China’s growing influence in Africa
By Lily Kuo, Quartz Nairobi correspondent
Eight years ago I watched the movie “2012,” named after the year the Mayan calendar supposedly ends. In the film, a sequence of natural disasters leads to mass earthquakes and tsunamis annihilating mankind. The only people who do survive, do so with the help of the Chinese. The People’s Liberation Army has managed to build a set of massive arks. After 27 days at sea, the Chinese-made arks set sail for the only place in the world that has stayed above water, the African continent.Over the past two years that Quartz has been writing about China’s growing presence in Africa, I keep coming back to this heavily CGI-ed image of China saving the world and along the way putting Africa on top. I wonder, was that 2009 John Cusack movie some kind of prophecy or just accidental propaganda for China?
The more stories we do on China in Africa, the more questions we have had not just about the topic but how we approach it. For instance, why is it that the international media is so interested in the China-Africa story when Chinese investment is also big in South America, the Caribbean, the Middle East, basically any region of the world?
What I think might be happening is that the China-Africa story provides us familiar tropes—the Chinese invaders, the meek, innocent African victims. The counter narrative, usually pushed by government voices both Chinese and African, is just as misleading. China is a fellow developing country, a partner that doesn’t judge the way the West does, and just wants the best for its African brothers and sisters.
The China-Africa story isn’t just about saviors or oppressors, and framing it that way is a disservice to all the interesting and enterprising people that form these links. For us, the most interesting part about these connections is that they form a new kind of globalization, one that a lot of the world isn’t paying attention to, a form of “globalization from below.” In Guangzhou in southern China, you’ll find entrepreneurs from Nigeria, Ghana, Kenya, Somalia running factories, logistic services, and other companies that are truly globally connected businesses.
In African countries, increasingly you find Chinese people who never meant to stay as long as they have. But now, they say they can’t go home, because being in Africa has changed them. And that leads to another point. Africa has become a platform that we often use to analyze and understand China’s expanding influence in the developing world. But what about how Africa is influencing China, or the rest of the world?
African entrepreneurs have made Guangzhou a truly global city
There are certain cities in certain eras that stand out as magnets for those who have dreams. Guangzhou numbers are all over the map. One recent report estimates that from January to August 2014, Guangzhou, a city of some 13– 14 million people, hosted 3.05 million inbound or outbound foreigners, with 86,000 foreigners having registered residence in the city. Another website estimates that about 500,000 foreigners are in Guangzhou at any given time. There are 34,000 permanent resident foreigners, according to one website, 47,000 according to another, and 120,000, according to a third.
Exact figures are impossible to ascertain, both because official figures are secret or unknown and also because many foreigners in Guangzhou are illegal residents of the city. It’s safe to say only that while Guangzhou has a large number of foreigners, whether legal or illegal, counted or uncounted, it still is a very tiny number within a huge Chinese population.
These foreigners are a wide range of people, from Japanese and European corporate employees to traders from all over the world exporting Chinese goods to their home countries and regions. Guangzhou is a major center for the purchase of cheap knockoff goods exported to South and Southeast Asia, Latin America, and particularly the Middle East and Africa. The developing world entrepreneurs of Guangzhou, especially the Africans who make up their largest number, play an essential role in making this trade possible.
In this book, The World in Guangzhou, after looking at the range of foreigners in Guangzhou, I explore the lives and trade of African entrepreneurs in Guangzhou. In 2013– 2014, I stayed in Guangzhou’s Xiaobei area, the working center and leisure haunt of much of its African and Arab population. I considered these entrepreneurs through the lens of “low- end globalization”— not the globalization of multi-national corporations with all their lawyers and advertising budgets, but of traders sending relatively small amounts of goods under the radar of the law, bribing customs agents on different continents, and getting these goods back home to stalls and street vendors. This is globalization as experienced by the majority of the world’s people.
Guangzhou today may be the best place in the world to investigate low- end globalization because it is the metropolitan hub of Guangdong Province and the Pearl River Delta, China’s industrial heartland, and is the central metropolis in the world where the goods of low- end globalization are bought and sold.
(University of Chicago Press)But how can low- end globalization effectively work in Guangzhou? It doesn’t operate through contracts and laws, but rather on the basis of reputation and interpersonal trust. How can this be maintained cross- culturally, with people whom you don’t know? To paraphrase a Somali trader, how can you trust someone who doesn’t speak your language and knows only a few words of English, who doesn’t share your religion, or have any religion, and who drinks and smokes as you do not?
Beyond this, how does low- end globalization work within China today, a state moving by fits and starts from societies like Kenya and Nigeria in their laxity toward laws to societies like those of Western Europe, Japan, and the United States? What is the ultimate significance of low- end globalization as practiced in Guangzhou today?
This leads to a second set of questions. The Africans profiled in this book do not merely trade in Guangzhou; they live there as well, most for weeks or months, but some for years, and a few for a decade or more. Some Africans stay, legally or illegally, marrying Chinese and having families. What will happen to them in the future? China in the past sixty years has been largely monoethnic and monocultural; but now, in its southern city of Guangzhou, it is international and multicultural. What does this mean for the long term? Might China, in fifty or a hundred years, become a truly multiethnic, multicultural society? Might we see, generations hence, China’s own version of Barack Obama?
