South Africa’s presence is increasing in Africa, with local brands able to shape the culture of shopping in countries like Nigeria, says Brand South Africa’s research manager, Petrus de Kock. South Africa is one of the top three countries of origin for foreign direct investment in Africa, meaning our companies have internationalised at a rapid pace since 1994.Between 2008-2013, the South African Reserve Bank approved nearly 1 000 large investments by South African corporations into 36 African countries. Brand South Africa general manager for research, Petrus de Kock.Petrus de KockThe dawn of a democratic dispensation in South Africa in 1994 did not only bring with it a bill of human rights, the right to vote, and freedom from oppression, but also led to a proverbial explosion of the country’s corporations onto the continent.Evidence of this proverbial explosion can be seen not only in the number of South African brands active in peer African markets, but also in the 2013 EY Africa Attractiveness Survey which indicates that the top three countries of origin for foreign direct investment (FDI) on the continent (by number of projects) are the UK at 104; the USA at 78; and South Africa with a total of 63 during 2013 alone. This means that since the end of apartheid South African corporates have internationalised at a significant pace, making the country one of the leading sources of investment on the continent.In the 2013 budget speech, the then minister of finance, Pravin Gordhan, indicated that during the 2008-2013 period the South African Reserve Bank approved nearly 1 000 large investments by South African corporations into 36 African countries. These are in many instances not insignificant projects, for example, the Industrial Development Corporation (IDC) has investments in 41 projects across 17 countries that added to a cumulative African investment portfolio of R6.2 billion by 2012. These IDC-led investments are predominantly in mining, industrial infrastructure, agro-processing and tourism.The IDC is but one significant example. During 2014 Brand South Africa’s research into the country’s exposure to peer African markets from a business, government, and civil-society/cultural point of view finds that the country’s corporate brands (both private and parastatals) have played, and will continue to play, a crucial role in carrying the nation’s flag across the continent. For this reason Brand South Africa set out to, in a more systematic manner, research the profile of the nation brand, how South Africa and South Africans are perceived on the continent, and additionally to identify opportunities and challenges South Africans, South African brands, and generally speaking the nation brand faces when investing in, trading with, interfacing or interacting with markets across Africa.From the fieldwork and related research it has become apparent that if South Africa, and South Africans are known for a few key attributes of features then in Nigeria one finds significant interest in South African corporate brands’ managerial and corporate governance capability. In Kenya fieldwork found that while there may be some criticisms of the South African personality (more on that in a moment), products and services from South African suppliers, retailers or service providers are often cited as reputable, reliable, and in some cases competitively priced.In some markets, such as Nigeria, several interviewees indicated that Shoprite’s entry has to some extent changed the shopping culture. This implies that South African brands have not only internationalised, but have in the intervening twenty years of democracy become well known, and respected for rendering quality services & products.Any South African who may suddenly develop a craving for a Spur or Steers “fix” – outlets can be found in Lagos and Nairobi. South African banks such as Stanbic have made it easy to transact, draw cash, and pay for services in the markets where it has a presence. Metropolitan Life in Ghana offers increasingly sophisticated insurance solutions to a growing business and consumer market. In Nigeria the Protea and Southern Sun hotel groups have become well established brands that form part of the Nigerian hospitality industry. Also in Ghana, corporates such as AFGRI, John Deere and smaller South African service providers deliver valuable services in the agriculture, plumbing, electrical, engineering, and automotive spaces.This means that the profile of the South African brand in markets such as Kenya, Nigeria, and Ghana (the countries focused on in the 2014 phase of the SA Inc project) is quite diverse, and by and large each market has unique reasons to accept, use, buy and interact with South African brands, products and services.However, while there is a lot to celebrate in terms of the significant economic and business ties that have developed during the past twenty years, Brand South Africa’s fieldwork research in Kenya, Nigeria and Ghana during 2014 also uncovered some important findings regarding challenges, particularly focused on market entry strategy some corporates have faced in their efforts at entering these markets.Learning to listenFieldwork interviews in Kenya and Nigeria indicate that South Africans can from time to time come across as somewhat aggressive, imposing and unwilling to listen to the advice from partners or local advisors. This raises an important issue pertaining to the internationalisation strategy South African corporates deploy when considering entry into peer African markets.Typical market entry strategy will consider “hard factors” such as: