Not only is South Africa the largest capital equipment market on the continent, it is also regarded as the ‘bridge to Africa’ for many international companies looking to establish a footprint on the continent. Many German OEMs seeking to establish themselves in this market have over the years turned to Smith Power Equipment for a distribution partner.
Germany is one of South Africa’s most important trading partners. To provide context, in 2017, Germany was ranked as the second-largest trading partner for South Africa, behind China and ahead of the United States. Among some of the major German companies that are represented in the “gateway to Africa” are original equipment manufacturers (OEMs).
Reputable OEMs are well aware that a brand is as good as its support. Above all other factors, aftermarket service has become a key parameter in influencing customers’ buying decisions in the capital equipment space. The South African market has reached a golden age of services, and to survive and prosper, the capital equipment supply chain has transformed into a service-centric sector.
It is therefore critical for OEMs to partner with strong and reputable local suppliers to ensure that their brands meet these evolving market needs. One company that has been at the forefront of building German brands in South Africa is Smith Power Equipment. One of the key success stories is the partnership with the KION Group. As part of its one-stop shop approach, Smith Power signed a distributorship agreement with the KION Group for the distribution of the Baoli range of materials handling equipment.
Through the agreement, Smith Power added the Baoli range of diesel, electric and LPG forklifts, as well as stackers and pallet trucks to its stable. KION Baoli is a brand of forklift trucks that was founded in China in 2003 and acquired in 2009 by Germany’s KION Group, the European market leader and the world’s second largest manufacturer of warehouse technology.
In 2017, the KION Group went on to establish Baoli EMEA, a new organisation which replaced and expanded the previous Baoli structure in Europe, the Middle East and Africa, currently covering 26 countries, but with the ambitious aim of covering 86 markets in the region in just a few years. In South Africa, the brand has benefitted from Smith Power’s knowledge of the market, as well as the extended branch and dealer network.
Smith Power has established itself as a reliable partner of choice with strong relationship building and dedication to its customers. “We have proven to be a builder of German brands in South Africa,” says Eric Schultz, Finance and Operations Director for Smith Power Equipment. “OEMs come to us and we help them build and establish their brands within the relevant markets.”
“We have a 30-year track-record of establishing leading brands in the country. Some that come to mind include the likes of Toro, Kubota, Linhai and Club Car and Polaris, to mention a few. These are not necessarily German brands but they are leaders in their respective markets. In our stable we have three market leaders and one second-placed brand in the market,” adds Schultz.
The partnership with Baoli started in 2018. The brand has showed tremendous growth in South Africa. It recorded the biggest growth last year, despite the market challenges posed by the outbreak of the COVID-19 pandemic and the subsequent lockdowns. In fact, it has doubled its market share in a space of a year.
Schultz points out that key to the success of the brand are a number of factors, mainly the favourable price points, great sales and aftersales support as well as the proven quality of the product. “The Baoli product is competitively priced in the market. The cost of ownership is also another competitive edge, buoyed by the quality and reliability of the product,” he says.
The 1-year/ 1 000-hours warranty is testimony to the confidence in the product. This is complemented by Smith Power’s strong support structures. The Baoli brand has enjoyed a strong reach into the market through a 35-dealer strong network offered by Smith Power. The strong partnership between the OEM and the dealer has also been key to the success of the brand. “We have a strong relationship with the OEM. They are working closely with us to grow market share. We get round-the-clock flexibility in shipment of parts,” he says.
Schultz believes that there is a lot of cultural similarities between the KION Group and Smith Power. The two companies, he says, share the same business ethics, passion for product, customer engagement and the desire to grow their respective businesses. The changing face of the market has in fact transformed the way OEMs interact with their dealers. Dealers have ceased to be just selling agents for OEMs; they have become valued business partners, trusted advisors to the OEM in all matters relating to aftermarket service, as well as crucial research and development projects.
Schultz believes that it’s no longer just about parts availability and fulfilling maintenance obligations. Customisation is one of the top trends in today’s equipment business. Customisation means understanding what the end user’s needs are, and being able to modify the product or solution to meet the particular requirements. “Baoli is always willing to work with us around customer specific builds,” he says.
Why South Africa?
South Africa is a key market for Baoli. “It is the gateway into Africa,” says Schultz. “The OEM sees South Africa as a vital part of its export markets, given the support structure that we can give into the neighbouring countries.”
Schultz says South Africa is a key growth market in the materials handling space. “There is big scope for Baoli to continue gaining market share and penetrating into other markets such as warehousing and distribution. We also have our eyes on the island markets of Madagascar and Mauritius, where we see a lot of potential in materials handling,” he adds.
Looking ahead, Schultz is targeting to establish the materials handling division as a major force within the Smith Power stable. “We want to further expand our sub-Saharan Africa footprint more aggressively. We also want to grow our rental fleet to meet customer needs, be it short-term or long-term rental,” he says.
Although there is a big focus on the materials handling market, Schultz says the company is always on the lookout to add more complimentary brands / products to its stable to expand its offering to the market.