Le Shushi from Guangzhou aims to become the "King of Fast-Moving Consumer Goods in Africa"

Interface News Reporter | Zhu Yongling

Interface News Editor | Lou Qiaoqin

On March 23, Shen Yanchang, Chairman of Le Shushi, “ripped” open a package of diapers at the first performance release after the company’s listing—he made a horizontal comparison between his products and competitors’ products to the brokers and investors present, much like a live-streaming host.

Le Shushi originated as an internal business division of Guangzhou Senda Group, became independent in 2022, and is set to be listed on the Hong Kong Stock Exchange in 2025. Le Shushi is currently a leading brand for baby diapers and sanitary pads in Africa, ranking first in sales volume and second in revenue based on 2024 projections. Senda Group, primarily engaged in home decoration and building materials, has been cultivating the African market for over 20 years. “King of Africa” Shen Yanchang also has high hopes for Le Shushi’s development in the African hygiene products market: “We sincerely serve consumers in Africa, and we aim to build a long-term national brand.”

Over the past decade, Le Shushi has developed in Africa to compete with established players like Pampers and Huggies, partly due to its cost-performance advantage. According to Le Shushi’s management, the company’s pricing in Africa is 15% lower than that of international first-tier brands but 10% to 15% higher than local small and medium-sized brands.

However, continuing to capture more market share remains the most important focus for Le Shushi at this stage.

At the earnings meeting, when asked how its mid-to-long-term brand positioning will be adjusted—whether it will move towards the high-end or maintain a mass-market approach—Le Shushi’s management stated that the company would adopt differentiated strategies in different markets. For example, in high-share markets, it will focus on launching new products and continue to strengthen market share and enhance pricing power; while in low-share markets, it will seek breakthroughs in mainstream categories, focusing on increasing share and finding appropriate market positioning.

Backed by a global supply chain, Le Shushi adopts a “locally produced, locally sold” model, with its core markets in Africa, including East, West, and Central Africa; new markets like Latin America and Central Asia are still being explored, but currently account for only 4%.

In the “fragmented” African market, Le Shushi mainly relies on a deep distribution model to sell diapers, sanitary pads, and wet wipes to local consumers—from selling by the pack in supermarkets to selling by the piece at market stalls, its sales methods are flexible and diverse to adapt to the purchasing power of different local groups.

In 2025, Le Shushi’s performance continued to grow, with revenue increasing by 24.9% year-on-year to $567 million (approximately 3.9 billion yuan); gross profit margin increased by 0.7 percentage points to 35.9%; adjusted net profit rose by 24.4% to $122 million, with a net profit margin maintained at 21.6%.

The “increase in both volume and price” is an important reason for Le Shushi’s revenue growth.

Sales growth primarily stems from the continuous demographic dividend released in emerging markets like Africa and the increasing penetration rate of hygiene products. Additionally, benefiting from favorable exchange rates in the second half of 2025, most operating regions saw their currencies strengthen against the US dollar, allowing Le Shushi’s average selling prices across categories to rise by 4% to 7%.

Image source: Le Shushi official website

However, Le Shushi’s ambition goes beyond just selling diapers and sanitary pads; its management stated that the goal is to become a leading fast-moving consumer goods group in Africa.

In terms of market share, Le Shushi still has room for improvement.

According to management, Le Shushi plans to advance the “Million Terminal Project” in the future to further expand and enhance its deep distribution system in Africa. Currently, Le Shushi has around 3,000 distribution clients in Africa.

The “Million Terminals” goal is based on two judgments made by Le Shushi. One is that, within the next decade, the African market will still be primarily offline and is unlikely to see a situation like that of the Chinese market with both online and offline channels coexisting; thus, establishing a broad offline distribution network remains key to channel competition in the short term. The second is that, according to Le Shushi’s calculations, a country in Africa with a population of 30 million can accommodate over 100,000 small stores, with a significant coverage effect for over 40% of them, which forms a basic platform to support Le Shushi’s further expansion.