Beijing is cultivating the next generation of African elites by training them in China
In the 1970s, China actively tried to export its communist revolution to Africa, one of Beijing’s few diplomatic engagements at the time. Now, Beijing is promoting a more subtle movement: support for China and and its model of development. Instead of relying on Chinese emissaries in African countries, Beijing is bringing thousands of African leaders, bureaucrats, students, and business people to China.
It’s a campaign that achieves several goals at once. The trips help solidify political and business ties between China and its partners on the continent. Like other development partners, China gets to help build capacity in African countries. Most importantly these exchanges cultivate partners on the continent who are more likely to be sympathetic to China and its way of doing things.
China has been hosting these trainings and exchanges in Africa since as far back as the 1950s when it first established diplomatic ties with Egypt. Over the past decade, the trainings have grown in both volume and profile. Kenya’s Jubilee party, created before the country’s contentious election this year, received trainings from the Chinese Communist Party in China. The Ethiopian People’s Revolutionary Democratic Front also takes inspiration from the the CCP while South Africa’s African National Congress regularly attends workshops in China and has modeled some of its party trainings on the CCP.
China is particularly interested in the next generation of African elites. Last year, Beijing announced it would invite 1,000 young African politicians for trainings in China, after hosting more than 200 between 2011 and 2015. Thousands of African students are pursuing undergraduate and graduate degrees in China on scholarship programs funded by Beijing. As of this year, more Anglophone African studentsstudy in China than the United States or the United Kingdom, their traditional destinations of choice.
Chinese officials are quick to say these scholarships and trainings are not an attempt to remake Africa in its own image. In theme with China’s self-avowed policy of noninterference, Beijing likes to stress that it does not tell its partners what to do.
“We’re not saying the Chinese model should be copied but to share lessons. It’s to give them the concepts so that they can adapt and find their own solutions,” says Zhang Yi, China’s economic attache in Juba.
“When you go to China they will not be talking about democracy.” But South Sudan, the world’s youngest country, may be particularly impressionable. It is still developing its government institutions and political system, amid a four-year civil war that has split the former liberation party into several factions. China, which has major oil interests in the country, was one of the first countries to recognize South Sudan and remains engaged with the country, with 2,600 peacekeepers and more than 100 Chinese businesses and investors.
“The SPLM seems to believe that given shared experience in historical struggle against imperialism and colonialism, there are much similarity and common ground between SPLM and the [Chinese Communist Party’s] origins,” says Yun Sun, a fellow at Brookings Institution who has written about party to party exchanges between China and African countries.
“It does raise the question what kind of political future South Sudan faces as a result. If we do believe in the universality and desirability of the democratic system, the model represented by the Chinese experience and its popularity may not be the most encouraging,” she says.
Chinese Peacekeepers in the United Nations Mission to South Sudan (UNMISS) parade in Juba. (Reuters/Samir Bol)Hundreds of South Sudanese government officials, business people, and students, attend training or schooling in China, every year. Delegations from the SPLM in Juba travel to China several times a year to study with the communist party. Bureaucrats from the government’s ministries of culture, transport, health and more go every month for trainings. Even before South Sudan became an official state, officials were hosted in China to attend workshops on poverty alleviation, managing public opinion, and building a party.
China has given at least 4,100 scholarships and training programs to South Sudanese students and officials since 2011, when the young country was established. In August, China pledged to offer at least 240more scholarships. The China-South Sudan Friendship Association, headed by a former foreign minister and partly sponsored by the Chinese embassy, embeds South Sudanese business people with Chinese companies.
South Sudanese and Chinese officials like to say they are learning from each other, sharing experiences from one former liberation movement to another. Both the Chinese Communist Party and the SPLA grew out of armed guerrilla movements. The SPLM fought for decades for independence from the north. The party also has its roots in socialism, identifying first with the Soviet Union during the Cold War. After the fall of the Soviet Union, the SPLM turned to the United States as an ally but even today, SPLM officials still use the title “comrade.”
But that’s where the similarities end. The Chinese communist party transformed itself into a government that maintains one-party rule over a country that is mostly one ethnicity, Han Chinese. In contrast, the SPLM in Juba is locked in a civil war with splinter parties, divided by region and ethnicity in a country home to more than 60 ethnic groups.
South Sudan President Salva Kiir (centre L) and then Chinese president Hu Jintao (centre R) attend a signing ceremony at the Great Hall of the People in Beijing April 24, 2012. (Reuters/Kazuhiro Ibuki)Zhang, China’s economic attaché to Juba, believes some aspects of China’s model of government could help South Sudan, for instance, a stronger central government. “There’s no history of a centralized government in the past, which means there’s no process of nationalism. So the people, they still stay grouped by tribe.”
But not all lessons from China should be learned. Under Xi Jinping, China has tightened its stranglehold over civil society. South Sudan is already familiar with some of these tactics. Local journalists are intimidated into silence or killed.
“When you go to China they will not be talking about democracy,” says Samson Wasara, vice chancellor at the University of Bahr el Ghazel in Wau state, where he says as many as 300 graduate students are pursuing degrees in China. “In 10 years time, one of [these students] will be the leader of South Sudan.”
