“I’m planning to auction export items through e-commerce”

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A conversation with Tadesse Tessema (Engineer)

 

Tadesse Tessema (Engineer) is a Co-founder, General Manager and Shareholder formerly Holland Car PLC. After he lived in the Netherlands for 27 years, Tadesse decided he could start a successful business in his homeland. He launched Holland car, forced to close down the successful joint venture and back to the Netherlands as the pressure from some groups loomed large. He returned to Addis Abeba three years ago and launched Adugenet Technology Group PLC, the parent company of Adugenet auctions in a bid to change the auctioneering process and make bidding easier while making buying safer in September 2021. Yared Nigussie of Origins Business sat down with Tadesse to explore about his plans on the new hybrid online auctioning platform excerpts;

 

Origins Business: Could you please first tell us how Holland Car established? And why it was closed down despite listed among the most successful and profitable company?

Engineer Tadesse: Holland Car was established in January 2005 as Private Limited Company (PLC) with joint venture of 50 percent share owned by me and the rest by Trento Engineering BV, Dutch Company. The reason for launching Holland Car was, when I was living in Holland, like many Ethiopian’s residing there, I used to export Ladas, which are very familiar in Ethiopian roads. For me the puzzle was that we were exporting these vehicles to Ethiopia despite the fact that these brand autos were outdated and discontinued anywhere else in the world. So, I started to believe that it’s possible to assemble these cars at home. I came up with such an initiative to start assembling the vehicle, went to the Dutch government, and told them my proposal. Actually, they were very surprised-very happy about it. They told me it was a good idea but I had to find a good partner with knowledge of car assembling. At that moment, I conversed with Trento Engineering because it was assembling parts for VDL Ned Car, among the most advanced vehicle manufacturing company in Dutch assembling Mitsubishi. They had goodwill to come and invest in Ethiopia with me. Consequently, we requested the Dutch government to get a grant for the project. We secured the grant and I invested all the money I had there. In 2005, we started building a vehicle assembling factory in Ethiopia with a goal of the company was assembling vehicles to be sold at an affordable price. Fiat 131, which we call it ‘DOCC’ was the first model assembled here. After the initial stage of construction and other infrastructural installation issues, we assembled 48 cars in 2006. Unfortunately, the Fiat sister company in Turkey, which was assembling these cars abroad took our partner. We had to look for a fresh partner, and I found Lifan while I paid a visit to China. I brought Lifan to Ethiopia in partnership. Assembling Lifan was a very successful business. At that very moment, assembling had not a trending thing for many companies except Mesfin Industrial Engineering in Mekelle. Brazenly, they demand both a support from and at the same time to take the project form me as they were not performing well in the market. Even former partner of Mesfin Industrial Engineering was keen to take over Lifan from me. There put pressure against me, and at the end of the day they quitted it. In the beginning of 2009, I was told to stop assembling cars by one of State Ministers of Industry without any logic to do so. I replied: “I invested a lot. Why you asked me to stop?” “No, you have to stop,” the State Minister told me without any explanation.

I have to find a new partner—it means when you change a brand and model you’ve to invest in machineries, knowledge and everything. It took me about 9 months to find new partner and restart assembling. This time our project was much successful than everyone expected. For that, I received the highest taxpayers’ recognition from the government of Ethiopia. Best Innovative Company of Africa was another award I received in 2010 in Cape Town, South Africa selected from 250 companies in Africa. The Dutch government also presented me an award for the jobs I created in Ethiopia. Generally, it was a successful enterprise, and even I have granted with a supply to import 3000 cars in a year to Europe, which I was so proud of. The vehicles tested in Europe, where approved by the recipients. Things have gone very smoothly and markets were thriving. At the same time, the pressure from the other side was getting stronger—accessing loans from banks and letter of credits was impossible.

Despite the successes I made to solve the public transport problem, I was forced by the then authorities to stop what I was doing. We tried to solve the problems with friends but it gone unsuccessful and I left for the Netherlands.  Holland Car declared bankrupted despite it was not. Unfortunately, we had a liquid cash problem because a bank refused to provide finance for us.

