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Is China de-industrialising Nigeria?

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Chuks Anim owns a small-scale shoe manufacturing company in Lagos. His factory produces boots, sandals and slippers, supplying them to schools and traders in south-western Nigeria.

He has been a shoemaker for 12 years and has made a name for himself. He employs 13 workers, four of which are apprentices. But barely three months into 2019, he has lost three of his main customers. Two Chinese businessmen were in Nigeria around December of 2018 and were able to convince Anim’s customers to look outwards.

The businessmen now exports shoes from China directly to Anim’s customers at cheaper rates.

“I used to sell a pair of shoes to them for N2, 000 ($5.5),” Anim said. “But I learnt that the Chinese businessmen sell theirs for N1, 200 ($3.3).”

Anim is already thinking of sacking seven of his workers and cutting down production as a hedge against this shock.

“If we should produce our quality of shoes and sell at that Chinese rate, we would all die,” he said.

He explained that no shoemaker would stay afloat after losing three of their major customers.

Like Anim, a number of entrepreneurs are seething at the sight of Chinese businessmen in Nigeria because of their experiences at different points in time.

In Aba, one of Nigeria’s main industrial cities, shoemakers complained in 2017 that cheap Chinese exports were “killing their business”.

This is not limited to shoes, but is extended to other areas of manufacturing.

In 2015, the only surviving brake pads and lining maker, Star Auto Industries, collapsed and blamed its woes on cheap Chinese imports.

 “It is difficult to compete with China, with substandard, cheap brake pads,” Chidi Ukachukwu, CEO of the firm, told BusinessDay after the collapse of his company.

“I am not happy that import duty on brake pads fell from 25 percent to 10 percent. This has been the situation since 2004 and government has done nothing about it,” he said, adding that duties had always been designed to favour Chinese and Asian products.

Many entrepreneurs in Nigeria, especially manufacturers, blame their struggles on Chinese business people. Their grouse is that Chinese entrepreneurs import cheap products, thereby beating local producers that have put much labour and resources into the production process.

Nigerian manufacturers provide their own energy and import some of their raw materials from abroad.

The question now arises, is China de-industrialising Nigeria?

Samuel Ojimbe, managing director of a manufacturing servicing company, answered in the affirmative.

“You see, they are only interested in the market which Nigeria offers,” he said.

“They are not interested in setting up factories locally,” he said.

 “The moment you ask them whether they want to set up local factories, they evade the question,” he added.

Ojimbe’s position, however, may not stand the test of time because there are many Chinese manufacturing companies in Nigeria. Examples of such are Western Metal Products Company Limited (Wempco), Inner Galaxy Steel Company, Hongxing, and Lifemate, among many others.  The Lekki Free Zone is virtually owned by Chinese manufacturers who enjoy several incentives for producing for export.

John Kolawale, an Ogun State-based businessman, believes that China uses substandard products to “kill local firms in Nigeria”.

“They send inferior products to us at cheaper rates, making it difficult for our local companies to compete favourably with them,” he said.

However, Ede Dafinone, chairman of the Manufacturers Association of Nigeria Export Group (MANEG), said if anyone should blame Chinese for importing substandard products or killing local companies, Nigerians too should not be spared.

 “The truth is that it is a mix of Nigerians and Chinese that are importing fake and substandard products from China. Nigerians go there and make their request and Chinese manufacturers give them what they want,” he said.

Nigeria offers a demographic advantage for China, with almost 200 million people seeking to satisfy their utilities and needs. More than half of this population are young people, below the age of 30, who live mainly in urban areas, statistics shows.

China was Nigeria’s biggest import partner  in the fourth quarter of 2018, with a share of N900.4 billion, representing 25.1 per cent of the total imports, according to Nigeria’s statistics agency, the National Bureau of Statistics (NBS).

China exports virtually everything from leather to electric bulbs to Nigeria. Incidentally, the NBS data show that China is not on the list of top ten export destination countries for Nigeria.

Such data explain why Nigerians feel that China is only interested in dumping its products to Nigeria, while restricting Nigeria’s export.

“Apart from flooding the Nigerian market with products that are not durable, some of their products can kill,” Haruna Maiya, a civil servant in a north-western Nigerian state, said.

Haruna may have made allusions to electrical products from China, especially cables, which have many times been reported to have caused fire outbreaks.

“Nigerian cables are strong, good and durable, but Chinese cables are often substandard,” Frank Jacobs, former president of the Manufacturers Association of Nigeria (MAN), said in a 2016 interview.

But several analysts say Chinese businesspeople are not de-industrialising Nigeria as they are only seeking new markets.

“They are only businesspeople looking for markets for their products,” a Chinese businessman told BusinessDay.

“There is even a Go-Out policy in China which even encourages Chinese firms to invest in places like Africa,” he said.

“So, it is a Western propaganda against China,” he added.

Charles Uzua, an investment analyst, based in Nigeria’s capital Abuja, said China could not have been de-industrialising the country when its firms were investing in all key industrial sectors.

“Is it railway, energy or manufacturing? They are all there,” he said.

“Yes, there are few unscrupulous elements from China, but it is wrong to just label them all as bad elements.”

Muda Yusuf, director-general of Lagos Chamber of Commerce and Industry (LCCI), said it was a question of regulation.

“It is a question of strengthening our own institutions to make sure they do what they are supposed to so,” Yusuf said.

 

ODINAKA ANUDU

1 Comment
  1. Kingsley says

    This is good reporting

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