South Africa offers great possibilities for industries to grow. However, it takes a great amount of patience and effort to navigate in the country’s playing field, when it comes to starting and running a successful business; something that AVK knows and still struggles with 15 years after entering the South African market.
After acquiring a local producer of larger valves back in 2014, the turnover has tripled and South Africa is now a substantial market for the AVK Group. One of the reasons being that the warm country simply needs good and lasting solutions to their drought issues.
According to CFO Lars Kudsk, the future for AVK in South Africa looks prosperous, even though local regulations complicate the process. Back in 2013, the South African government tightened the demands to foreign companies, which has meant, as an example, that 70 percent of value must be created locally. With the acquisition, and through a local training academy, the director in South Africa has eight-doubled the local staff now counting approximately 200.
“South Africa is part of our long-term strategy. Therefore, we stay in the market and follow the demands of local authorities despite of high costs and a negative impact on our revenue.”
Though high bureaucracy and short-notice cancellation of agreements often has delayed business processes, South Africa has offered good, competent employees and a modern economy compared to other African countries.
Securing water supply and sustainable energy
Despite increasing the demands to foreign companies, the interest for attracting investments is still there; as an example, the South African president hope to attract three billion dollars for improvement of water supply and more sustainable energy, and together with companies such as Kamstrup and Grundfos, AVK has many upcoming tasks.
Traditionally, South Africa has high expectations to their water supply efficiency and to the quality of their drinking water. This means good possibilities for AVK’s quality products and solutions. The large valves are especially used for large water pipes, between reservoirs and water works desalinating sea water for the cities’ water supply, meaning that AVK now covers a larger market than before.