Wasara fears the SPLM already sees the Chinese communist party as its role model, a trend that he sees replicated across the continent. “Most Africans are switching from the West to China,” he says. He worries that China will become South Sudan’s main role model. The United States and other Western powers supported South Sudan’s bid for independence and are still involved in aid and mediation efforts in the country today. “It will be a disaster for us, especially for those who know the value of human rights, democracy, free speech,” Wasara says.
That may already be happening. The SPLM is at least taking inspiration from the CCP. Kpandu says he reads from his copy of Concise History of the Chinese Communist Party every day. He wants to establish a youth arm of the SPLM, modeled after the Communist Youth League of China. After reading about Mao Zedong’s famous declaration that women “hold up half the sky,” he has pledged to recruit more women into the party.
Xi Jinping (second from left) at the Forum on China-Africa Cooperation in Johannesburg. (DIRCO ZA)“China has been an example to us. We will always look up to them,” he says from his office at the General Secretariat for the SPLM. The secretariat manages the day to day operations of the party, and he is preparing an SPLM training on code of conduct and party structure.
Kpandu says South Sudan won’t copy everything from China, claiming that South Sudan won’t be a one-party state. President Silva Kir, head of the SPLM in Juba, is pushing for an election in 2018 despite warningsfrom the United Nations that a legitimate election is near impossible and risks causing more violence. Others say that African elites and students select what lessons they choose to take from China’s example.
“The young Africans are not robots and tabula rasa such that the Chinese will just stuff them with whatever they want. The students will take the best of China and leave the bad there in China and go back to Africa,” says Adams Bodomo, director of the Global African Diaspora Studies Research Platform and professor of African studies at the University of Vienna.
The exchanges and scholarships may be more about inspiring admiration and sympathy than emulation. Others who have attended diplomatic trainings say the teaching is basic — how to shake hands or how to sit with a senior dignitary. (If you’re the host, the dignitary should be to your right.)
A South Sudanese diplomat who spent a month in China for a training of diplomats said his trip was mostly focused on showing off China’s achievements. He was taken to visit villages built from scratch, well-run rural hospitals.
“When we went they told us a lot of stuff about China itself and China’s industrialization. It’s more about public relations,” he says, asking not to be named because he was not authorized to speak to media.
This public relations campaign is at least partly working. The so-called China model is gaining traction across the African continent. According to an Afrobarometer survey last year of 56,000 people in 36 African countries, 30% of respondents said the United States was a better model for development, compared 24% who ranked China first. In Southern Africa, North Africa, and Central Africa, China was on par or ahead of the US.
On his trip to China, Kpandu was also impressed with the surveillance. He visited a police control room in Nanjing and when his group was taken to a special economic zone outside the southern Chinese city, a drone filmed them the entire 72 mile journey.
Back in Juba, he wrote a report recommending his government buy some of these drones to deal with “unknown gunmen,” a moniker that often includes government soldiers themselves known for robbing and attacking civilians in the capital. “We have learned quite a lot from the CCP,” he says.
The best days of selling cheap Chinese goods in Africa are over
In just 20 years, a sleepy residential neighborhood east of Nairobi’s central business district has become one of the most globally connected trade hubs in Africa.
Here, thousands of wholesale and retail traders sell clothing, electronics, fabric and more that make their way across East and Central Africa. Purses, dresses, and suits displayed in the neighborhood’s many malls are branded, “Made in the PRC,” a deliberately vague label that shoppers often don’t realize refers to the People’s Republic of China. Other items come from Ethiopia, Dubai, and Turkey. Investment flows in from entrepreneurs based in the United Kingdom, the United States, and elsewhere.
Eastleigh, or “little Mogadishu” as the area is known for its number of Somali residents, owes much of its wealth to the trade of mass produced goods from China. Sales of Chinese goods make up almost all of Eastleigh’s 2.9 billion Kenyan shillings (about $28 million) in turnover a year, according to the Eastleigh Business District Association.
Eastleigh’s main shopping avenue. (EPA/Daniel Irungu)“Ninety percent of these items are coming from China. We rely more and more on China,” says Omar Hussein, general secretary of the Eastleigh Business District Association. Hussein has been traveling to China to source clothes for his menswear shop for most of the last decade.
Now, more people are finding that this line of work isn’t as reliable anymore. Years of quick profits have inspired more people to get into the business and expanded trade connections between China and Kenya have made it much easier to start. Today, Eastleigh is home to at least 50 malls, each housing hundreds of stalls selling often identical merchandise from manufacturing hubs like Guangzhou or Yiwu in southern and central China.
“The business is too slow and the malls are too many. You can see it from the stores, all selling the same things, the same quality,” says Mohamed Ali, who owns a menswear store in Amal Plaza, a five-story mall on Eastleigh’s main road, First Avenue. The walls of Ali’s shop, Nasiib Fashions, are lined with jeans, suits, and polo shirts brought over from China.Mohamed Ali in his men’s wear shop in Amal Plaza in Eastleigh, Nairobi. (Quartz/Lily Kuo)
When Ali first opened his store almost eight years ago, he could make about $100 a day, enough to build a house for his four children and wife in Isiolo in northern Kenya. Now, making even half that is hard. Other local traders and shop owners say business isn’t as good as it used to be.
