Monday, October 15, 2012

The Chinification of Africa

Throughout history the Chinese merchants are famed for being street smart, calculating, cunning and possessing a good nose for business that have seen them traverse the world through the centuries, making the phrase “Made in China” a global brand.

And although they had to wait for Chinese multinationals to trail blaze the way to Kenya, the legendary Chinese merchant, called Shang in oriental folklore, has finally landed in Nairobi. And Kenyan traders are not amused because these diminutive men from the Far East have “disrupted” the order of doing business around here by playing through their own rules.

To display their displeasure with these unwanted guests local traders staged a street protest last week where they presented a petition to the Prime Minister’s office and Parliament.

“These Chinese traders are very cunning people,” says a Luthuli Avenue based generator and public address system dealer who identified himself as Karis. “They usually come to our shops disguised as customers and ask for the prices, only to go back to their country and bring the same product at a much lower price”.

Karis adds that sometimes the Chinese employ Kenyans as salesmen and then sack them after building a client base and learning the local business dynamics.
“Most of these Chinese don’t have shops which means they don’t pay rent or tax hence they can afford to sell their products cheaply,” the trader lamented to DN2. “The government should step in and either tax them or expel them because I suspect most don’t even have work permits”.

Karis’ sentiment were echoed by many other traders along the busy Luthuli Avenue and other areas in Nairobi who complained of their businesses being undercut by the unfair dealings of the Chinese. 

“Since they are in contact with some manufacturers from their homeland sometimes they bring in low quality goods that they sell cheaply,” complains Yunis Abubakar, a mobile phone trader based at the Luthuli Complex business center. “For this reason and the fact that most don’t pay rent or City Council levies they are also eating on their client base”.

Abubakar claims that the Chinese stalks customers in shops and entice them through prices that would be economically unviable to Kenyan traders.
“When I started this business in 2007 we used to have major clients from Ethiopia and Uganda who would buy goods in bulk,” He recalls. “Now the Chinese are not only dealing directly with these foreign clients but they have also have agents in places like Addis Ababa and Kampala to retail their products there”.
Like Karis, Abubakar pleads with the government to step in and ensure the principles of fare competition are put in place. 

“The government should ensure the Chinese pays tax as we do and that they have business premises for which they will have to pay rent and City Council levies,” he says. “Otherwise at the moment some of them hawk their goods on a backpacks moving from place to place”.

Riding on the good will cultivated by Chinese corporations and their billions the aggressive these foreign traders have taken the war to their Kenyan counterparts. With a “junk of all trade” the Chinese are doing everything from hawking cheap phones to selling garments, second hand car dealerships and real estate.

But Nairobi is not the only city in Africa swarming with the enterprising merchants from the Far East. Small-scale traders in cities like Dakar, Lusaka, Luanda, Maputo and many are all contending with the threat of the robust Chinese traders.
In a bid to protect local vendors the government Malawi passed a law last month that restricts all foreign traders to the countries four major cities of Lilongwe, Blantyre, Mzuzu and Zomba besides having to deposit $250,000 (Sh20 million) in the country’s central bank as start-up capital.

“The new law clearly outlines what kind of businesses foreign investors will be allowed to get involved in,” Malawi’s Minister of Trade John Bande said. “We will not accept foreigners to come all the way from China and open small businesses and shops in the rural areas of this country and compete with local traders”.

With China establishing a multibillion-dollar development partnership with African nations Chinese citizens have been coming to the continent as experts, supervisors and other types of workers contracted in the various projects.

But besides the genuine staff brought in by the Chinese companies there are others who are here for unclear reasons. These are the ones who eventually end up being hawkers and small scale traders,” explains William Karang’ae, a player in the textile industry. “While we appreciate the Chinese positives in the country like the Thika Superhighway we are totally opposed to them destroying our businesses through unfair competition”.

After the Kenyan traders demonstrated the Chinese Embassy issued a statement to the effect that all the Chinese people and businesses in Kenya operates within the law.

“The Chinese companies and citizens in Kenya strictly comply with the local laws and regulations in their production and management process,” the statement form the embassy read. “The Chinese Embassy in Kenya has always been committed to educating the Chinese companies and citizens in Kenya to operate businesses within the law, make contributions to the local society and live together in harmony with the local people”.

The embassy also stated that it was concerned about some leaflets that have been purportedly dropped in some areas of downtown Nairobi threatening Chinese businesses and citizens. 

“We have noted that a few people were circulating leaflets in Nairobi recently, making a threat to both the Chinese business people in Kenya and the Kenyan people,” the statement from the “Spokesman of the Chinese Embassy in Kenya” read. “Everyone with conscience should condemn such an irresponsible behavior by a few people to bring shame on a specific community and stir up contradictions and hatred in the Kenyan society”.

Early this month protesting mineworkers in Zambia killed a Chinese manager during a protest. Two Chinese managers were charged with attempted murder two years ago in the same mine after they shot and injured miners during a pay dispute. The charges were later dropped.

