Rising Costs In China Offers Opportunities For Africa

Rising costs in China offer opportunities for Africa

 

CHINA AND AFRICA

Published 18 Oct 2011

 

Article by: Keith Campbell

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African countries should be seeking to attract manufacturing industries that are now looking to exit China because of the Asian country’s increasing labour costs. So argued Brenthouse Foundation director Dr Greg Mills and KPMG South Africa’s China desk headGlenn Ho on Tuesday.

“What are the opportunities for Africa as China’s unit costs rise?” queried Mills. Ho pointed out that China had built its industrial base by focusing on manufacturing that could no longer be done competitively in developed countries. Now there was a chance that Africa could do the same, in those sectors in which China is now losing competitiveness.

Wiphold executive director Gloria Serobe pointed out that Chinese investors were like all other investors – they wanted clear and consistent regulatory and legal frameworks. She highlighted that South Africa – and a number of other African countries – were ahead of China in this regard and in terms of their financial frameworks and services.

These regulatory and services strengths should be better marketed to potential investors.
Ho agreed: “In South Africa, we’ve got such systems and we don’t actually push that.”

Serobe also stressed that African countries must make themselves attractive to investors from all countries, not just those from China. Director of Nairobi-based African Development Professionals group, Kithinji Kiragu, concurred. “Kenyans are very clear about what development they want to see, at what pace. China is just one of the potential suppliers of investment and technology.”

Both Serobe and Kiragu asserted that it was up to the host countries to safeguard their interests and ensure the quality of foreign investments.

Mills argued that China’s drive to acquire African minerals has transformed the continent’s international image over the past 15 years. “The debt debate in Africa is largely over. The one thing China has done is to dramatically change that debate. The development debate is now Africa-centric. In many ways it [Chinese investment] has been a huge benefit for the continent.”

Mills also argued that long-term relationships are based on communication and trust, and that these have to be established between African and Chinese businesses as well as governments. He cautioned, however, that “a long term relationship depends on what happens in China. We should never assume we are on a never-ending trajectory of economic growth.” Africa needs a Plan B in case the Chinese economy decelerates.

Ho, Kiragu, Mills and Serobe were all panelists in the latest edition of the KPMG Africa Conversation series, in Johannesburg (Kiragu participated via videolink from Kenya) on Tuesday.

Edited by: Creamer Media Reporter