/ 2 April 2008

Palestinian businesses look east to China

Faced with Israeli trade and travel restrictions, a stagnant economy and a flood of cheap imports from Asia, Palestinian businessmen are increasingly seeking their fortunes in China.

Demand for Chinese visas among business owners in the occupied West Bank is so high that the Chinese consul regularly visits the city of Hebron to stamp their passports and circumvent an Israeli ban that prevents them from travelling to the embassy in Tel Aviv.

”Everybody is doing business in China,” Khaled Oseily, businessman and mayor of Hebron, told Reuters. ”The Chinese consul comes to Hebron and on one day issued some 600 to 700 visas to Hebronite businessmen.”

China began to open up its economy around 30 years ago, using cheap labour to produce and export huge volumes of inexpensive goods that have undercut local industries in many developing countries.

In Hebron, the largest Palestinian city famous for its leather and handmade ceramics, the wave of cheap Chinese goods was the last straw for businessmen already battling Israeli travel restrictions that inflate costs and hurt economic growth.

Israel says its network of checkpoints and roadblocks that carve up the West Bank is needed for security reasons. Palestinians say they amount to collective punishment.

On Sunday, Israel said it would remove about 50 ”dirt roadblocks” in the West Bank and open a ”permanent checkpoint” that obstructs the flow of travellers to the town of Jericho.

Western and Palestinian officials said Israel had pledged in the past to remove West Bank barriers but failed to do so.

Meanwhile, many Palestinians have turned to the import trade, travelling to China to buy cheap goods to sell at home.

Increasingly, and amid doubts peace talks with Israel will yield a deal for an independent Palestinian state soon, they are opting to stay.

”Economic conditions in Palestine are very bad,” said Hazem Shyoukhi, a gift merchant from Hebron who moved to the eastern Chinese city of Yiwu in 2006 to start an export business.

”There [in Hebron] we conducted our business based on news reports,” he told Reuters by phone from Yiwu. ”I had to listen to the newscast to check if there was a closure … I worked under pressure merely to survive, so I decided to leave.”

‘Made in China’

China, which since the end of the Cold War has turned to the Middle East for half of its oil imports, is not just linked to the region by trade. Beijing has sought a bigger political role in the Middle East and has appointed an envoy to the Arab-Israeli peace process.

Palestinian diplomat Ahmad Kayed, who lives in Beijing, said in the past 10 years, more than 200 Palestinian businessmen had settled in China, but thousands of other Palestinian and Arab businessmen were frequent travellers to Chinese cities for trade.

Arabic restaurants, mosques and schools have opened throughout the vast country, he said.

”Palestinian imports of Chinese goods are [worth] more than $2-billion through direct trade by Palestinian businessmen or through Israel,” said Kayed, head of Palestinian-Chinese trade relations at the Palestinian embassy in Beijing.

Competition from cheaper Chinese goods has all but destroyed the manufacturing industry in the Palestinian territories, where the ”Made in China” label is a common sight in shops.

The popular Crocs leisure shoes, made by United States-based Crocs, sell for 280 shekels ($78) in Israel but in Hebron, the copycat Chinese-made version goes for just 13 shekels ($3,60).

For five decades, Yasser Hirbawi was the only Palestinian manufacturer of the national black-and-white keffiyeh headdress, the symbol of Palestinian nationalism worn most famously by the late leader Yasser Arafat.

Now, he wipes dust and cobwebs from an old weaving machine in his small, dark textile factory in Hebron.

”Two years ago I had to close down my factory because I couldn’t compete with Chinese-made Hattas [keffiyehs] that sell for 40% less,” said the 76-year-old, who himself wore a keffiyeh.

Hebron mayor Oseily said competition from Chinese goods coupled with Israeli restrictions had forced about 200 shoe factories to close in the city, putting 17 000 out of work.

He said more than 40% of people in the Hebron area were unemployed and called the 250 Israeli army roadblocks there a ”huge impediment” to business.

Work ethic

Thousands of kilometres away in Yiwu, a city of two million people in China’s eastern Zhejiang province, 30-year-old Shyoukhi had a happier tale.

”Palestinian businessmen import everything from China. I even get orders to send Chinese-made Palestinian flags and the Palestinian keffiyehs,” said Shyoukhi, whose export office does business with thousands of Palestinian and Israeli merchants.

Yiwu has become a buzzing trading spot thanks to the influx of Middle Eastern money. It is now a hub for selling made-in-China Arabic products, like fashion clothing and religious artifacts.

Every Friday, buyers from Lebanon, traders from Yemen and businessmen from Egypt, gather for their weekly prayers. At wholesale markets in the city, makeshift stalls are stacked with everything from toothbrushes to belts.

Businessmen in Hebron have their business cards printed in English and Chinese, and many have even adopted Chinese names.

Professor Wilfried Vanhonacker, who taught a course on doing business in China at the Kellog-Recanati School of Business in Tel Aviv in February, said Hebronites needed to adapt to globalisation or see their businesses die.

”Production has moved to China and it will be moving next to Vietnam. There are 1,3-billion people in China with an incredible work ethic … This will continue,” said Vanhonacker, dean of the Moscow School of Business Skolkovo and author of several books on China.

In Hebron, Shehadeh Sammouh, once a small-time merchant, now owns a large store selling Chinese shoes, clothes, toys and household goods. He sells Chinese shoes for 70% less than a Hebron-made shoe.

”Customers demand the goods made in China because they look better and are cheaper,” Sammouh said. – Reuters