China's textile and clothing firms expand in Africa
By Wang Fangqing | 18 December 2012
Chinese companies see Africa as a huge market for export and investment
China's powerful clothing and textile industry is looking for continued growth in sub-Saharan Africa - where local manufacturers and brands are now worrying about how to deal with the competition.
According to William Gumede, a senior research fellow at the University of Witwatersrand's school of public and development management in South Africa, Chinese domination of Africa's textile markets and its industry has promoted significant job losses.
"For instance in South Africa, employment in the textile industry dropped from 300,000 workers in 1996 to 120,000 in 2010," says Gumede when reached for comment by just-style.
And the situation is worse in Nigeria where the country has seen its once burgeoning US$1.3bn spinning industry in disarray, with Chinese cheap fabrics being highlighted as the culprit.
"Since 1995, over 175 textile manufacturing factories have shut down, leaving more than 250,000 workers jobless," says Jaiyeola Olanrewaju, the director-general of the Nigerian Textiles Manufacturers Association.
And there is concern that some Chinese producers are not playing fair - being accused of mimicking African textile trade marks and unique designs.
"In order to compete favourably, African governments must stop [the] influx of counterfeit and smuggled textiles," says Dr Walid Jibrin, the chairman of the Northern States Chapter of the Nigerian Textiles Manufacturers Association.
He identifies African prints, shirts, fine wax print textiles, unique Guinea brocades and lace embroideries as examples of African designs and textile trade marks being copied on cheap Asian fabrics and dumped in West Africa.
"The counterfeits have destroyed the handmade traditional textile industry in Nigeria, Ghana, Ivory Coast and Guinea," says Dele Hunsu, the president of the National Union of Textile Garment and Tailoring Workers of Nigeria.
AGOA's preferential access
But probably the most devastating effect of the Chinese textile industry on sub-Saharan Africa's economic growth is its ability to piggy-back on the US's year 2000 African Growth and Opportunity Act (AGOA).
Chinese firms have benefited from the region's preferential access to the US by establishing Chinese-owned subsidiaries in the region. AGOA of course creates a trading advantage for sub-Saharan Africa's textile industries to access the United States market.
According to Ms Ciliaka Millicent Gitau, a lecturer at the University of Nairobi's School of Economics, its success was rapid but short-lived. By 2005, many Chinese companies had established subsidiaries in countries including Ghana, Kenya, Lesotho, Madagascar, Malawi, Mauritius, Namibia, Nigeria, Tanzania and South Africa.
"The issue is that AGOA did not have rules of origin that would have curbed transhipment of the Chinese textile commodities," said Gitau who is an expert on the emerging Sino-Africa geo-politics and trade relations.
The result has been local African clothing and textile companies closing, unable to compete with Chinese firms' aggressive export-oriented tradition, low production costs and technological superiority.
And while AGOA has been extended to 2015, Chinese clothing makers in sub-Saharan Africa will continue exporting more textiles to the US at the expense of African companies.
"In essence, in the last two decades, China has placed itself in a strategic position to reap benefits from sub-Saharan Africa, not only in the textile industry but in other sectors as well," says Gitau.
New sales opportunities
And Chinese manufacturers are in no mood to pull back. With weakening demand in Europe and the US since the financial crisis, plus continuing disputes at the World Trade Organization (WTO) with key mature market trading partners, China's clothing and textile industry wants to diversify its sales.
From January to August 2012, China Customs figures show textile and apparel exports to the European Union (EU) dropped 14.4% year-on-year to US$32.02bn, while they rose 12.2% to US$9.82bn to Africa.
"We have got lots of inquiries from clients in Africa recently. They are less demanding, and some of them are happy to accept our private brands," says a director at a Shanghai clothing manufacturer who so far has been supplying the EU, US and Japanese markets.
"There are many economic communities in Africa, which allows us to enter other African countries easily once we are in one of the community countries. We would like to look into the African market," she adds.
Other Chinese manufacturers are using Africa as a hassle-free, alternative way to access the US and EU markets.
"In Ethiopia, we rent a plant and hire local workers make clothing for clients in the US and EU," says a business manager at a Shandong province-based textile firm, who stresses that the African Growth and Opportunity Act offers companies such as his legal opportunities to access the US market.
And Chinese companies continue to see Africa not only as a huge market for export, but also a possible place for massive investment.
For example, in August, China Garments, a Beijing-based former state-run manufacturer, announced it will invest about US$29.7m in Zimbabwe to form a joint venture with the Cotton Company of Zimbabwe. The JV is expected to be a major cotton supplier of China Garments.
With additional reporting by Wachira Kigothi.
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China's textile and clothing firms expand in Africa