“It’s more about surviving these days when in the past it was about thriving,” says Neil Carrier, author of a recent book on Eastleigh, Little Mogadishu: Eastleigh, Nairobi’s Global Somali Hub.
“There was a moment when just importing goods to African markets was enough to make money.” The boom years of trading in Chinese goods may be over not just for Eastleigh, but for the thousands of African and Chinese who have been facilitating the flow of cheap Chinese goods into Africa. Across the continent, Chinese products dominate the market for everything from cell phones to traditional dutch wax prints.
Now, African traders from Kenya to Nigeria are struggling with competition and the rising costs of Chinese goods. It’s easier to move goods between China and Africa than ever before, but tightening visa regulations are making it harder to operate in China. Guangzhou, the main hub for Chinese products destined for Africa, has begun to empty out of the African traders and businesspeople that have collected there over the past decade.
Chinese traders who have set up shop across Africa, selling to African traders or directly to customers, are also getting hit by weak local currencies and growing competition from other Chinese and African traders. In South Africa, home to Africa’s largest Chinese community, Chinese traders are moving to less saturated markets in Africa or going back home. Chinese communities in Botswana, Senegal, and Angola have shrunk as more consider leaving.
“My suspicion is that the days of Africa-China trade in Guangzhou are going down, and that the best days are done,” says Gordon Mathews, an anthropologist at the Chinese University of Hong Kong, who has written a forthcoming book on the topic.
Guangzhou to Eastleigh
It’s surprisingly easy to get things from Guangzhou, a port city of 14 million, to Eastleigh, a central Nairobi neighborhood of 200,000 that struggles for government funds just to fix its roads.
Hundreds of businesses, brokers, money changers, transport and logistics companies, exist to cater to the trade of Chinese goods. Hundreds of businesses, from brokers and money changers to transport and logistics companies, exist to cater to the trade of Chinese goods. Cargo companies with offices in China and Kenya arrange every step of the process from picking up buyers at the airport, to checking on their orders before shipment. Traders who can’t afford to fill an entire container themselves can share with others in a process called “groupage.”
Even traveling to China isn’t as necessary anymore. Those with established connections in China make their orders through WhatsApp or WeChat, using video chat to check on their products. Payment is made through trusted relatives and friends to avoid extra fees charged by banks.
These links are more than two decades in the making. In the late 1990s and early 2000s, Somali and other African traders who had been sourcing from Dubai and Hong Kong began going directly to mainland China as the Chinese economy took off. At a time when global consumer giants were ignoring Africa, African traders began importing more and more Chinese goods.One of Eastleigh’s many malls selling Chinese goods. (EPA/Daniel Irungi)
Eastleigh, where many Somalis fled to after the outbreak of civil war in their country in 1991, became a base for the Somali diaspora. As it expanded, Somalis based in the US, the UK, and elsewhere invested in property and businesses in the neighborhood, and more people got into the business of buying and selling made-in-China items.
“Up to and during the mid-2000s, there was a moment when just importing goods to African markets was enough to make money,” says Emma Lochery, a post-doctoral researcher at the University of Liege in Belgium who has researched trade between Eastleigh and Guangzhou.
Academics describe this flow of goods and people between China and Africa as “globalization from below.” China accounted for just 1.8% of African imports in 1992. By 2013, it had become the continent’s largest source of imports, sending three times as much (pdf. p.40) goods as either of Africa’s traditional trading partners, the US or Germany. Chinese exports to Africa reached $103 billion in 2015, according to UN Comtrade data. Some researchers say the real amount could be as much as 60% higher than official figures, given how much is underreported or smuggled through people’s luggage.
It’s an industry that straddles the line between the formal and informal. African entrepreneurs run business associations, logistics companies, consulting services, hotels, restaurants, and in some cases their own factories in China. Academics describe this flow of goods and people as a kind of “second economy,” or “globalization from below,” directed by individuals in developing countries with limited resources rather than multinational companies.
In Eastleigh, this dynamic is on full display. There are few things for sale that aren’t from China, including items specific to its majority Muslim Somali population. Small shops and traders sell prayer mats, compasses that indicate the direction of Mecca, fake gold jewelry styled after the elaborate necklaces and bracelets favored by Somali women, and Somali wedding dresses, called dirac.A shop near Amal Plaza in Eastleigh sells children’s clothes imported from China.(Quartz/Lily Kuo)
Critics say Chinese goods are being dumped on African countries to the detriment of local industry and African shoppers. Chinese textiles have been blamed for the decline of the local garment industry in Kenya, South Africa, and elsewhere. In April, hundreds of Ugandans protested in Kampala calling on Chinese traders to leave.
In some cases there are health risks. Counterfeit medicine, often from China, causes as many as 100,000 deaths a yearin Africa, according to the World Health Organization. Ivorian authorities in March burned 50 tonnes of fake paracetamol, antibiotics, vitamins, and other drugs that appeared to have been made in China.
In Eastleigh, low-quality Chinese items are referred to as “one time” goods. (They’re called “fong kong” in South Africa or “chinko” in Nigeria.) Traders and shop owners in the Nairobi neighborhood defend their merchandise by pointing out that Chinese factories produce both low and high quality goods. It just depends on the price buyers are willing to pay.A Kenyan trader holds up a placard during a protest against Chinese hawkers in Nairobi in 2012. (EPA/Daniel Urungu)
Others say China has brought cheap cell phones, machinery and other staples to people who would have otherwise struggled to buy such goods. “Many people say China items are fake, but the fact remains that everyone goes to China to buy goods,” says Hussein.
