listening
The wind-up radio is finally available in SA after being produced for export only, reports Madeleine Wackernagel
THE story of the wind-up radio is one of ironies. It took a South African company to realise its potential after its British inventor had no luck selling his idea in the rest of the world, but the product was too pricey for the local market and all the output to date has been for export only.
Minister of Finance Trevor Manuel’s first Budget this March has helped to change all that. By bringing down the ad valorem duties on imported parts to a more realistic 15% from 37,5%, the mass production of the Freeplay range of wind-up goods is finally feasible. A worldwide launch – including South Africa – of the second generation wind-up radio is scheduled for next month. And a wind-up torch is due out before the end of the year.
“Advance orders for the radio are very encouraging,” says Rory Stear, joint chief executive of BayGen, the Cape Town-based manufacturer. “In the past, non-governmental organisations and development agencies have been our biggest customers, but with the next generation we will be targeting the big retail outlets, such as Dixons in Britain and Sears in the United States.
“The drop in ad valorem taxes is very welcome, bringing a realm of possibilities, and putting us on a par with the United States, Europe and Japan in terms of market opportunities. But the price, at around R250, is still high; it sounds a lot better and more affordable in dollar terms – $69 for the radio and $49 for the torch,” adds Stear.
The company is only too well aware that it has to bring down the price if it is going to achieve critical mass – and half the problem is education.
“People are used to pressing a button,” says Toby Sutcliffe, the marketing director. “We have to change their thinking, not only on switches, but also in terms of the long-term cost-savings. Batteries can cost about R20 to R25 a month so the cost of a Powerplay radio is easily offset in a year. Plus the spring only needs replacing after about five years, so the product is very economical. It’s just a question of changing perceptions.”
And the company is looking for as much exposure as possible, targeting the whole range of retail outlets, in a bid to get that message across.
“It won’t be easy,” admits Sutcliffe, “but we are very determined and 100% confident we will get there. Otherwise, we wouldn’t be doing it.”
The company was given an additional boost this year when the General Electric Pension Fund of the United States bought a 33% stake, giving BayGen a substantial cash injection, and with it, money for ongoing research and development.
“The secret of success for a company like ours is to stay ahead of the market, so we put a significant amount of our resources into research – up to 40% in fact,” says Stear.
BayGen is already looking ahead to other potential markets, especially toys. Says Stear: “Many parents object to buying battery-powered toys for their kids – the maintenance costs are too high. So there’s a huge market. But we have to bring the size of the spring down first; it’s pretty bulky at the moment, which limits its application. Most of our research and development expenditure is aimed at reducing the size. Already, there is a big change in size between the first and second generation wind-up radios.”
For the financial year to February 1998, Stear is looking for sales of 500000 units, and projecting double that for the following year. That would mean doubling the size of the factory too, and hopefully more employment for disabled people, who currently make up the bulk of the workforce.