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 Entrepreneur proves SAs manufacturing promise

 

 Sometimes it takes a perspective from the outside to see the opportunities in a local market. When Hifzur Rehman came from India to South Africa on a three-week holiday in 2004, he was struck by the enormous number of products imported from China.

​​ Surely, he thought, this is an opportunity for an intrepid manufacturer to start making all of this right here, cut out the middle man, and sell from here to the rest of Africa? Any number of South Africans would probably have responded to him that you simply can't compete with the cheap imports, as shown by the dwindling number of local factories.

But Rehman, who extended his three-week holiday to a six-month study tour before settling down permanently in Johannesburg, has since proven that it can be done. Today, he is the proud owner of a steel wool factory in Robertville, Johannesburg.

Rehman was born and raised in Delhi, India, and studied accounting before a short stint at an auditing firm, a shipping and logistics company, and then at his brother's pharmaceutical business as a general manager. He always had a yearning to travel and seek his fortune outside of India, and by the time he took that holiday to South Africa he had enough knowledge and experience to take on the world.

He soon found a job as the general manager of a new soap-manufacturing business that a group of local entrepreneurs started in Johannesburg, and Rehman was able to put his international network to use to source the raw materials, while at the same time getting to know the local business landscape, especially the fast moving consumer goods industry.

In 2007 he felt confident enough to start his own business, the Lamex Corporation, through which he imported all sorts of fast moving consumer goods into South Africa, all the while exploring avenues to start his own factory.

Around 2015, when the rand was trading at less than half its value compared to where it was when Rehman came to South Africa, he saw that the time was ripe to start manufacturing. He kept his eyes open for a product that could be made with local raw material, that is somewhat difficult to import, and that had relatively little in the way of local competition.

Most fast moving consumer goods categories are fiercely competitive, but steel wool slightly less so. Rehman identified a steel-wool making machine in China and did exhaustive research, including visiting the East to see the machine in action and sending South African steel over to test it.

By the time he sat down with his bankers he had a very strong business case for them to finance the machine. But the bankers just could not see the opportunity. They claimed that most steel wool was imported from China, and that it was impossible to compete against it.

Business Partners Limited (BUSINESS/PARTNERS), on the other hand, liked what they saw in Rehman's business plan, and soon agreed to finance the machine. “I found that the people from BUSINESS/PARTNERS are more like business people themselves - they know an opportunity when they see one,” says Rehman.

Part of the deal that he negotiated with the Chinese was for three engineers to come over to South Africa to set up the machine, and to train local staff. Because there are only a handful of steel-wool factories in South Africa, Rehman could not find any workers skilled in operating the machine, and he had to have them trained from scratch, including himself.

Rehman's careful research and preparation left him confident that they could run the machine successfully after the Chinese engineers left. Apart from a few hitches, which they sorted out by phone to China, production of the steel wool under his own new brand Easy Brite went smoothly.

Today Rehman runs one eight-hour shift on the machine and employs 15 workers.

His marketing so far has been focused on independent supermarkets and cash-and-carry stores, and he also supplies to a number of cleaning companies. He is looking forward to listing with the big supermarket chains one day.

Although Eazy Brite is up against very strong competition, Rehman says he is able to compete on price because his overheads are very low compared to the giant consumer-goods companies that run the established steel-wool brands.

Once he wins enough business to keep his machine running around the clock with three shifts, he plans on acquiring more of them. He also wants to branch out into making sponges and pot scourers.

Looking back on his experiences in both the Indian and South African business world, in which country does he think is it easier to build a factory?

Despite a recent armed robbery at his warehouse in Robertville, which rarely happens in India, Rehman says South Africa currently has a better business environment.

India has a huge consumer market that counts in its favour, but a stifling amount of red tape that make life very difficult for business owners. Constant load shedding from an unreliable electricity grid is another disadvantage of doing business in India.

Load shedding and red tape? It sounds like two familiar gripes of South African business owners. Sometimes it takes someone from elsewhere to shows us that we actually have more going for us than we think. 

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