A shrinking market
It’s in part because of this ease of trade between China and Africa that business has slowed in Eastleigh. Down the road from Amal Plaza is another shopping center, Mega Mall. A few stores dot the ground floor. The second and third floors sit empty except for a local nonprofit and a storeroom of shoes. The Eastleigh malls are starting to see more vacancies and turnover of the shops is high, according to locals.
It’s in part because of the ease of trade between China and Africa that business is worse. Eastleigh’s shops face more competition from Kenyan traders who have made their own connections in China as well as other Somali shop owners and traders. Chinese companies are also new rivals. Phones made by the Hong Kong-based mobile phone company Tecno are now ubiquitous across the continent. Telecom giant Huawei is also ramping up its marketingto sell cell phones directly to middle-class Africans.
Small-scale traders also face the threat of expanding supermarket chains like South Africa’s Shoprite, which can import in bulk from China. Nakumatt, a Kenyan grocery chain, is scheduled to open in a new upscale shopping complex in Eastleigh, the Comesa Shopping Mall, named to “embrace the spirit” of the trade bloc, or the Common Market for Eastern and Southern Africa.
“I think that we are seeing a process of market change from a period of new connections and opening up… to a period where making money requires a large amount of money, good networks, and the ability to protect a niche [or] secure contracts,” says Lochery.
Mega Mall, a shopping center in Eastleigh, Nairobi is mostly empty. (Quartz/Lily Kuo)A shrinking market for Chinese goods will hit small businesses, traders, and hawkers the hardest. In South Africa, where Chinese traders and business people have opened dozens of shopping centers, generically called “China malls” selling inexpensive Chinese goods, more Chinese shops are closing.
Eric Phiri, from the coastal KwaZulu-Natal province, owns a computer shop in one of these centers, China Mall, in Johannesburg’s industrial Crown Mines area. He says the departure of the Chinese will eventually mean less foot traffic to stores like his.
“If the Chinese leave, it’s going to affect us. We’ll have to close down,” he says. He’ll struggle to find somewhere with similarly cheap rental space.Eric Phiri runs a store in South Africa in a Chinese-run shopping center selling refurbished computers. (Quartz/Cornell Tukiri)
In Eastleigh, that will mean job losses and stores closing, a painful process given that several families often go in on one shop together. It’s not great for factories in China either, where demand from the US and Europe never fully recovered after the financial crisis.
For now, many are doing their best to cut costs, develop a niche market, or get into new businesses. Dan Kamwanza who owns a ladies wear shop in Amal Plaza with his brother, researches the latest styles on Instagram and browses the other malls in Eastleigh to see what’s selling well. He’s been able to make enough to fund more purchasing trips to Guangzhou—last year he went four times.
“It’s a very nice business. If you have the capital, the business is not bad,” he says.
Others are doing extensive market research through their networks in Africa, or looking for new niches, importing specialty items like ice-cream machines or fish eggs. “They can still benefit from what they learned in China, like how to import toilet bowls, materials, air conditioners,” says Heidi Haugen, a researcher at the University of Oslo studying China-Africa trade in Guangzhou.
Abdirahman Hassan owns a shop in Garissa Lodge, the first of the Eastleigh malls that got its start in the 1980s when Somali traders and refugees would sell smuggled goods from their rented rooms, spread out on their beds. (At night the traders stashed their merchandise underneath their cots while they slept). Hassan buys women’s clothes in Guangzhou where he spends several months out of the year. He thinks competition is tough but there’s still money to be made.
“The demand [for Chinese goods] is too much,” he says. Hassan is confident that he can get into other businesses, like selling electronics or building materials. “There are other things you can turn your attention to. In China, there are a lot of opportunities.”
Another way to do business
Slowing trade with China could also give African businesses and entrepreneurs an opening to make the goods they’ve been buying from China. Manufacturing accounted for 10% of GDP on average in sub-Saharan Africa in 2013, around the same rate it was in the 1970s. As labor costs in China rise, more manufacturers might look to African countries with ready supplies of cotton and leather as well as a growing labor force.
“The money has to stay in Africa. It’s a lot of money we can make by creating here.” Ethiopia is expanding its textile processing industry and other garment factories have started in Rwanda. Across the continent, industrial zones have been built, often with Chinese funds, to jumpstart manufacturing.
There are challenges to producing goods here rather than in China, like inconsistent and expensive electricity, poor transport infrastructure, and a lack of regulatory protections for growing industries.
Still, local entrepreneurs and business people think something has to change. “Africa will have to rely on itself and rely on local industry, local factories. That’s a long-term solution,” says Hussein, of the Eastleigh business association. He’s considering opening his own garment factory in Kenya. “This,” he says, referring to the import of goods from China, “is a short-term solution.”
