China Full Throttle Ahead

24 July 2006

After Western industrialists decided to abandon their homelands and seek their fortune in China to produce more volume and more cheaply and to supply the expanding consumer market, we are feeling the pinch in Western economies. We don't really have an efficient remedy, whereas China's economy is booming with double digit growth this year as it has during the past several years. Developed countries have suffered probably the longest lasting ever economic crisis. What took the Indian subcontinent 40 years to accomplish, China did in less than ten years, and China is going to do more, much more. While the Western world is still debating how to deal with the fantastic achievements in and by China, China is already looking into the future and considering the next step that it is going to take. Decisions seem to have been made and apparently China is going to take advantage of the opportunity we Westerners are offering on a golden platter. Let me explain. I have always cynically sustained that the philosophy of the industrialised world, and those who benefit from development aid, is that Africa must be kept poor and wanting. It is our only opportunity to continuously employ hundreds of thousands of aid workers, UN officials, NGOs, who otherwise would be without a job or occupy much less rewarding positions. Keeping Africa poor also means to keep the industry in developed countries turning out cars, four-wheel drive jeeps, water purifying plants, tomato paste factories and get rid of our excess food which is bought by the UN, Western governments, religious organisations or NGOs and donated to those in need. Hence in my view the charity that is being deployed is merely an egotistical need and means to keep the developed countries running over the backs of the poor people. Hundreds of workshops and congresses are being organised each year to prove how much Africa is in need. Hundreds of reports, which inevitably repeat themselves, are continually being written about the same subjects with analysis and deductions that are already known and published. Everybody knows perfectly well what is wrong with African hides and skins, but we are doing nothing or close to nothing about it. If we solved the problem, what would happen to all those people that ride the waves of development aid? Projects are written and implemented and mostly change absolutely nothing, although it must be said, that it's not always the fault of the project itself, which in theory may be excellent. Hundreds of theories are being developed but few practical solutions are being offered or implemented. Consulting companies are enriching themselves, advising governments on subjects they know nothing about, using computer models that are applied and adjusted to any commodity that is brought to their attention. There is a lot of talk about business opportunities and on paper it looks great and so easy for an emerging businessman in a developing country, but in the real world when you get to the point and want financing all you find are theories and promises. No one is there to sign a cheque, other than for buying peanuts, or the exact opposite, setting up mega projects, of which most turn out to be white elephants or cathedrals in the desert. Without the proper guarantees, as required by banks all over the world, you get nowhere. If you have money, you can get money. The real big money remains within the system as I have described over the years. So, coming back to China, we should have noted that it has detected (again) a weakness in the Western system. This time it focuses on the aid to Africa, that developed countries think for themselves as their exclusive fiefdom and which gives them a halo of sainthood, a real bonus that goes down well with the crowds. The truth is that Africa is full of really big business opportunities, not just a market to employ highly paid officials writing fancy reports and playing benefactor. And China has decided to go after those opportunities. Nigeria recently developed the Calabar Free Trade Zone where several industries are expected to set up, amongst which will be one or more tanneries. Chinese companies have swept in and bought large quantities of land and it is said that at least one of the tanneries that will be constructed in the area will be Chinese. Chinese President Hu Jintao visited Nigeria at the end of April and secured a multi billion deal with the Nigerians that exchanges Nigerian oil for Chinese technology. Chinese technology? No, Western technology that we kindly provided thinking we'd do ourselves a favour for cheaper production of consumer goods in an uncontrolled environment, where prison and child labour are acceptable and polluting is a way of life. On the way back home Mr Hu also made a stopover in Kenya, where tanneries over the years have closed faster than turning out leather. Sure, he went there for oil, but also to talk about industrial development. We have been accusing China of abducting raw materials, including hides and skins, at prices local tanners can't afford, and turning out leather at prices we can't match. It is all true of course, but what have we done about it? Nothing! China on the contrary has seen the light and apparently adopts a policy that intends to sweep into Africa and do what we have omitted to do: set up industries, implement practical solutions to the poverty problem, give people work in viable enterprises and produce consumer goods which cater for the local taste and wallet. Instead of sending out armies of aid workers and officials, they have sent machinery to build roads, computers and telecommunications equipment to help people travel and communicate and now, for sure, they will set up industries that provide work for the Africans rather than creating queues to pick up the hand-outs. It's quite possible that Western governments or donors paid for the work performed by the Chinese with grants to African governments. This opens a new possible scenario related to our industry. There are tens of countries in Africa that have a tanning industry, but who suffer from exports of their raw materials to the Indian sub-continent and China, leaving their tanneries standing idle. Tanzania, Uganda and Kenya are mere examples. What if the Chinese decide to keep the hides and skins in these countries and set up tanneries or buy existing tanneries and operate them 'the Chinese way'? This move may be even necessary with the new Chinese import policy on raw hides and skins, which will most probably be extended to the import of wet-blue as well. Can you imagine? The developed world will miss the train again. The Chinese won't have to dump their rejects in Africa. They will produce in Africa. First leather, then shoes, and certainly at Chinese prices, which are affordable to the average African income. Sam Setter

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