Western Metal Products Company (WEMPCO), is a Chinese-owned manufacturing company best known for its steel value-chain group and as the majority shareholder in the popular Oriental Hotel in Lagos. It is also actively involved in agricultural and hospitality sectors. The company was founded by Lewis Tung and his brother Robert Tung, with the Tungs being among the four Chinese families that came to Nigeria in the 60s. With over 40 years in Nigeria, the effect of their exit will heavily impact the jobs and businesses dependent on them.
News of their exit first began in 2019, but it was solidified in July 2020 as the Oriental Hotel was listed on a popular property sale website. They also took up representation with a prominent real estate firm in Nigeria. The Oriental hotel is currently going for $250m (about N90 billion) as its market price.
Reasons for their Exit
- Poor corporate governance: It was reported that the Luxury Oriental Hotel suffered from gross mismanagement. The management team includes children of other shareholders of the hotel.
- Over-dependence on government policy: Other than particular issues with Th eOriental hotel, it was said that WEMPCO relied heavily on favorable government policies. This was because, they banked on former Minister of industry, trade and investment, Olusegun Aganga, for its survival. The company, along with other important manufacturers, was granted import waivers. This was to allow them to import any demand gap to complement what they would produce locally. Unfortunately, the incoming government led by President Muhammadu Buhari cancelled the waivers.
- Little regard for Nigerian Business environment: WEMPCO created a production line in its N236 billion rolling mill in Lagos to produce a thick cold-rolled of 0.2mm, which is more expensive than the 0.8mm or 0.4 mm seen in the West African market. Because o fits expensive nature, they found it difficult to compete in a market where low-quality and low-cost products reign supreme.