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How Chinese products feed local manufacturers’ deficiency

Textile from China

Textile from China

The atmosphere is tensed. The sun is above the head and slowly emits heat. A lot of people are walking on the long stretch of road leading to the popular Ladipo Market, Mushin, with concern in their faces. Floods of sunshine welcome Kehinde Lawson to the popular market, as she parks her sports utility vehicle in front of a crowded warehouse.

There’s a gentle tap on her car door. She winds down her glass. “Can I help you?” she asks in surprise.

“Madam, dis one na funnel for your car?” The barander —market agent, who works for his own commission — says in halting English. “You fit use am put fuel for your motor.”

The middle-aged lady with a graceful figure breathes out, “enhhh!… show me how it works.”

The lady is impressed with the demonstration. “How much is it?” she asks, thereafter.

The barander answers, “N1,000 ma?”

“What of N600?”

“No, make it N800.”

For some minutes, they haggle over the price, until they eventually reach a compromise.

“Okay madam, make you bring money,” the barander says.

“Ehen madam, see power bank for your phone. No more dead battery. No more power failure. Dis one na rechargeable fan too. You no need electricity to get fresh air for your house.”

Lawson watches in bewilderment at the street hawker’s entrepreneurial spirit: running back and forth of the warehouse to bring some more products for his customer. Power bank, funnel, rechargeable fan… there is nothing from China that he doesn’t sell…

On Ejigbo-Ikotun Road, a market for generators has sprung at the Iyana Ejigbo. Over 20 shops on that road sell different kinds of generating sets from China. No matter the kind you are looking for, you’re sure to get one. Besides power bank, generator, rechargeable light and inverters, a lot of China-made products have become an important part of life in the country.

While the country is facing a downward slide in its manufacturing capacity, China seems to have deployed all its production line to service Nigeria’s deficiency. It has become its factory floor.

Studies have shown that over 70 per cent of homes in Nigeria use one Chinese product or the other. From mechanical and electrical products to high-tech automatic data processing facilities and components, clothing and accessories, shoes, furniture and parts, children’s toys, kids’ cars, flying helicopter, bicycles, wristwatches, eye glasses, artificial hairs, jewelries, yarn and textiles, plastic products, mobile phones, popularly known as Chinko and rechargeable fan, there is one Chinese product to meet the country’s need.

According to information from the Nigeria Bureau of Statistics, China’s aggregate export to Nigeria amounted to N393.42b in the last quarter of 2014, while it amounted to N459.40b in the third quarter of 2015. It declined slightly, though, to N333.50b in the last quarter of 2015. China currently controls the world’s trade and commerce. Nearly everything you need is made there; all that is required is for you to get into the market to see how big it really is.

Right from when the major import from China was mosquito coil and fireworks, import has grown astronomically such that high-tech manufacturing is the largest category in the Chinese export economy. Computers, broadcasting equipment and mobile phones made up nearly 18 per cent of all exports from the country, totalling $358b in 2011.

This movement away from low-tech manufacturing reflects the growing development of more complex industrial capabilities across China. At the same time, Chinese brands such as, Lenovo and Huawei have become household names in some Nigerians home.

They hold fast to the idea that the products have brought tangible benefits to Nigerians, by giving them more choices.

According to Innocent Okorie, a generator dealer in Ejigbo, “it is one country that you can get different goods, ranging from personal effects to industrial machinery at very cheap price.”

For Okorie, “the Chinese are capable of manufacturing any product according to your specification and your local need. That’s why you can see that they produce all what we need in this country. You think they know all these things that we lack here? It is our people, who go there to tell them what we need. You can pick up any product sample, take it to China and they will manufacture an exact replica at affordable price.”

Okorie said, “it would be very wrong for people to think that all products made in China are fake, as people often assume. They are among the best in the world.”

Commenting on why Chinese products are affordable, Okorie said there is a vast pool of unskilled and skilled labour in China, which cater to the mushrooming manufacturing and allied industries. It is estimated that the labour cost for hiring well-educated professionals in China is at 10 per cent of the cost of hiring professionals with similar skills and knowledge in countries like Japan or US.

Another trader in Iyana Ejigbo, Tony Nwafor, told The Guardian that a visit to China would give a glimpse into something that may not have been fully understood: the stature and popular appeal of the country as a factory house.

Findings have revealed that Guangzhou, store front for manufacturers in the Guangdong province, China’s biggest exporter, is always crammed full of wholesale malls offering everything imaginable in bulk: kitchen cabinets, furs, car parts that are sent to Nigeria. It is also home to the biggest African community in the country, an estimated 20,000 people.

The first set of Africans arrived in the late 1990s, shuttling shipments between Guangzhou and African cities like, Lagos, Abidjan and Accra, forming the backbone of the kind of informal trade that has helped make China Africa’s biggest trading partner.

The Guardian gathered that Chinese manufacturers and traders looking to make more profit are now taking their wares straight to the continent, no thanks to alibaba.com, which is more like e-bay, and some Africans in China are rapidly leaving buying and selling the small batches of cheap, low-margin products like clothes and plastic household goods that have made up much of their business. Instead, traders have begun manufacturing and shipping heavy machinery for African companies.