Any internationalisation strategy has to consider inherent risks pertaining to the sector, local competition or international presence, the policy and regulatory environment of the market; In order to mitigate the unique market entry risks corporate leaders must assess risks and then decide on an appropriate strategy such as: Will the company go and establish a o Should the company seek local partnerships and/or shareholders to create joint ventures, or Should the company operate in a foreign market by licensing the firm’s products in another market to be distributed and marketed by local partners.The above are but a few of the somewhat challenging questions corporate leaders, marketers, and strategists face when deciding to internationalise and expand into foreign markets be they on the continent, or further afield in emerging markets or so-called developed economies.Seeing that the Sub-Saharan African economy has been growing at significant rates during the past decade, opportunities for expansion onto the continent have expanded. However, during fieldwork interviews in all three markets it became apparent that perceptions of corporate brands, South African individuals, and the country as a whole, plays an important role in managing relationships.For example, in both Kenya and Ghana interviewees (both South Africans in these markets and local businesses or corporate leaders) indicated that the success of a market entry strategy relies on the ability to take the above decisions on “hard issues” including elements noted above. However, the perception of personalities, and the manner in which South Africans interact with local business partners can in some instances cause deals to fail.The above means that one of the key findings of Brand SA’s research is that the success or failure of a corporate market entry strategy often hinges on the “soft factors” as well. These include an awareness of, and willingness to learn from partners, advisors, or South African individuals or corporates with experience in the market. In Kenya as well as Ghana local advisors often indicated that South African corporates are good with dealing with the hard issues, but when it comes to understanding local business culture, nuances in the use of language, and etiquette associated with social and business interactions with local stakeholders often lead to misunderstandings and failure to develop synergy at an interpersonal level.In Ghana, for example, an interviewee (a South African with more than fifteen years of experience with doing business in West Africa – particularly Nigeria and Ghana) indicated that corporates from South Africa in some instances think that they can proverbially ‘go it alone’ through the market entry process. Such processes often entail complex business registration and licencing procedures, tax compliance and expat quota management to name but a few unique challenges corporates may face when entering markets. Furthermore, unheeded advice from local partners, or advisors such as the case mentioned here, can often mean disaster and massive loss of capital due to deals that go wrong.Key lessons & recommendations to draw from the fieldwork The South African corporate brand profile on the continent is extremely diverse; South Africa, as third largest source of FDI on the continent can continue to play a pivotal role in the diversification of economies in peer African markets to the mutual benefit of the nations concerned; In all three markets where fieldwork was conducted this year a bi-national business chamber exists. From a strategic point of view government and business from SA already active in these markets, or intending to expand there, can utilise these as strategic platforms for a range of services, such as: Introductions to possible local partners, advisors, suppliers, service providers; A platform to share knowledge, build insight and networks to understand local business environment; Develop relations with local partners not only to grow business, but also to get exposure to the local business culture, and national culture generally; Such platforms that typically involve the South African High Commissions or Embassies in the markets can with increased support fulfil a critical bridging function that can soften the landing of SA corporates in peer markets.The lesson to draw from this is that while South African corporates have exploded across the continent post-1994, a lot of work remains to be done to understand the unique hard and soft factors that may impact on the internationalisation- and market entry strategies of South African corporates across the continent.As the National Development Plan outlines, South Africa aims to expand not only its own trade with African markets, but essentially to support the gradual increase of volumes of intra-African trade. This has to be facilitated and supported with relevant policy, infrastructural and innovative solutions. To this end Brand South Africa’s SA Inc research project aims to bring new insights to the fore that can assist governmental, business, and civil-society stakeholders when engaging with markets, people, businesses, universities, or cultural activities.Finally, the conclusion is that South Africans may have to learn how to listen more carefully to the advice of local partners, advisors, or friends. By learning to listen, we will be better equipped to listen in order to learn more about the soft factors that can sometimes come and bedevil the best laid corporate internationalisation strategy.This research note was republished in volume 26, issue two of PMR Africa magazine.