[sparkscoffee] Chinese investments No. 3
- From: Dry Turtles <dryturtles@xxxxxxxxx>
- To: sparkscoffee@xxxxxxxxxxxxx
- Date: Tue, 20 May 2014 16:12:44 -0700
Why ‘Made in Ethiopia’ Could Be The ‘Next Made in China’
China’s was once known as cheapest factory floor on the planet, but in the
last two decades its economy has transitioned to become one of the world’s
most advanced industrial powers. That means someone else needs to start
making all those shoes and sweatshirts, hence all those apparel companies
in recent years moving their factories to
Vietnam<http://online.wsj.com/news/articles/SB10001424127887323798104578453073103566416>and
other cheap spots throughout Asia.
And it’s not just Asia. China’s Huajian Group plans to invest up to $2
billion in Ethiopia in the next decade, turning the country into a shoe
manufacturing base for exports to the U.S. and Europe. As the WSJ’s Peter
Wonacott
reports<http://online.wsj.com/news/articles/SB10001424052702304788404579519631654112594>
:
Mounting labor costs in China are part of what makes Africa so attractive.
The average monthly wage for a low-skilled Ethiopian factory worker, for
example, is about 25% of the pay for a comparable Chinese worker, according
to the World Bank. As the wage gap widens between unskilled Chinese workers
and their counterparts elsewhere in Asia and in Africa, as many as 85
million factory jobs could leave China in the coming years, according to
former World Bank chief economist Justin Yifu Lin.
In addition to its pool of low-cost labor, Africa represents an enticing
market for Chinese products manufactured on the continent. Africa is now
home to six of the world’s 10 fastest-growing economies, according to the
International Monetary Fund, and many African countries are reducing their
dependence on extracting resources, such as oil, metals and gems.
Africa’s poor infrastructure and uneven distribution of skills erode its
cost advantages, however. The World Bank study estimated that a Chinese
worker making shirts, for example, could produce about twice as many per
shift as an Ethiopian worker.
Chinese factory wages have been rising an average of 20% a year for the
last decade, pushing low-cost manufacturers toward places where salaries
are stagnant. Here’s a chart the WSJ put together last year:
And as China steps more prominently into Africa, what do its officials say
in response to suggestions the country could act as a new form of colonial
power? In an interview with the WSJ, Chinese ambassador to South Africa
Tian Xuejun had little time for such
claims<http://online.wsj.com/news/articles/SB10001424052702304893404579532220294759920>
:
Some media say China assists Africa only for the market and resources, and
they talk about “neocolonialism,” but I say these kinds of criticisms are
absurd. One reason is that they don’t know much about China-Africa
cooperation. Another reason is maybe that they have other agendas.
China has assisted in the building of infrastructure, roads, bridges and
railway stations. This has greatly improved the investment environment in
many African countries. China has invested in manufacturing and sent
agricultural experts to other countries. China also has helped to build
many hospitals, schools and stadiums.
People are talking about neocolonialism but what is neocolonialism? People
in Africa know very well about colonialism—this is about using gunfire to
open the door to Africa to grab their resources. It is China who buys
resources with a fair price under internationally recognized rules.
Scotty
Other related posts:
