In part one of our two-part interview with JJ van Dongen, CEO of Philips for Africa, he shares his thoughts on the continent’s slowing economic growth, and explains how the company is adapting its products to local needs.
Recent reports suggest sub-Saharan Africa will record slower economic growth in 2016 compared to previous years. How does this affect your business?
First of all, there are a billion people in Africa you cannot overlook. Second, in Africa you have to have a long-term strategy. Philips has been here for more than 100 years. The focus you need to have is how to deal with different parts of Africa that may be having faster growth – and parts that are having slower growth. As a company we tailor our investment based on what we see happening in different parts of the continent. Overall we are continuing investing and growing market share.
We are focusing on the seven countries that deliver the bulk of the GDP of Africa (South Africa, Nigeria, Kenya, Egypt, Algeria, Morocco and Ghana). We are also focusing on 10 tier-two countries that are up and coming, such as Ethiopia, Côte d’Ivoire and Mozambique. In these countries we see opportunities to expand and grow faster.
However, we serve the whole continent, and those other countries are also very important to us. So we are growing well – in fact way ahead of the market – and are cautiously investing in countries, adapting our portfolio to fit African needs and developing new business models.
Doing business with government is sometimes viewed negatively due to concerns over bureaucracy and corruption. How do you handle this now that government ministries are a key client for Philips?
In our company we have general business principles. I’m quite ruthless with my staff and organisation – we don’t accept any involvement in corrupt business practices. So yes there is corruption in Africa, we are not blind to that, but we are very strict in terms of how we conduct our business. From my own experience in countries across the continent, if you take a hard line and work with people who have a similar mindset, you find customers who are interested in operating in the correct business way.
Bureaucracy is not an issue just in Africa, but across the world. What we try to do is make it easier for a ministry of health, for instance, to address the needs. For example, in large-scale projects we look at how to get funders to support our clients in their healthcare revitalisation programmes.
As a global company, how do you stay relevant to local needs in a continent that is so diverse?
We opened an innovation hub in Kenya in 2014 and its primary focus is taking our global portfolio and adapting it for African needs and looking at new business models. Take the example of shaving – generally the African male skin is different from European male skin. So we have adapted the blades in our shavers that are offered in Africa for the African male skin types and that means you avoid things like bumps that occur in African males.
In terms of new business models, as a company we see an opportunity to address mortality reduction in Africa and so we have developed very strong business models working with ministries of health and financiers to start scaling primary healthcare development.