If you watch a documentary on an African country and spot a child wearing a Michael Jordan T-shirt, chances are good it was shipped by AfCan Interlink.
AfCan buys used clothing from the U.S. and packages it at plants in Brampton, Ont., and Kandla, India. The clothing is then exported to some 20 developing countries in Africa, Latin America and southern Asia. AfCan Interlink president Jagdish (Jack) Bhanot credits both good fortune and business savvy for AfCan's success in building a booming export business with about $20 million in annual sales.
In the late 1990s, Bhanot met an entrepreneur who was in the business of recycling textiles and selling them overseas, and recognized an opportunity to build something much larger. After taking a trip to Africa to study the market for used clothing, he and two partners founded their own textile recycling business.
"We improved quality, packaging and service, and that's how our business has gotten to this level," Bhanot says. "Once you improve the whole process, you move a couple steps ahead of your competitors."
Improving business processes was one thing; breaking into new markets was another.
Bhanot made trips to Africa, sitting in local markets and screening potential clients. Patience was crucial in finding trustworthy customers, he says. "My contacts weren't built in one day. In Africa, there aren't many conventional banking institutions. So your network has to be strong. And you have to have so much faith in your people, because there are many risk factors involved," says Bhanot, who immigrated to Canada from India about 40 years ago and for many years operated a catering business.
The formula is working. Because of the strength of those overseas contacts, AfCan barely has to market its clothes any more. All its production is pre-sold. However, AfCan, a BDC Financing client, is careful not to flood markets with product to ensure constant demand and better control over cash-flow and growth.
In setting up a new plant in India, he and his contacts found a spot right next to the ocean in a Special Economic Zone in Gujarat province. This cuts down on manufacturing costs. And, Bhanot says, business should increase —to $30-million — in the next two years as the facility reaches full capacity with 400 employees.
The new plant will also be able to recycle wool from clothes back into yarn and create products for sale in India. That will help the company diversify its product line.
The plant in Brampton will remain open because products from North America are perceived as higher quality and more valuable in the countries he's exporting to, Bhanot says. But the higher cost of labour in Canada and the rising dollar are forcing AfCan to increase its Indian work force at the expense of the Canadian one.
With so many business opportunities ahead, Bhanot says other Canadian entrepreneurs should be looking overseas for export markets.
"Trade between Canada and the U.S. has peaked," he says. "Now is the time to move into other markets, because that's where the growth is."
Content in this section is provided in partnership with the Business Development Bank of Canada. BDC provides entrepreneurs with financing, venture capital and consulting services. To find out more go to BDC.ca.
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