Africa’s trade with China is set to expand, as the continent’s entrepreneurs are increasingly exploring ties with the Mainland that go far beyond mineral mining and resource exploration.
Africa-China trade has rapidly intensified since the late 1990s. In 2013, China became Sub Saharan Africa’s (SSA’s) largest export and development partner.
This relationship has only grown stronger with time, and China now represents about a quarter of SSA’s trade, up from just 2.3% in 1985.
No surprise then that The Economist commented that the Chinese are coming to Africa in ever greater numbers and finding it a comfortable place to visit, work in and trade.
“An estimated 1 million (Chinese) are now resident in Africa, up from a few thousand a decade ago, and more keep arriving,” the article, aptly titled ‘More than Minerals’, notes.
An even more welcome development the article hints at is the broadening of Sino-African links in the past few years, with the relationship now almost ‘as diverse as Africa itself’.
So where until recently China concentrated on a few big resource-rich countries, including Algeria, Nigeria, South Africa, Sudan and Zambia, nations like Ethiopia and Congo where resources are scarce or difficult to extract are now getting more attention as Chinese businesses branch out into non-resource sectors.
And, where non-resource sectors are concerned, value added sectors such as agriculture and manufacturing are getting their fair share.
Sample this. During 1990-2008, China’s agro-industrial imports from Africa increased tenfold from $188 million to $2 billion, growing at around 15% each year.
Also, Chinese manufacturing firms have invested in countries as diverse as Ethiopia, Nigeria, and Tanzania. A review of a sample of Chinese greenfield investments in SSAduring the past decade reveals the rising importance of the manufacturing sector and the increasingly significant contribution of Chinese FDI to job creation in countries across the continent.
In this context, an African nation that has done exceeding well on improving its balance of trade with China is South Africa.
China-South Africa trade has grown tremendously in the past 15 years from US$ 1.5 billion in 2001 to US$ 23 billion in 2015, of which trade in agricultural commodities has grown from US$ 67 million to US$ 655 million. Traditionally, South Africa has imported more agricultural products from China than it exports, but, in the last 2 years,South Africa has attained a positive trade balance for agriculture with China.
Be it agro-industrial or manufacturing investments, the data breaks the mould of traditional imports from Africa to China, which centred on exploring the vast mineral wealth of the resource-rich continent.
With the much-needed diversification in Sino-African trade, it is no surprise that the number of African entrepreneurs doing business with China has been growing in recent years.
And, as trade among China and African countries continues to rise, a good number of Africans are embracing what they see as opportunities in China to sell products produced in their home countries.
African entrepreneurs eying the China route
Kenyan entrepreneur Julias came to China in 2007, and his business deals in coffee and tea.
Kibua, who has lived in China since, says while the opportunities abound, establishing his business hasn’t come without its challenges.
“Basically, it is like we are inducting the Chinese people into the art of coffee because they still don’t know much about it, especially the old generation,” he says candidly.
But, for the young generation, he expresses greater hope, noting that it is the youngsters who are giving African coffee products the right mileage in China.
On tea, he says there are greater challenges, considering the entrenched popularity of Chinese green tea.
”The Chinese still worship their green tea. However there are some of them who really enjoy our black tea from home.”
Kenyan entrepreneur Phyllis Maina started Phyma Fresh in 2004, sensing a huge opportunity in processed foods exports.
The business sells processed greens, mainly dealing in French beans, but supporting products like sugar snaps, snow peas, baby corn and passion fruit are gaining shelf space.
After having made substantial inroads in the European market, especially UK, Germany and the Netherlands, Phyllis is now keen to diversify into the Asian and Middle East countries.
“This will help Phyma to avoid overreliance on the Western markets as any blanket bans may pose serious challenges to the business.”
With her usual thoroughness, Phyllis has identified a number of potential clients in Asia, where China poses an attractive opportunity because of the existing trade and investment links.
Apart from African entrepreneurs like Julias and Phyllis who are going it alone, there is an entire network of African merchant entrepreneurs who have successfully tapped the Far East trade route.
Indeed, African entrepreneurs have become an integral part of the social and commercial fabric of two South China cities: Guangzhou and Foshan.
An academic survey of 234 merchants in 2015 revealed that many African merchants in Guangzhou and Foshan are well-educated and successful business people. Settled in major cities such as Guangzhou, Yiwu, Hong Kong, and Macao, the majority of African migrants are involved in trading businesses, scalping garments, electronic products, cosmetic products, and car and motorbike accessories.
And, these African merchants promote local African products in China, by maintaining strong commercial links with their home countries. As many as 56% of the merchants surveyed stated that they have business partners or co-workers located in their home countries, compared with only 20% in China.
#Take the leap
Still not convinced about exploring the trade route all the way from the comfort of your home shores to the mysterious Far East? Like Phyllis, partner with an organisation such as GroFin, which specialises in financing SMEs for availing growth and expansion opportunities and providing market linkages to explore these opportunities with a sustainable business model.