Origins Business: Recently, you have come up with an online auction platform.  What inspires you to create that business idea?

Engineer Tadesse: The platform is called Adugent Hybrid Online Auction.  Holland car had taken away from me because of lack of justice and rotten auction— we lost 167 vehicles, machineries and the plant including the building as these properties sold for 42 million Birr. The system was corrupted at all. The Court then decided that the least price to sell the company was 50 million Birr. That corruption in the auction system, which I and others suffered from and the need to get rid of the manual auction system emboldened me to come up with the new online auction system. Under the new scheme, all the actors involved in auction system—the buyers and sellers will be beneficiaries including high tax rates will be deducted to the government.

The traditional auctioning is not transparent one even prone to corruption. To tell you specifically, my inspiration starts with making the system transparent and corrupt-free one.

Auctions amounting of 100 to 150 billion Birr are conducting in the country annually. If you get at least 3 billion Birr from that, it will have significant tax revenue to the government.

Origins Business: What’s the ultimate goal of the new online platform and how does it operates?

Engineer Tadesse: Through the traditional auctioning method, a company will unveil the bid announcement; the auctioneer must buy a bid-document from a company, look at the property to be sold through bids that needs a physical appearance of the person.

Then, they (bidders) have to pay a visit to a bank to make a Customer Payment Order (CPO) followed by sending the CPOs and their bid amount.  Finally, they have to come on the day of bid opening to check out whether they win or not. All these tiresome process will consume 5 or more days.

With our system, we’ll discuss with our seller, put pictures and videos of the property on our website so as everyone can look at the property he/she would like to bid to. Register in the online system and pay a bid bond through online banking. Once the bidder is done with the payment, he/she can start bidding. In 10 to 20 minutes, the bidder is part of the online bidding.

Unlike the traditional bidding, Adugenet is an open digital bidding platform; he/she can submit a multiple bids based on the fluctuating price, which others submit to win bids. The system will send a message to the bidders informing them another applicant submitted a higher price. In such a way, the system works 24 hours a day and 7 days in a week and anybody can see the process. Anyone can be part of it from anywhere. A winner will receive message from our system. This process will have a mammoth contribution in cutting-down cost and time.

As you can observe, the system creates a win-win situation all go through auctions. For sure, nobody will lose from our system. It’s state-of-the-art technology. We have to catch up with the era of digitalization and that’s why I came up with this new idea.

Origins Business: What sort of properties you are auctioning?

Engineer Tadesse: We’ll be auctioning properties from foreclosures from banks, vehicles from insurance companies, governmental and Non-governmental Organizations (NGOs)—who are going to vendor vehicles and other properties. Those are our preferable markets.

Origins Business: How many employees you hired?

Engineer Tadesse: For the time being, we have eight employees. We are planning to increase them as I am planning to start an e-commerce business giving much emphasis to the local market and the diaspora community, which is a project nearing at the final stage its launching.  

Origins Business: How much market share do you have? And tell us about your partnership with Dashen Bank. What’s its importance?

Engineer Tadesse: As I said before the platform is online banking, and to need a bank to support you. In that case, we have agreed with Dashen Bank to create a payment gateway system for customers. The system permits them not to send a bid-bond for auctions but also if they lose, they will deposit the money, they don’t have to go to Dashen to request a CPO.

Origins Business: What’s your future plan regarding the expansion of your project?

Engineer Tadesse: Using e-commerce to mobilize the diaspora, I am aspiring to make the diaspora part of the Ethiopian economy by a means of supplying goods to them globally. Auctioning products Ethiopia exporting is also my plan. By so doing, we can generate higher revenue we are getting now through reaching end use in other countries. I will also move to manufacturing vehicles locally if the government allows conducting that business here.  Seeing Ethiopian brand car manufactured outside of Ethiopia is also in my list. 

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