Africa looks to the Orient for lessons
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E-mail China Daily, September 9, 2013
In recent weeks, Kenya's President Uhuru Kenyatta on his first official visit to Beijing echoed the wishes of many other African nations in calling on China to invest more in his country to establish factories, create jobs and boost its economy.
However, according to Arthur Mutambara, deputy prime minister of Zimbabwe, choosing a correct and suitable way for Africa's industrialization is vital. For Africa, it must be value-added, manufacturing and export-based, not import or supermarket-based.
"You can't industrialize as a supermarket," he says. "No country would be industrialized through trade or selling raw materials, buying finished products.
"We just need to be clever as Africans. Sometimes we just sell raw materials for cash, but if you produce value-added products, the profit could be 10 times bigger than it is now."
He says China and Africa have been successful in many fields through bilateral cooperation and this can continue through the process of Africa's industrialization.
"The Chinese could come to Africa to help Africa process raw materials and sell them to China, the US and other parts of the world," he says.
"For instance, we can work with Chinese in Africa to design and make computers and sell them in Africa and China."
Justin Yifu Lin, former chief economist and senior vice-president of the World Bank, said in a conference organized by the China Macroeconomic Research Center in July that China must transfer its manufacturing and labor-intensive industry to other countries to ensure a sustainable and rapid economic development and Africa is one of the best choices.
"Transferring labor-intensive industries overseas is in line with the lessons of history and economics," he says. "Although disparities still remain among China's eastern, central and western regions, moving operations within the country has become quite limited because cheaper labor from the west has moved to the east and the salary gaps among regions are being bridged. So moving overseas is a must."
Japan transferred its labor-intensive textile industry to the Four Asian Tigers (Hong Kong, Taiwan, Singapore and South Korea) in the 1960s and, come the 1980s, these economies moved manufacturing plants to the Chinese mainland.
China has performed an economic miracle with an annual 9.8 percent growth on average over the past 33 years. The Chinese average annual income has reached a high level, much higher than that of Africa, says Lin. "China still has a huge gap compared with other developed countries, but with huge potential to become a high-income country in 2020."
To maintain the momentum of development, Lin believes industries must be updated and structurally reformed, especially labor-intensive manufacturing, which has contributed enormously to China's success.
"The industry must be updated at both ends of the value chain's smiling curve, which are research and development and marketing with more added value," he says. "And the structure needs to be reformed with technology-intensive manufacturing."
Africa is an ideal destination for this to take place, because China's neighboring Southeast Asian countries have limited populations that cannot satisfy the needs of this transfer, Lin says.
As an example of a successful relocation, he cites the 2011 move of Chinese shoe company Huajian to Ethiopia, where it has recruited more than 2,500 workers locally with plans to increase that to 30,000 in the next three to five years.
Lin says Africa could be the "blue sky and green sea" for Chinese labor-intensive manufacturing providing a base for the second boom of the industry.
"More importantly, it will also largely enhance Africa's economic development and lift the living standards of African people," he adds.
Based on China's past experience and lessons it teaches, Africa has huge potential to develop a better industrialization, according to Teng Liliang, chief marketing officer of the China-Africa Development Fund.
"African countries have witnessed China's successful built-up on the basis of industrialization during the past few decades, so now they are quite enthusiastic about doing that themselves," Teng says. "But they could do better, because they have abundant natural resources and minerals as a foundation for development, which China didn't have when it started the process."
Another advantage is Africa's huge population as a potential market and provider of labor for the processing industries.
"Many harbor doubts about China's intentions in helping Africa start industrialization, but they should also realize Africa's industrialization would also help China in the future," he says. "From a macro perspective, China and Africa are now deeply interdependent on each other, so a better Africa makes for a better China."
China now has an excess of production in many fields, including processing industry, electronic appliances and textiles, which are all desperately needed by Africa, so it's vital many Chinese entrepreneurs move factories there, says Teng.
"They would be closer to the raw materials and markets, which would greatly reduce production and transportation costs," he says.
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