Abdi Haji from Hargeisa in Somaliland, a self-declared state in northwest Somalia, has been helping traders from Djibouti, Mozambique, Tanzania, Somalia, and Kenya source their goods in Yiwu in southern China for more than a decade. Now, Haji approaches his customers with a new proposal: buy the machines to make the items they’re importing, are at least parts of them.Abdi Haji, a businessman from Somaliland, in Yiwu China where he works as a broker for African traders. (Quartz/Abdi Haji)
As a broker, Haji’s job is to check and monitor the progress of his clients’ orders, an excuse for monitoring and studying every part of the production process. “I take video in the factories of every item. I study how it started, how it finished, how it’s produced,” he says.
His advantage, he says, is that he knows exactly what people want to buy as well as how to make those items. For the last few years, he’s been importing light machinery from China for cutting building materials, garment stitching, or screen printing.
“I show them there is another way to do business. They can take this machine, they can do the processing and finishing in Africa,” he says. “The money has to stay in Africa. It’s a lot of money we can make by creating here.”
Chinese migrants have changed the face of South Africa. Now they’re leaving.
Chinese in South Africa
Johannesburg, South Africa
Zhu Jianying, the owner of a home goods shop in southwest Johannesburg, plans to leave South Africa as soon as she can. Her store is making less than half of what it was two years ago when it first opened. She worries about security—Chinese traders like herself are often targeted. She and her family hardly ever leave the mall that houses her store and their apartment on an upper floor.
“It’s like we’re prisoners in our home,” Zhu says, standing by the cash register in her shop, “Forever Helen,” after the English name she adopted when she moved to South Africa in 2000. Stuffed animals hang from the wall. A digital sign by the entrance says: “We stock furniture, toys, beds.” On a Sunday afternoon Forever Helen is empty, as are many of the neighboring shops selling electronics, fake flowers, curtains, and furniture brought over from China.
Zhu’s store is in one of South Africa’s many “China malls,” shopping centers operated by Chinese entrepreneurs and used by Chinese traders across the country. These buildings have become one of the most visible reminders of China’s presence in South Africa, home to the largest Chinese community in Africa.
A bad economy, xenophobia, and competition are forcing Chinese traders to consider leaving. Africa’s most developed economy has been one of continent’s top destinations for Chinese investment for years. And traders like Zhu make up the bulk of the estimated 350,000 to 500,000 Chinese in South Africa, largely in the big cities of Johannesburg, Pretoria, and Durban.
Now, a relentlessly bad economy, a rising tide of xenophobia, and competition from new malls as well as African traders who have forged their own connections in China, are forcing Chinese traders and business people to consider leaving. The threat of a downgrade of South Africa’s debt, now a reality, and heavy regulations have also dissuaded Chinese businesses and investors from coming in the first place.
The traders who can afford to are returning to China or moving to Western countries like Australia, the United Kingdom, or the United States. Others say they’ll try their luck in nearby African countries. Many, with debts to pay off or without enough money to return home, are stuck where they are.China Mall in Johannesburg, South Africa. (Quartz/Cornell Tukiri)Zhu Jianying poses at her store “Forever Helen,” in China Mall, one of dozens Chinese-run shopping centers in Johannesburg. (Quartz/Cornell Tukiri)
“What’s the point of working in South Africa where it is more dangerous and lonely when you could be making the same wage in China?” says Mingwei Huang, a doctoral student at the University of Minnesota, echoing sentiments expressed by traders during her research at the China malls.
An estimated half a million to more than 1 million Chinese live in Africa, many of them small-scale traders and entrepreneurs. Chinese traders in African countries from Botswana to Senegal are also struggling to make a profit in the once booming trade of importing cheap goods from China—a sign that the best days of an industry involving thousands of African and Chinese traders, agents, and middlemen across Africa and China might be over.
The Chinese have always occupied an uneasy place in South African society. Some of the earliest Chinese migrants, who came from southern China after the discovery of gold and diamonds in the 1870s and 1880s, were barred from getting mining licenses. Later, Chinese laborers brought to work the gold mines of Witwatersrand in the 1900s were sent back after outcry from white miners.
Even South Africa’s former government, which assiduously classified and segregated its citizens by race, struggled to place the Chinese. Under the apartheid system, the Chinese were lumped together with the country’s Indian population and then with those of mixed race ancestry, in a category called “coloured.” They were barred from living in certain areas and traveling without approval.
Today, South Africa’s Chinese community, a mix of waves of Chinese migrants from Taiwan, Hong Kong, and almost every province in China, is still not completely welcome. Some South Africans resent the fact that the Chinese are included in black economic empowerment policies established to repair damage done during apartheid. (Only Chinese naturalized or born in South Africa before 1994 are included.)
Locals accuse the Chinese traders of causing the decline of South Africa’s own textile industry. The electronics and other items sold at the China malls are known among South Africans as “fong kong,” a term synonymous with fake or poor quality. Critics of the government’s ties with China call president Jacob Zuma “Fong Kong Zuma.”Old friends. (Reuters/Wang Zhao)
Since the late 1990s and early 2000s, the country has seen a new wave of Chinese migration from poorer Chinese towns and counties left behind by their country’s economic rise. They’ve come to work in the malls or in hopes of starting their own businesses selling Chinese-made goods.
Older generations of Chinese migrants criticize them as uneducated peasants. Many of them speak little English and keep to themselves, associating mainly with other Chinese from their same province or hometown.
