Download - Pro-Poor Urban Development: China and Africa Workshop Session on China’s Involvement In African Urban Development, 07/30/2012

The Impact of Chinese Enterprises on Urban Employment in AfricaThe Impact of Chinese Enterprises on Urban Employment in Africa

TANG, Xiaoyang International Food Policy Research Institute

Sister Cities InternationalTsinghua University

Quantitative Measurement

Rapid growth of Chinese economic activities in Africa

0

2000

4000

6000

8000

10000

12000

2003 2004 2005 2006 2007 2008 2009 2010

0

20000

40000

60000

80000

100000

120000

140000

FDI stocks

Trade

In $ million

Source: MOFCOM of P.R.C.

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


Trade and Service

-numerous enterprises, but small in size

-low or no skill requirement

-imbalanced trade relations, questionable sustainability

Qualitative Analysis Trade and Service


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


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.


Manufacturing

- loss of export market

Export of textile and garment from Sub-Sahara Africa to USA and EU 2000-2010


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


Manufacturing

- Mitigation Measures


Manufacturing

- Investment and Relocation Industrial upgrading in China

Footwear & textile production moving overseas

Investment in Ethiopia, Egypt and Nigeria.


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)


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.