|photo credit: Evan Osnos, The New Yorker
One of the primary complaints I hear on China-in-Africa is the issue of substandard Chinese goods in African markets. Clearly, Chinese traders are bringing in a lot of these goods. But an under reported factor is the role of African traders in the supply chain.
As many as 20,000 African traders and entrepreneurs live, visit, and work in a suburb of the city of Guangzhou (Canton) called by locals "Chocolate City". The suburb is divided into different neighborhoods -- Nigerian, Malian, Benin and so on. From time to time the local police crack down on traders who have overstayed their visas.
A report by Bill Schiller in The Star (Canada) on a crackdown last year caught my eye recently because it contained an illuminating reference to practices of some of the African traders and how substandard goods enter African markets. A Nigerian trader explains:
"My brother came here first to seize the opportunity. So I came, too. Everything is so much cheaper here," he said one recent afternoon.
He and other African buyers tour local factories regularly, he says, looking to buy "seconds" with minor imperfections.
A pair of blue jeans can be had for as little as 15 Chinese yuan, the equivalent of $2.45, he says. These he can sell right here at his stall for 28 yuan, or about $4.60. But back home they can fetch as much as 45 yuan or $7.35, maybe even more.Other reporting elaborates on these practices. Here's an excerpt from the English translation of an article on Chocolate City that appeared in Southern Weekend (courtesy of Africafeed.com):
“Every day after noon, “Chocolate City” begins to turn lively. Tens of thousands of black people seem to erupt from the ground in groups of twos and threes. Carrying large black plastic bags or wearing backpacks, they look through the stalls along the street. The stalls are filled with “tail goods” (excess production that did not meet quality standards) from thousands of small factories throughout Guangdong: blue jeans, unbranded television sets, hand-assembled cell phones.”For more visuals on Africans in China, click here for Evan Osnos's great slide show from the New Yorker.
Complaints about substandard Chinese goods in African markets abound. Here's one way these goods enter, and why. The price differentials also help explain why African manufacturers are having such trouble competing with Chinese firms. In a future post I'll link to a paper on ways in which consumers in one Tanzanian market are successfully dealing with these challenges.