Major Chinese textile firms are stepping up sourcing and investment plans in Ethiopia as increasing trade tensions between the US and Beijing create an incentive for the East Asian country to look at alternative sourcing destinations.
A recent visit to Addis Ababa by a delegation from the China Chamber of Commerce for Textiles (CCCT) saw delegates meet heads of Ethiopian textile firms, leaders of Ethiopian Textile and Garment Manufacturers Association and government officials.
They struck sourcing agreements and explored investment partnerships with Ethiopia-based partners, according to the International Trade Centre (ITC). The visit was part of ITC’s Partnership for Investment and Growth in Africa (PIGA) project and was one in a sequence of events aimed at boosting private investment from China in African economies.
The CCCT has a membership comprising over 12,000 textile companies in China. Its recent delegation to Ethiopia included the heads of four large-scale firms, who were reportedly enthusiastic about the prospects for more Chinese investment in Ethiopia, particularly as manufacturing costs rise in China.
One of the firms on the delegation agreed to source 1.5m pieces of beach shorts from a textile factory located in the Bole Lemi Industrial Park, a specialised export zone on the outskirts of the Ethiopian capital, ITC says.
A B2B event organised by the PIGA team for the delegation and local manufacturers generated six prospective investment partnerships for three local companies with values ranging between US$1m and $5m.
Over the last 20 years, China has become an increasingly important source of financing in African economies, including in Ethiopia’s young but fast-growing manufacturing sector. The Chinese delegates were said to be impressed by Ethiopia’s progress on improving infrastructure, including roads, trains, and electricity, though they suggested further enhancing labour productivity and lowering logistics costs would make the country an even more attractive destination for investment.
The current trade tensions between the US and Beijing were cited as an additional incentive for Chinese firms to invest in Ethiopia, with increasing difficulties associated with exporting from China.
The PIGA project in Ethiopia said it looks forward to continuing cooperation with the CCCT in order to catalyse further investment in the future.