These Chinese migrants have filled a niche in the country. As South Africa emerged from international isolation following the country’s first democratic elections in 1994, they were there to sell to the emerging middle and lower classes. The rand was strong, making goods sourced in China cheap. At the time, there were few other retailers.Shoppers and sellers head towards one of the main entrances at Johannesburg South’s, China Mall. (Quartz/Cornell Tukiri)
“When we first came, people didn’t even have shoes. There was nothing to buy. Chinese people could sell them so much,” says Qian, a shopkeeper from Zhejiang province at another mall, China City, who moved to South Africa in 1995.
As South Africa’s middle class expanded and the country, helped by commodity exports, became one of the world’s biggest emerging markets, the China malls multiplied. By 2011, there were at least 18 Chinese-run shopping centers across Johannesburg, Durban, and Cape Town, in border cities like Musina between South Africa and Zimbabwe, and in some of the country’s less developed urban townships.
The malls are hard to miss: the large fenced-in complexes are manned by security guards with guns and flanked by billboards advertising their latest deals. Driving along Main Reef road along the old mining belt, between the township of Soweto and inner city Johannesburg, one can stop at any number of China malls: “China Cash and Carry” “China Multiplex,” “Dragon City,” and more.
In a way, the China malls and the people who work in them are a kind of proxy for China and its growing role in South Africa. For almost a decade, China has been South Africa’s largest trading partner and an ally of the ruling African National Congress (ANC), inviting the country to join the BRIC economic bloc in 2011. The ANC has sent several delegations to study China’s economic model and recently said the Chinese Communist Party should be a “guiding lodestar of our own struggle.” There are more than 300 Chinese businesses in South Africa, in finance, mining, telecom, automobile, and logistics.
For most South Africans, “what ‘China’ represents is still pretty abstract and behind doors when it comes to large-scale investment and diplomacy,” says Huang, the doctoral candidate at the University of Minnesota. “These malls are the everyday face of Chinese investment and capital to South Africa. They are small traders, but they are stand-ins for larger geopolitical forces.”
“Not just for white people”
China City is a darkly lit warren of wholesale stalls in central Johannesburg. Signs direct customers to stores selling sneakers, luggage, wigs, and furniture. Music blares from a nearby stall as people sell popcorn and ice cream at the entrance. The center, the first China mall to open in 1995 when a Hong Kong businessman converted an old supermarket into storage and retail space, has been manned almost entirely by Chinese shop owners for years.
“It used to be that there were more [Chinese] people coming than leaving. Now it’s the opposite,” says Qian, the shopkeeper from Zhejiang province. She sits behind a display counter of watches at her store, identified by a half torn sign with her shop number, that she’s operated for most of the last two decades.
Now, almost as many African traders as Chinese are running stores at the mall. More Africans have forged connections in China and can go directly there to source their goods. Others haven’t been as affected as the Chinese have been by the weakening rand since they buy their goods in South Africa.Seteko Sharon, from Zambia, runs a clothing store at China City in Doornfontein, Johannesburg, selling mostly to traders from Malawi, Mozambique, and Zimbabwe. (Quartz/Cornell Tukiri)
“It’s better because then the business is not just for one country, not just for white people,” says Mathew Thyah, 26, from Malawi who manages a sneaker shop owned by a Senegalese entrepreneur. He’s referring to the Chinese as white.
Thyah may get his wish. China malls across the city are increasingly deserted. At China Mart, a fortress-like shopping complex also in the Crown Mines industrial area, several stores sit empty. Qin Hans and his wife, who arrived in South Africa almost 30 years ago from Nanjing, sell clothing from traditional African wear to golf t-shirts.An empty store in China Mart, one of many Chinese run shopping centers in Johannesburg. (Quartz/Lily Kuo)
On a recent Friday afternoon, they had just one customer who spent 600 rand (about $45). In the past they would expect at least 15 customers a day. The owners of a store across the hall selling panty hose and lingerie didn’t even bother coming in. Another neighbor has left his store shut for the last two months. Switching to English from Mandarin, Qin says, “Not sustainable.”
Most Chinese traders say the rand, one of the world’s worst performing currencies last year, has been their biggest obstacle. Last year, it reached a record low and is tumbling again as protesters call for Zuma to step down and the country’s economic outlook stays bleak.
Jeremy Zhao, who runs a party decoration store in China City, says the rand is hurting his business, which depends on people’s willingness to splurge. “There are too many Chinese malls. That and the rand isn’t so strong so people have less money to spend on parties.”
In the face of inflation, low wage growth, and a prevailing sense of job insecurity, people are feeling squeezed. A McKinsey survey last year of about 1,000 South Africans found that 70% were afraid of losing their jobs and half were living paycheck to paycheck.Jennifer and Jeremy Zhao pose in their party decorations and gift store at China City in Doornfontein, Johannesburg.
In some ways, the China malls that once filled the void of affordable consumer goods aren’t as needed anymore. With 2,000 shopping centers, many of which have been built in the last 10 years for its population of 53 million, both middle and lower class South Africans have more options. South Africa is now seventh in the world in terms of space devoted to shopping centers.
It’s not just the Chinese in South Africa who are struggling. In Senegal and Ghana, the Chinese find themselves competing in markets already saturated with Chinese goods. Chinese in Botswana are facing competition from local traders and a weakening local currency, according to researchers.
