Dangote Group and China’s Sinotruk Sign $100 Million Deal

A significant milestone in China’s trade relations with Africa was reached recently when industrial giant Dangote Group of Nigeria and Shandong-based China National Heavy Duty Truck Company (Sinotruk) signed a contract for delivery of 1,700 heavy trucks and 1,700 semi-trailers. The contract was concluded on the eve of the state visit to China by Nigeria’s President Goodluck Ebele Jonathan from July 9 to 12. After several months of negotiations led by Dangote Group Founder and President Aliko Dangote and Sinotruk Chairman Ma Chunji, the two companies finally reached an agreement earlier this month. Both leaders personally attended the signing ceremony on July 6 in Beijing, illustrating the importance of the transaction, said the group. The vehicles will be used to expand Dangote’s ground fleet, a critical component of its extensive nationwide distribution network. The network is crucial to national and regional availability of the wide range of items produced by various companies in the group, including cement, industrial and edible salt, food and other consumer items.

Dangote is a diversified continental conglomerate and Africa’s largest manufacturer and supplier of cement, which contributes greatly to the continent’s construction and infrastructure development. It is also the largest corporate employer in Africa. Information from the group referred to Aliko Dangote’s single-minded determination to create a major brand in Africa that would be among the world’s best. This determination has been rewarded with much success and praise worldwide. Analysts said the Sinotruk deal comes at a crucial time as China begins to feel increasing pressure in foreign trade from other Asian countries as well as its traditional rivals in the West. They said an appreciating Chinese currency and lower-cost labour in emerging Asian exporting countries have affected opportunities for Chinese companies, particularly in Africa. In addition, the US, EU nations, India and South Korea are competing more aggressively for market share in Africa, now acknowledged to be one of the fastest-growing regions in the world. The same analysts predict that this vehicle export transaction will create highly desired employment opportunities both for Sinotruk in China and for Dangote Group in its home base of Nigeria.

The focus on local and cross-border employment explains why there has been significant support for the deal from both Chinese and Nigerian agencies and institutions, said the two companies. Established in 1956, Sinotruk has its headquarters and main manufacturing facility in Jinan, capital of Shandong province. Sinotruk was the pioneering enterprise in the development of heavy-duty truck manufacturing in China. The nation’s first wholly self-manufactured heavy truck rolled off the company’s assembly line in 1960. In the past, the company has developed strategic technical partnerships with major international brands such as Steyr in Austria and Mann in Germany. These have helped Sinotruk penetrate key global markets. Nigeria is one of the most important of these markets. China Export & Credit Insurance Corporation (Sinosure) played an important role in facilitating the success of the landmark truck deal between Dangote and Sinotruk by providing short-term financing in partnership with commercial banks in China. Beijing-based Andaz Global Solutions was involved in providing business and financial advisory services throughout all phases of the deal. The company focuses on Sino-African collaboration in key sectors such as oil and gas, infrastructure, mining and power.

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This article was first published on 11th July 2013

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