Sino-Africa cooperation brings more 'made-in-Africa' goods

Every morning, more than three thousand workers in uniform do morning exercises before taking their places on a leather shoe production line.

As the largest shoemaker and a sizable job creator in Ethiopia, the factory, with investment and management by a private Chinese company, is part of the next wave of Chinese investment in Africa.

"When the plant opened in 2012, hundreds of locals queued in long lines to apply for jobs there. The sight was indeed a spectacle," said Liu Guijin, former Special Representative of the Chinese Government on African Affairs on the Fifth Roundtable Conference on China-Africa Cooperation (FRCCC) held from Thursday to Saturday in south China's Hainan Province.

China needs a new market to absorb its industrial overcapacity in the manufacturing sector, and Africa needs more labor-intensive projects to boost employment, Liu added.

JOB CREATION

China's investment in Africa is no longer limited to natural resource exploration and infrastructure construction. More labor-intensive manufacturing enterprises are looking to the vast continent, which is eager for job opportunities.

Africa has a vast number of youth population, with over 200 million young people between the ages of 15 and 24 residing on the continent. However, about 60 percent of Africa's unemployed are young people.

"History has taught us that many 'tiger' and 'dragon' countries have achieved economic prosperity, and hence minimized unemployment problems through industrialization. I feel Africa has no need to invent the wheel. It should follow the same route that others have passed," said Amb. Seif Ali Iddi, the second vice president of Zanzibar, at the conference.

He added that he hopes China will shift more labor-intensive manufacturing industries to Africa to accelerate industrialization.

According to the Ministry of Commerce, there are over 2,500 Chinese firms operating in Africa. Hisense started manufacturing TVs and refrigerators in South Africa last year and Huawei and ZTE are rolling out base stations across Africa.

CAPACITY TRANSFER

The world's second-largest economy, under pressure to upgrade its industries and facilitate economic restructuring, is increasingly eying the overseas market for solutions. More and more firms attached to China's past three decades of growth will be looking to diversify into new markets such as Africa.

These construction companies, engineering firms, machinery exporters, and other Chinese firms that have built up scale and competitive advantages in building infrastructure will need to export capacity, find new opportunities, profits, and job creation. Africa is a key partner in this process, said Clive Tasker, CEO of the Standard Advisory (China) Ltd.

Tasker said that promoting the development of labor-intensive and manufacturing initiatives will be a key part of Sino-African ties over the next decade.

State-owned enterprises once led the wave of Chinese money flowing abroad, but now nearly half of China's total outbound foreign direct investment (FDI) into Africa is from smaller private sector players. Meanwhile, Chinese individuals are pursuing their own enterprises in wholesale and retail trade, restaurants and manufacturing.

NO EASY MONEY

Despite the lure of low labor costs, the efficiency of African labor often lags behind other developing countries. According to a World Bank report, a Chinese worker can produce 4.5 chairs per day and a Vietnamese worker produces 1.9 chairs, while an Ethiopian worker can only produce 0.3 chairs.

Meanwhile, an unstable political environment, poor infrastructure and unsound legal system may also hinder Chinese enterprises' ambitions to strike it rich in Africa, said Liu Guijin.

China Development Bank set up the China-Africa Development Fund (CAD fund) in 2007 to facilitate Chinese investments in Africa.

It is important that China-Africa Development Fund provisions be used diligently using a real market-based approach, said Julio Morais, Ambassador of Cape Verde in China.

Investment should cater to different African countries' development priorities and focus more on technology transfer, local added-value and job creation, Morais added.