Buying CFAO: an African distribution network (2012)

Choosing a different road from the resource traders

At the centre of this acquisition is Toyota Tsusho choosing a different arena in a sogo-shosha world where every house competes over resources and infrastructure. Rather than goods with large price swings, like oil or metals, it would move goods close to everyday life — cars, pharmaceuticals, beverages — in the long-horizon market of Africa. The local sales-and-distribution network CFAO had built over more than a century was not something money could buy overnight, and in that lay a source of differentiation rivals could not easily copy.

Even so, goods close to everyday life do not escape the hazards particular to Africa — weak currencies, political instability. The 2016 loss showed that the very market chosen as the axis of differentiation carried volatility of its own. The turn toward earning on quality rather than volume, and the question of how to return the profits accumulated there to shareholders, are matters for separate decisions, taken up elsewhere. As a move to put down roots in African life beyond the sales channels of Toyota cars, the CFAO acquisition still lives on within Toyota Tsusho’s business today.