Plaza, Spars and the rest. We are also bringing in individual entrepreneurs of like minds who are aggressive and want to see the brand evolve. We believe that a lot of people who are looking for business to do will seize this unique opportunity to partner with us and be part of these good business opportunities. There are discussions going on too in terms of the long term plan of really establishing a Bosch assembly plant here in Nigeria. Bosch is determined to play in this local market in the assembly way in the next couple of years. This is something that the board of Bosch will have to discuss and agree but there is a lot of interest in coming to Nigeria and setting up an assembly.
In specific terms, how is your business shaped by the economic situation?
It’s actually affected because it’s difficult to get foreign exchange, and when we get, sometimes, we get from the parallel market, and the prices are high. So goods that normally cost maybe N100,000 increased to N130,000, N140,000. So, it reduces the number of people who are interested in buying this product. So it’s actually affecting sales in terms of the general picture but we believe that sooner than later, the economy will improve. There will be more money in the pockets of many Nigerians and they can also be able to spend more.
How prepared are you to protect your products from counterfeiting?
What we want to do is to make sure that Bosch products are only available at certain stores. That’s why we want to build 100 stores in Nigeria so that you buy from there. We are not going to supply to the market; we are going to supply to games, stores, and mega-plazas. We are also talking to Cash and Carry to see whether we can work with them. We are working with reputable brands and we are going to let our clients know that if they want to get this product, they are in these authentic stores. Counterfeit is difficult to remove entirely but over time, we believe there is this method that can help eradicate it. We are also going to partner with Standard Organisation of Nigeria (SON) to fight faking our brand.
How much do you invest in quality control across your supply chain?
Every Bosch product that is produced goes through a rigorous process before getting to Nigeria. So there is no question about the quality of the product. In terms of marketing, we have put a compelling strategy in place to penetrate the market. The younger middle class are on social media and we have hired a robust social media group to help us in this market.
Bosch founder, Robert Bosch, said he would rather trade profit than trust. What is the import of this?
That is the foundation of everything that I personally believe in. I believe that integrity is more valuable than trust. It is better to lose money than to lose the trust of your friends and that is what I discuss every day with my team. You must give a 120 per cent to your clients because even though you might lose in certain aspects, in the long run you will make your profit. On the trust issue again, the Nigerian business landscape is very challenging so what we have done is to evaluate clients and offer credit with the help of our banks. In some cases we get beaten but in most cases our evaluation has been right. So we have like grade A, B, C clients. Grade A, we offer them credit, B, C, we offer them low credit.
Tell us about Pedini Nigeria?
Pedini Nigeria is actually an offshoot of Pedini Italy but right now we are also involved with Bosch to create a new brand called Vurn. It’s going to be the kitchen that will revolutionise the way we cook because it’s going to be assembled locally, it’s going to be fused with Bosch and the price is going to be affordable that every home will have that product. So watch out for Vurn coming to a house next to you. We intend to populate the entire environment with Vurn products. It’s actually built by Pedini and empowered by Bosch.
Source: The Nation