However, the downside of a deep distribution model is the insufficient control brands have over the terminal channels. To address this, Le Shushi’s solution is to build a digital management system. The company mentioned in its financial report that it will first launch pilot projects for channel digitization in key countries like Ghana and Kenya in 2026.

However, it is foreseeable that the implementation of digitization will require cooperation from distributors, which may also be a lengthy process.

In addition to channels, Le Shushi also has further room for expansion in categories. Management revealed at the earnings meeting that, as an independent commercial group, Le Shushi is also open to mergers and acquisitions, and an internal acquisition team has already been established.

As of the end of 2025, Le Shushi has $445 million in cash and cash equivalents on its balance sheet, with the debt ratio decreasing from 44.9% last year to 16.4%. “Without issuing new shares, we still have the capacity to pursue some good acquisitions,” Le Shushi’s management stated.

Image source: Le Shushi official website

Although the African fast-moving consumer goods market has strong growth certainty, doing business here also presents challenges.

Since Le Shushi’s sales transactions in different countries are priced and settled in local legal currencies, foreign exchange fluctuations actually represent a risk point for the company’s operations in Africa. For instance, in 2023, Le Shushi recorded a foreign exchange loss of $13.8 million, which was even higher than that year’s sales and distribution expenses.

Le Shushi’s management stated at the 2025 earnings meeting that, regarding foreign exchange risk, the company will first choose to operate in countries with lower exchange rate volatility and more political stability. Currently, over 40% of Le Shushi’s income is relatively stable and not significantly affected by exchange rates. Additionally, the company will adopt measures like advance payment for goods and timely currency exchange to mitigate exchange rate impacts.

The impact of the Middle East conflict leading to rising oil prices on Le Shushi’s supply chain is also a current market focus.

Le Shushi previously disclosed in its prospectus that the cost of production materials (including procurement costs, related taxes, and freight) accounts for over 80% of its total sales costs, indicating that fluctuations in raw material prices greatly affect its costs and gross profit margins. Among Le Shushi’s three main raw materials, SAP (superabsorbent polymer) and non-woven fabric have core materials that are petroleum derivatives.

However, Le Shushi’s management stated at the earnings meeting that the impact of the Middle East conflict on the global supply chain is “more opportunity than risk” for Le Shushi, as the company can leverage its leading advantages to capture more market share during resource shortages, as demonstrated during the pandemic and the Red Sea incident when raw material supply and transportation capacity were tense.

Le Shushi’s management noted that the company’s leading advantages are reflected in that its upstream and even further upstream suppliers, under pressure from rising costs, typically prioritize fulfilling orders for core major clients, ensuring “raw material supply is definitely guaranteed.” In contrast, small and medium-sized enterprises often face greater impacts.

On the other hand, Le Shushi has established long-term strategic partnerships with leading global logistics companies like Maersk and MSC. According to management, Le Shushi can obtain shipping costs at 60% of the market price. Moreover, the Middle East conflict does not have a direct impact on Le Shushi’s shipping routes to Africa.

However, while Le Shushi may benefit from the Matthew effect during a crisis, the rising costs of raw materials will inevitably be passed down. “In the third and fourth quarters of this year and into next year, we may face certain challenges and pressures, but from a medium to long-term perspective, this will definitely be favorable for us,” Le Shushi’s management stated.

In addition, more and more competitors are eyeing the large cake of the African market, which may also pose challenges for Le Shushi to maintain its lead, just as Le Shushi has done against international brands over the past decade.

Le Shushi’s management is confident in the company’s market leadership position over the next three years. They believe that currently, the main competitors in Africa are known leading brands, and considering that Africa is not a unified large market, even if new brands can compete with Le Shushi in a single country market, it is unlikely that a new emerging brand will broadly cover the African market in the short term to comprehensively impact Le Shushi’s business across dozens of countries. Le Shushi’s barrier lies in the in-depth understanding of the African market’s politics, economy, and culture accumulated over many years, in other words, the capability to do business in the diverse and complex operating environment locally.