Apart from trade and business disputes with locals several reports have claimed that the inclusion of China as one of the “approved” ivory importing countries in the world by the Convention on International Trade in Endangered Species (CITES), Word Wild Fund (WWF) and other conservation bodies and a huge presence of country’s nationals in Africa have fuelled the rise of illegal poaching in recent years.

A documentary entitled Chinese Fuel Resurgence in Ivory Poaching shot by A24 Media, a Kenyan company, in 2011claimed that fifty percent of poaching incidences in Kenya today happens within a 20-mile radius from Chinese road building projects. The documentary also alleges that major poaching activity is reported in areas where the Chinese are grading or constructing roads like Tsavo and Amboseli.

“I think there is a link between the number of Chinese who have come into Africa recently and elephant ivory purchasing,” explained Dr. Esmond Bradley-Martin, a conservationist interviewed in the documentary. “For instance in about 2000/2001 there was something like 75,000 Chinese working in Africa, now the figure is well over 500,000 and the Chinese are being caught all over Africa…in Kenya they have been caught with ivory coming in from Congo, Cameroon”.

While 134 Chinese nationals are said to have been arrested in Africa trying to smuggle illegal ivory to China in the last decade, there have been 426 cases of ivory seized on its way to China during the same period.
But just like the silver lining in every dark cloud the benefits of China-Kenya relationship cannot be gainsaid. 

“The Indian workers who remained behind after the construction of the railway by the British in the 1900s formed the first crop of entrepreneurs in Kenya,” Mr. Tiberius Barasa, a policy analyst from Kenya Institute for Public Policy Research and Analysis (KIPPRA), “Africans learnt a lot of business skills from these Indians and the same attitude should be adopted towards the Chinese. Kenyan traders should view them not as enemies but competitors whose presence will cultivate a healthy business environment”.

He explains that with every one out of six human beings being Chinese most ordinary citizens from that hugely populated country are forced to seek greener pastures in developing countries like Kenya. This is same situation in the country today where three million Kenyans live and work in the Diaspora.
“I was in Lesotho and saw a huge Chinese population doing business there which means these traders are not in Kenya alone,” Mr. Barasa points out. “Kenyan traders should be glad that the Chinese are here because they stand to learn a lot of business tactics and the art of outdoing competition”. 

However, he says the government should ensure the Chinese traders operating in Kenya have the necessary papers and pay taxes and other levies to create a level playing field.

“Another issue is pricing where the government should ensure studies are done to find out why the Chinese are able to sell same goods at a lower price than Kenyan traders,” he advises. “This should also involve discussions between the governments of Kenya and China to ensure the issue of taxation on imports and exports on both sides is ironed out so that nobody is disadvantaged”.
Barasa warns that if the current hostilities between traders from the two countries persists it might precipitate diplomatic friction, with Kenya being the biggest loser.

Besides business and infrastructural development there have been a lot of cultural exchanges in recent years between China, Kenya and Africa in general.
“Each year over 5000 African students receive Chinese government scholarships, over 700,000 Chinese tourists travel to Africa, while over 400,000 African tourists travel to China,” says Chinese Ambassador to Kenya Liu Guangyuan. “Every week there are more than 20 regular flights between China and Africa”.

Trade volumes between Kenya and China hit an all time high of $1.8 billion (Sh144 billion) in 2011. 

“Till August 16th this year, the Embassy has issued 6628 visas to Kenyan citizens, of which 85 percent were commercial visas,” a statement from the embassy said. “In addition, the Embassy provides “one-day express service” for Kenyan citizens who plan to visit China urgently”. 

Statistics from the Ministry of Finance indicates that in 2008, Kenya imported sh73.3 billion worth of goods from China against Sh2.3 billion of exports to the Asian country.

The huge trade imbalance seems to have rattled the United States government as reflected by a cable allegedly sent by Washington’s envoy to Nairobi at that time Michael Ranneberger.

“China’s engagement in Kenya continues to grow exponentially,” one of the cables leaked by WikiLeaks quoted the ambassador saying. “China enjoys a large trade surplus with Kenya, exporting more than 30 times its imports”.
After being pressured by parliament the government through the Ministry of Immigration issued a directive that stipulates that foreigners earning less the Sh2 million a year and those below the age of 35 will not be issued with expatriate work permits. The law intends to safeguard jobs for Kenyans and respond to criticism that thousands of semiskilled workers from India and China are working in Kenya today.

“The regulations are needed to prevent foreigners from taking jobs that can be done by Kenyans,” explained Sammy Onyango, the Chief Executive Officer of Deloitte East Africa. “Expatriates are also important but we should engage them largely as investors or professionals coming in to offer rare skills and build local capacity”.

According to the department of immigration between 2007 and April 2011, Indian citizens held the highest number of work permits at 10,581, followed by China at 3,494, Britons 2,700 and Americans at 1,593. However, there are thousands of others who operate in the country without work permits.

No comments:

Post a Comment