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China moves manufacturing to Africa

 

A Wall Street Journal report looks at Chinese companies that are turning Africa into a manufacturing base.

By Raymond Mpubani

China is now the largest trade partner of a number of countries in Africa. It is one of the largest sources of investment on the continent, and most African countries have benefitted from it’s growing economic power by setting up much-needed infrastructural projects. Chinese aid is especially attractive to these nations because it comes with no strings attached, unlike other traditional sources of aid.

However, like the Wall Street Journal reports, China’s growing footprint on the continent is becoming even more varied. On top of the infrastructure projects it has provided cheap funding for, it is now moving production to the continent. The reason for this: “rising labor costs at home and negative perceptions about their employment practices in Africa.” As a result, “Chinese companies are setting up new factories on the continent and hiring more Africans.”

The Journal article mentions a Hisense factory in Cape Town, which uses twice as many workers as the same factory would in China. Additionally, “Auto maker China FAW Group Corp. is building a new factory in the South African industrial hub of Port Elizabeth to produce trucks and light commercial vehicles. Huajian Group, a Chinese shoemaker, plans to invest as much as $2 billion in Ethiopia over the next decade to make the country a base for exports to Europe and North America. Chinese factories also produce steel pipe and textiles in Uganda.”

Producing in Africa helps lower labour costs. The “average monthly wage for a low-skilled Ethiopian factory worker, for example, is about 25% of the pay for a comparable Chinese worker.” As Chinese workers demand more and more wages, the World Bank says, “as many as 85 million factory jobs could leave China in the coming years.”

The Wall Street Journal also has an interview with the Chinese ambassador to South Africa Tian Xuejun in which he defends China against allegations of being a new imperial power on the continent, calling the criticism “absurd.” “People in Africa know very well about colonialism—this is about using gunfire to open the door to Africa to grab their resources,” Tian Xuejun says. “It is China who buys resources with a fair price under internationally recognized rules.”

Read the rest of the interview here.

Raymond Mpubani is a Journalism Honours Student at Wits University.

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