🔍 Stories to Watch: Edgars vs. Civil Servants & China's Auto Takeover

Has Edgars' biggest customer become competition as another Chinese car brand enters South Africa.

This post is part of "Stories to Watch," a sharp analysis of news stories that could significantly impact African markets and businesses. These posts will become more common alongside the traditional deep dives into specific companies.

🇿🇼 When Your Customer Becomes Your Competition

Last week, Al Jazeera published a fascinating story about civil servants who have “secret side hustles” as informal traders to supplement their income.

This made me think of Edgars, which relies on Civil Servants for 35% of its business.

Now, if more civil servants are starting side hustles, which most likely includes selling clothes, this presents an interesting dynamic for Edgars.

Firstly, this means that their current earnings have decreased, meaning less buying power from a third of Edgards customer base.

However, it also means that Edgars is sometimes losing a customer and gaining a competitor simultaneously!

If this trend is prevalent, it may help explain why Edgars' revenue dropped 7% in its most recent results despite being well positioned to succeed with strong financial backing and a new(ish) management team.

This highlights how complex business can be in an unpredictable environment like Zimbawe. You build a strategy targeting your customer, and then your customer turns around and targets you as a competitor.

🇿🇦 🇨🇳🌍 More Chinese Cars On The Way

Another Chinese car brand is entering the South African car market. IOL reports:

“The Changan automobile brand is returning to South Africa thanks to a distribution agreement with Jameel Motors, and the new products on the radar are a far cry from the small bakkies offered previously.”

This brings the number of Chinese car brands available in South Africa to 18 by the end of the year.

That’s a lot.

China was late to start manufacturing cars, with the first locally assembled car being the Dongfeng CA71 in 1958. Compare this with Germany, which started in 1885, and Japan, which started around 1907.

China’s first locally assembled car, the Dongfeng CA71

Despite this, China has become the world's largest car exporter in the last few years, and the trend isn’t slowing.

Chart from New York Times

Some people still doubt Chinese cars, but they will become the norm, especially electric vehicles (EVs).

In 2024, Chinese automaker BYD officially became the world’s leading EV maker, beating out Tesla. In 2024, Tesla made 1,774,442 electric vehicles, 4,500 fewer than BYD’s 1,777,965.

Made in China, will now also apply to most of the cars we drive.

Thanks for reading. This post is part of "Stories to Watch," a sharp analysis of news stories that could significantly impact African markets and businesses. These posts will become more common alongside the traditional deep dives into specific companies.