According to Johnson Chukwudebe, an electronics dealer in Alaba International Market, “as a result of massive imports of China products, many families are enjoying improved spending power and this provides impetus for economic growth.”

An opinion also shared by Oluwakemi Sunday, a University of Lagos-trained economist. She said Chinese products have widespread availability.

“You can easily get them anywhere within the country. They are also very easy to maintain.”
Olushola Akinola, a resident of Oworonshoki, said, “since the citizens don’t have options, and majority are not too buoyant to the point of buying European and Japanese made products that are basically expensive, it is better to make do with the Chinese product.”

EVERY week, hundreds of thousands of containers are shipped from China’s ports, carrying goods to every corner of the world. Of these, 120 Maersk Line containers make the journey to Nigeria, with a cargo of product components from Haier, the world’s leading manufacturer of white goods.

China’s evolution as a central hub for the global economy is best illustrated by the country’s substantial increase in exports, which has grown nearly 10 times in the last 15 years alone. In 2013, China’s trade hit $4t, a 7.6 per cent growth on the previous year, with exports making up over $ 2.21t of that, Forbes reported.

According to BBC report, 2014, Benin was the continent’s biggest importer of wigs and false beards from China. It purchased Chinese hairpieces worth $411m. A hefty three million kg (472,400 stone) were taken to that country, with many of those wigs finding their way to Nigeria.

Nigerian traders were the continent’s biggest purchasers of toothbrushes from China that year, spending $9,372,920 on 159 million items – roughly one for each Nigerian. Also, in 2014, Nigeria spent a whopping $450,012,993 on motorcycles from China.

“The impact on local manufacturing capacity is quite huge. This is unfortunate for the Nigerian manufacturing sector and a major drain on the income of local manufacturers. MAN is not happy with the situation and is engaging the government to find a solution,” said Frank Udemba Jacobs, president, Manufacturers Association of Nigeria (MAN).

To Err Is Common And Normal

THE Guardian investigations show that the major problems facing China is that manufacturers continue to engage in sharp practices or what is referred to as ‘quality fade’. This is the deliberate and secret habit of widening profit margins through a reduction in the quality of materials. Importers, usually, never notice this, because it is very gradual. The initial production sample is fine, but with each successive production run, a bit more of the necessary inputs are missing.

Media reports detail a series of quality problems with Chinese-made exports – pet food tainted with prohibited chemicals, toys covered with lead paint and tires that fall apart at high speed – which have alarmed the public and resulted in a number of international product recalls. These days, ‘Made in China’ is an almost notorious label.

Jacobs said, “most of these products are substandard, and therefore, sometimes, cheaper than local products. The Chinese claim that they produce to specifications given to them by Nigerian importers. This is not a good explanation because every manufacturer should abide by acceptable standards and be held accountable for the quality of their products. I agree that good quality products are produced in China, as they also export to countries such as America and Britain.”

The MAN boss added, “I think that Nigeria should be very strict about the quality of products coming into the country. That is the duty of regulatory agencies such as SON, NAFDAC, etc. Unfortunately, even with these agencies in place, we still find the proliferation of substandard products in the country. This is bad for our health, for our economy and for our industrialisation generally.”

Said Saliu, a phone dealer in Bariga: “Majority of the products don’t have long life span. They are very fragile and prone to faults, easily.”

An official of the Standard Organisation of Nigeria (SON), who spoke under condition of anonymity, stated that more than 80 per cent of products from China are substandard. He revealed that SON is putting in measures to combat this. It is not SON’s fault, he said, but those who go there to tell them what to produce. “We have a reviewed act that can combat these anomalies. The complicity of some greedy Nigerian importers in saturating the markets with cheap, fake and substandard goods; and some local manufacturers of products that fall short of international or national set standards exacerbate the ugly situation,” he said.

At a forum in Abuja, an envoy of the People’s Republic of China on African Affairs, conceded that there was need for cooperation between Nigeria and China to control the scourge of inferior goods in the country that come from China. He said, “we are going to help consumers fight the problem; we seek the help of retailers to be able to trace the real manufacturers.”

Taking Care Of Chinese Products

MANY, who spoke with The Guardian, warned that this is a looming danger to the economy. In the last few years, goods that were apparently irrelevant were imported. Concerned that consumers were over stretching the foreign exchange with these fickle imports, the Central Bank of Nigeria (CBN), in August 2015, issued a directive stopping some imported goods and services from the list of items valid for forex in official Foreign Exchange Markets. Most items on the list were actually imports from China.

Samuel Abayomi, a small-scale entrepreneur, suggested encouragement of the local manufacturing industry with subventions and grants, “because it will be for the benefit of the country in the long run, in the sense that it will provide employment opportunities for the youths.”

Abayomi said, “aside that, Nigerians are very intelligent and creative people, just that a lot of resources and concentration need to be put together and support from the government to market the product.”

He added that the likes of Innoson in Nnewi are good examples of the entrepreneurial spirit of Nigerians. “You can never think that Nigerians can come up with that.”

According to Leonard Akabueze, a resident of Ajao Estate, the coming of China into the Nigeria market is the beginning of wisdom. It tells us that we should improve our own manufacturing capacity.”



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