Published on February 5, 2014
The Impact of Chinese Enterprises on Urban Employment in Africa TANG, Xiaoyang International Food Policy Research Institute Sister Cities International Tsinghua University
Quantitative Measurement Rapid growth of Chinese economic activities in Africa 12000 140000 120000 10000 100000 8000 80000 6000 60000 FDI stocks Trade In $ million 4000 40000 2000 20000 0 0 2003 2004 2005 2006 2007 2008 2009 2010 Source: MOFCOM of
Quantitative Measurement Examples of Official Statistics and Research Surveys 2007 in Angola: 85 Chinese companies hired 3353 Chinese and 5482 Angolans 2011-12 in Ethiopia: 24 medium and large Chinese enterprises hired 2650 Chinese and 10470 Ethiopians Source: Angola MOF, author’s survey Caution on reliability and preciseness of the data
Qualitative Analysis Examine various sectors Focus on development dynamism and long-term sustainability
Qualitative Analysis Construction sector: -Large number -Temporary workers more than permanent jobs -Low skill requirement, most are laborers -Depending on projects and funding, sustainability not self-evident
Qualitative Analysis Trade and Service -numerous enterprises, but small in size -low or no skill requirement -imbalanced trade relations, questionable sustainability
Qualitative Analysis Trade and Service
Qualitative Analysis Manufacturing - telecom installation & training (Huawei, ZTE) - automobile assembly (Angola, Ethiopia, South Africa) - target at limited local market - a small part of the whole value chain - well-educated trainees, less relevant to urban poor
Qualitative Analysis Manufacturing -labor intensive branches: footwear & textile -negative impact of the made-in-China influx Over 2000 small and micro shoe-makers in Addis. In a survey 2007, under the pressure of Chinese imports, 32.4% of the producers downsized activities, 27.8% producers went bankrupt, 11.1% closed the company temporarily Tegegne Gebre-Egziabher, Impact of Chinese imports and coping strategies of local producers, JMAS, 2007, p 663.
Qualitative Analysis Manufacturing - loss of export market Export of textile and garment from Sub-Sahara Africa to USA and EU 2000-2010
Qualitative Analysis Manufacturing - Mitigation Measures Ethiopian government imposed higher tariff on the imported shoes and provided financial assistance to save the local shoe industry for the time being USA and EU re-introduced quota system during three-year transition period after the Multi-Fiber Agreement expired
Qualitative Analysis Manufacturing - Mitigation Measures
Qualitative Analysis Manufacturing - Investment and Relocation Industrial upgrading in China Footwear & textile production moving overseas Investment in Ethiopia, Egypt and Nigeria.
Qualitative Analysis Manufacturing - Investment and Relocation Huajian Group in Ethiopia, plan to invest 2 bn usd during the next five years has employed 900 local workers, sent 86 to China for two-month training, plan to send another 300 trainees to China hire 25000 workers in China 2000-3000 RMB (300-500 usd) vs. 600 Birr (35 usd)
Qualitative Analysis Manufacturing - Strength: low labor cost, abundant raw materials, and tariff exemption - Weakness: backward infrastructure, weak industrial bases, inconvenient logistic supply, insufficient government capacity - Opportunities: rising labor costs, industrial relocation - Threat: overall productivity, alternative destination
Conclusion Overall impact huge and extensive Construction and trade are current job creators, but how to evolve? Manufacturing jobs are threatened by made-in-China products, protective measures are required. Labor-intensive production being relocated to Africa, orchestrating efforts are critical.
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