The number of Chinese in Angola has fallen to about a quarter of what it was four years ago, according to the Angola-China Industrial and Commerce Association. African traders based in China or on the continent importing Chinese goods are also seeing business slow.
As importing from China has become easier, competition has gotten worse. It’s now much easier for a trader in Nairobi to go to Guangzhou, buy goods and ship them back. More Africans traders have brokers in China with whom they can place their orders over WhatsApp or email, eliminating the need for Chinese middlemen on the ground in Africa.
“Knowledge of China and how to get there has increased dramatically,” says Emma Lochery, a post-doctoral researcher at the University of Liege in Belgium who has researched trade between Eastleigh and Guangzhou.
“It starts with words”
Life in South Africa is hard in other ways for the Chinese. Competition is fierce among traders and the Chinese community is far from unified. There are more than 100 different Chinese associations just in Johannesburg and various factions based on when and from where one moved to South Africa.
The Chinese haven’t been attacked the way African migrants from elsewhere on the continent have. But they’re often the target of robberies and hijackings, and growing anti-Chinese sentiment is a concern. As the South African economy has worsened, hostility towards the Chinese along with other foreigners has increased, according to Erwin Pon, head of the Chinese Association of Gauteng.Save our rhinos. (Reuters/Stringer)
The association has filed hate speech lawsuits as well as a complaint with South Africa’s Human Rights Commission over comments left on their Facebook page last month. After the association organized a Chinese New Year celebration, advertised on its page, users left remarks calling for the Chinese to be banned, “wiped out,” or for their children to be killed. “Can we not stop these slant eyed freaks from coming into the country?!” one comment said.
“It always starts with words. Once those words become more angry, anger turns into violence,” Pon says.
The trading economy
The departure of Chinese traders doesn’t bode well for the thousands of traders, hawkers, and owners of small shops in South Africa and across southern Africa. Less than a few kilometers from China City is Park Station, a hub of trains and buses where traders transiting from Zimbabwe, Botswana, Zambia and other nearby countries come into the city to buy goods.
They can walk over the China City, make their purchases, head back to the bus station and go straight home to sell them. In South Africa, hawkers that sell goods in traffic, Ethiopian traders downtown, and South Asian shopkeepers all buy their goods from the Chinese.
“It’s really bad if the Chinese are going.” Satiad Hussain sells gauzy fabric and rhinestone-studded chairs for weddings at China Mall, which also houses Zhu’s home goods shop. He buys all his materials from the Chinese and takes their departure as a sign things aren’t likely to improve. “It’s really bad if the Chinese are going,” he says.
These networks are important. In sub-Saharan Africa, the size of the informal economy as a percentage of gross domestic product is 41% on average, according to the International Labour Organisation. In South Africa that figure is around 30%, but the informal economy is even more important here given high rates of unemployment.
Right now, South Africa’s Chinese community is “providing a particular service or function that is important to people involved in that business within trading communities,” says Romain Dittgen, an urban studies researcher at Wits University in Johannesburg.Maliya Lu helps a customer look for fabric at her store in China City in Doornfontein, Johannesburg. (Quartz/Cornell Tukiri)
The overall Chinese community is feeling the effects of South Africa’s slowdown and increasing hostility to foreigners. Chinese residents whose families have been in South Africa for generations have also decided to move on. Pon, who was born in South Africa, says that as much as half of younger Chinese residents, those between the ages of 30 and 50, have left for the United States, the United Kingdom, or mega-cities in China where they believe they’ll have more business opportunities.
Pon, also head of the China division at Rand Merchant Bank, part of one of the five largest banking groups in the country, says Chinese companies have become less interested in South Africa over the last four years. Chinese investment in the country, after peaking before the financial crisis, is still growing but more slowly now.
Officials at the Chinese Embassy in Pretoria say the number of Chinese in South Africa has always fluctuated, but Chinese businesses are still committed to the country. “The Chinese are everywhere in South Africa—from Chinatown in Johannesburg, to factories, mines, restaurants, and shops. These people have taken root and are working hard in South Africa,” the embassy wrote in an email to Quartz.
The embassy blamed current struggles of the Chinese community on the slow recovery of the global economy after the financial crisis. “South Africa’s economy is also sliding, which affects Chinese people’s investment and businesses in South Africa.”
You can’t go home again
Not all the Chinese who’d like to go home can. Many can’t afford the costs of going back to China and starting over. Others find that after years of being away they’ve lost the contacts or guanxi they need for doing business or finding work. Some are too enmeshed here, with children in school, property to pay off, and goods left to sell.
“Business is bad but the opportunity is still better here than at home.” Wei Zhihong, who runs a shop in Johannesburg’s China City selling hats and belts says he can’t afford to live in China where living costs have risen and inequality is among the highest in the world. “Business is bad but the opportunity is still better here than at home.”
Many feel like they have more opportunity in African countries, even those whose economies are a fraction of the size of China’s. Wang, a man from Guangdong province sells electronics at China Mall, down the hall from Zhu. Even though his business is struggling, he won’t go back to China. “Comparing South Africa with China, there are good and bad sides. For poor people,” he says, like him, “South Africa is better.”