Blog

Market Forces

In markets across Africa one is greeted by two major imports from China. First there are likely to be a huge number of products which have been designed and manufactured in China before being shipped over for sale across the continent. These goods are the same as those you will find in Chinese markets where cloned electrical goods and ‘Rolph Leuren’ shirts swamp tight lanes of market stalls. The second import is small family owned businesses selling everything from chickens raised on an African farms, to mobile phones assembled in Guangdong. This second import seems to be creating ill feeling.

Chinese goods make their way to Africa via a number of different roots. Most find there way from manufacturing hubs like Shenzhen in Southern China through traders to distributors in Africa. These channels are all about relationships. Usually they are established by an African entrepreneur based in China selling back to his African contacts, or a Chinese ex-worker or economic migrant in Africa using family connections back home to arrange shipment.

The logic for this trade is simple. Africa has a strong consumer market. Chinese factories produces cheap goods which seem to suit the African consumer well. Western multinationals witnessing the growth of the middle class in Africa, and the propensity to spend new found wealth on consumer goods, are doing their best to establish themselves in the market. But their goods are expensive, and often the particular style or function of a shirt or phone manufactured by a multinational won’t suit the tastes and desires of the African consumer. The enormous variety in Chinese goods has allowed for flexibility in finding which goods suit African consumers.

While the ‘made in China’ brand is ubiquitous in all African markets, complaints have followed their successful incursion closely. High on the list is the complaint that Chinese goods are of inferior standard, falling apart quickly and failing to perform as advertised. There was an interesting article last week in Nigeria’s The Nation where the author asked, why Nigerians prefer Chinese goods? The only real conclusion is that despite the lower quality, Nigerians like these goods. After all in the market, the stall owners stock what sells.

Chinese factories produce more than just cheap shirts. After all, most of the goods that are consumed in the USA and Europe are made in China too, including high cost brands. If the demand in Africa was for higher quality, higher priced goods they would be provided and the factories producing cheap goods would change their production. The trade relationship between most African countries and China is fairly equal. Therefore the enormous value of all the African natural resources shipped to China is equalled by Chinese produce going in the other direction. Much of this is made up of goods for the African consumer.

Chinese workers looking for a way to earn their fortunes have increasingly infiltrated petty trading in African markets. The problem here is that these low skilled jobs are valued in the local economies and the increased competition is not appreciated by local populations. A recent survey in Uganda found that about 65 enterprises out of the 150 that were surveyed were involved in the wholesale and retail trade. Ugandan traders under have always demanded that the government stops issuing work permits to foreign traders working in retail who often pose as investors when entering the country.

Nevertheless the very fact that these market sellers survive suggests that antipathy towards them is not as extreme as the media sometimes suggests. The most effective form of action would come from the consumer. If consumers chose to boycott Chinese goods or Chinese traders local interests would be naturally and effectively expressed.

In the absence of this natural response regional organisations have sought legislative and political means to reduce the impact of Chinese entrepreneurs. East African Community Director of social sectors Mary Makoffu said last week, “This is among the new challenges facing the region that needs individual partner states to look for a way of resolving it”. The Chinese state is working hard to improve the perception of its relationship with Africa, and scenarios which whip up public anger and mistrust of China at a national and regional level are likely to concern policy makers who need cooperative governments and economies for their Africa strategy.

In This Day recently Chidi Amuta wrote a very interesting article calling for caution in dealing with China. About the impact of China’s globalisation he writes,

Globalisation unites humanity not around the fear of America’s big guns but around the desire to possess the same goods – cheap cell phones, computers, clone wrist watches, fake denim, T-shirts, modern homes and appliances that make life easy and encourage people to feel special and a sense of belonging in a new train of civilization. And China goes on churning out those goods, thereby uniting humanity faster than the merchants of fear and humanitarian imperialism.

It is important to recognize- as he does- that providing cheap goods that people want is a major aspect of China’s engagement with Africa, and goes a long way toward defining China’s trade based relationship. It is easy to gloss over the importance of being able to buy a mobile phone, a motorbike, or a new shirt, but the African consumer is demonstrating that it is indeed important to them, even if it might fall apart quicker than a more expensive alternative. The opportunity to own these goods makes a big difference to people’s lives, and African consumers demonstrate every day that these goods are worth their money.

The real issue is that Africa needs jobs, and manufacturing is a vital space for growing urban populations to find work. While Chinese competition is vital in order to raise standards of productivity, it is also vital that African producers are supported as they attempt to meet this competition. Chinese producers have had a long time to hone their art, and it seems that the best way to meet their standard is to learn from them directly. This is why the increase in assembly plants and other Chinese factories moving to Africa is so important and must be encouraged.

The solution here is not to reject Chinese goods for their poor quality. The entire world has become hooked on cheap Chinese goods, and finding a way to generate sufficient revenues in the local economy to buy them is as relevant in Washington DC as it is in Ouagadougou. The ace up Africa’s sleeve is its resource contracts, giving African countries and regions real leverage with the Chinese government. African governments need to ensure that China transfers manufacturing jobs to Africa and listens to complaints. While traders and journalists complain that Chinese goods are bad for Africa, it seems the African consumer simply doesn’t agree.

Comments are closed.