How chance visit to ‘overpriced’ Kenyan supermarkets birthed China Square

Lei Cheng alias Charlie

Mr Lei Cheng alias Charlie has annoyed the whole country with cheaply priced goods at his store in Unicity Mall.

Photo credit: Simon Ciuri | Nation Media Group

When Lei Cheng alias Charlie visited Kenya for the first time in September last year, nothing had prepared him for his life ahead.

On Saturday, he told Nation that he instantly fell in love with the country.

But then something happened. He said a routine visit to a supermarket surprised him after he found out that most cheap items he knew very well were imported from his home country –china—had been priced as premium.

He smelled a business opportunity. He flew back home to China and roped in some suppliers into the idea of setting up a base in Kenya. That gave birth to the now controversial China Square located at the Unicity Mall near Kenyatta University, which has annoyed not just Kenyan traders but also Trade Cabinet Secretary Moses Kuria.

On Saturday evening, Mr Cheng announced that he will close the store on Sunday to reevaluate its strategy following claims it had driven Kenyan traders out of business with lowly priced goods.

Mr Cheng opened the business on January 29 this year and in the first two weeks, he made sales worth Sh 20 million.

On Saturday, he said his daily sales volumes have more than doubled thanks to genius market pricing, a chance social media marketing and referral clients.

“We opened this store on January 29 this year. We are barely a month old. In the first two weeks in business, our sales turnover was Sh20 million. Nowadays, on a bad day we sell goods worth Sh10 million,” Mr Cheng offers confidently.

He maintains that his business model is friendly and appeals to many Kenyans who despite low earnings are suffering under the high cost of living.

He claims that the same lot has long been exploited by businessmen who sell to them basic items at a premium.

Mr Cheng has been in the eye of the storm this week after Kenyan traders protested against his business model.

The traders accused Mr Cheng of slashing prices by almost half thereby cutting them off from the market.

On Saturday, Nation found him sitting unperturbed in his office at  Kenyatta University-owned UniCity Mall along Thika Super Highway, Kiambu county.

He was not even bothered by Mr Kuria’s outburst that he has given the university a counteroffer to buy out his lease and hand it over to the Gikomba, Nyamakima, Muthurwa and Eastleigh traders and edge China Square out of business.

Mr Cheng wondered what the hullabaloo was all about.

“My business is legal and is centred on healthy competition. We have cooperated with all government directives for opening a business in Kenya and we are here to break the monopoly. The people who are fighting us feel threatened because Kenyans now know we exist and we are not exploiting them in pricing,” Mr Cheng told Nation.

A graduate in International Trade from a South African University, Mr Cheng, 37, says business is about knowing where to buy and who you are selling to and creating a sustainable supply chain.

He says he has cultivated this for many years in China and locally.

His business currently employs 130 people.

He says he was very shocked to read Mr Kuria’s utterances on social media saying when he was applying for the licences there is nowhere he was told that “Chinese are not allowed to do business in Kenya”.

“Kenya is a very good country and its people are very friendly. I was very shocked by trade minister Moses Kuria's utterances because this may heavily slow down foreign investments in Kenya and I think the minister should support ethical businesses like the one we have here that create opportunities for Kenyans and pays huge taxes to the government,” Mr Cheng reasoned.

“If other foreigners can do business in Kenya so can Chinese because we have done nothing wrong. Our customers are happy because we have drastically reduced our prices. Business is about serving customers and they have been our biggest referral,” Mr Cheng noted wearing a grin.

He says China Square is already working with local companies that have approached them for partnership. He cited the huge traffic the shop has generated to the once-dull UniCity Mall that is now brimming with business.

The mall has been operating at just 10 per cent occupancy after being snubbed by local supermarkets that quietly withdrew after noticing it did not attract foot high traffic, a key mainstay for supermarkets operating outside Nairobi.

When the Nation visited the mall on Saturday at 11:47am, it was almost full with queues stretching metres away.

The parking lot was also full forcing motorists to wait in long queues.

Deputy President Rigathi Gachagua this week convened a meeting to avert a planned strike by Gikomba traders in what they termed as unfair competition from Chinese traders.

The strike was expected to take place on Wednesday next week but the talks seem to have cooled off the traders.

“This evening, at Harambee House Annex, I have hosted representatives of small traders from Nyamakima, Kamukunji, Gikomba, and River Road for discussions on addressing challenges in their businesses in the Capital City," Mr Gachagua said after the meeting.

"We have agreed to have further consultations with more members on Wednesday, March 1, next week towards sustainable solutions to the issues affecting these small-scale traders- who are on the lower side of the pyramid- real Hustlers," he added.