Business

Chinese myths shattered

Lynley Donnelly

A report by the Brenthurst Foundation has revealed the fraught relationship between shop owners and their host countries in Africa.

The Chinese shop is an ubiquitous sight across South Africa. But as the country and the continent cements ties with China, the influx of Chinese migrant traders—the driving force of these economic hubs in Africa—is a little-understood phenomenon.

Research published last week by the Oppenheimer family-funded think-tank, the Brenthurst Foundation, explored the plight of traders, delving into what has become “the opaque underbelly of China’s presence in Africa”.

The report, by foundation deputy director Terence McNamee, revealed the fraught relationship many traders had with their African host countries and the bitter neglect many felt at the hands of Chinese diplomats and consular officials.

This antipathy, said McNamee, was in stark contrast with perceptions that China operated as “a remorseless monolith” in Africa.

The harassment traders endure was among the key findings of the research, feeding mutual distrust and suspicion. “What we are seeing is an unbridgeable gap developing between Chinese traders and Africans at grassroots level,” said McNamee.

Just fewer than 200 Chinese traders were interviewed from across South Africa, Botswana, Lesotho, Angola and Zambia, between April last year and February.

Traders, often the most visible element of China’s presence in Africa, are the individuals most divorced from their country’s official policy and activity on the continent. But as the economic effect of government-to-government relationships is felt, they are the first to receive the backlash in public sentiment if things go wrong. 

A great divide
Many of those interviewed ended up in Africa because it was easier to make money here than in their extremely competitive motherland.

Most were not drawn by state-led initiatives, such as the provision of trade zones on the continent and other such activities. Instead, it was the lure of a huge market for low-cost goods, said the report.

This was combined with “few constraining regulations and [the] minimal entry requirements” of African markets, where entrepreneurs “with limited capital and low levels of skill and education could compete”.

Counter to perceptions that Africa was being flooded by Chinese, it was regarded by many as the “bottom-rung destination for China’s migrants” and the continent least settled by them.

Migration had been facilitated by strong family, village or provincial networks and, despite the economic alternative Africa presented, the majority aimed to return home.

The traders were not a homogenous group, however, and competition within the community was intense. But, the report revealed, there were significant similarities in the views Chinese had regarding work, personal aspirations and perceptions of Africans.

The majority of traders endured isolation and separation from their families. Most were unwilling to bring their children here because of a perception that education and health systems are poor.

The interviewees shared an admirable determination to survive and a relentless work ethic. This often involved putting up with crowded accommodation, or resorting to living in their shops to cut costs. Most worked 365 days a year and had little or no holidays or social life.

Counter to the notion that they simply employed fellow Chinese, most were a source of employment for locals, although the number varied from country to country. It ranged from an average of eight in Lesotho to two in South Africa.

There was little evidence that employment managed to bridge “the values gap” between Chinese and Africans. For example, “what the Chinese see as a virtue—frugality—is largely perceived by their staff and employees as stinginess, or often worse”.

In general, those interviewed were critical of their employees’ work ethic and trustworthiness. Such perceptions were linked to the environments “in which they are born, in this case typically the most deprived and least advantaged parts of African communities”.

Crime and corruption
Although many traders cited incidents of corruption in China as “good training for Africa”, many were “overwhelmed by the scale of police and/or official corruption”. About 64% of traders said corruption was “a serious problem”. In Zambia and Angola this figure was more than 90% and in Lesotho it was more than 80%.

“The nature and severity of the corruption varied considerably, from relatively mild harassment by local police seeking small bribes or food to major systemic abuses by customs or immigration officials who solicited large fines for real or concocted transgressions,” the report said.

It also noted that language difficulties led to traders paying bribes because they had “little means of either expressing their grievances or interrogating the reasons for a demand for payment”.

Only in Botswana did the majority of respondents feel that crime and corruption were not a major problem.

Fong Kong
Much of the anger directed at Chinese traders was often a result of the poor quality of their goods, the failure to include local producers in their supply chain and the unwillingness to respect the consumers’ right to return faulty goods.

The widely used pejorative “Fong Kong” to describe Chinese goods was increasingly used across Southern African countries, implying they were substandard replicas, said the report.

But, the research said, the Chinese believed this resentment was as a result of a lack of understanding. Traders could never return their goods to their wholesalers, many of whom increasingly supplied African traders such as Somalis, who were posing stiff competition to Chinese traders.

Almost all traders operated on a cash-only basis and “a significant number did not pay tax”. This was in part because of claims of extensive corruption at customs, ensuring that traders did not operate on a level playing field.

“Because you are not able to import anything legally, you are forced not to obey the law,” said one Johannesburg trader. “If I could bring some products in legally, why would I not do it? But customs are so corrupt; they let other people bring their goods through corruption, thus forcing everyone to do the same.”

A way of regulating this trade would be advantageous, said McNamee.

Competition from other traders, particularly Somalis and Vietnamese, was becoming intense, raising questions about whether the markets had reached saturation. However, it still made economic sense for traders to stay in Africa where incomes remained higher than in China.

Ignored
The experiences of traders in Luanda, Angola, stood out as the most negative. “They receive an astonishing amount of harassment and the community lives in a siege-like mentality,” McNamee said.

Even in countries where traders traditionally received better treatment, such as Botswana, there was a growing change in attitude. Botswana is considering legislation to bar Chinese businesses in the clothing sector from renewing their licences.

The indifference of Chinese consular officials was another common grievance. It was not clear how long the traders could continue being ignored by Beijing.

“The fear is that violence against Chinese migrants abroad could stoke nationalist reactions at home and threaten the country’s unity,” said the report.

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