China’s textile and clothing firms expand in Africa

Faced by rising labor cost, China has started thinking about “going globle” for its T&A sector: not product, but capital.

From Just -Style:

“According to William Gumede, a senior research fellow at the University of Witwatersrand’s school of public and development management in South Africa, Chinese domination of Africa’s textile markets and its industry has promoted significant job losses.

“For instance in South Africa, employment in the textile industry dropped from 300,000 workers in 1996 to 120,000 in 2010,” says Gumede when reached for comment by just-style.

And the situation is worse in Nigeria where the country has seen its once burgeoning US$1.3bn spinning industry in disarray, with Chinese cheap fabrics being highlighted as the culprit.

“Since 1995, over 175 textile manufacturing factories have shut down, leaving more than 250,000 workers jobless,” says Jaiyeola Olanrewaju, the director-general of the Nigerian Textiles Manufacturers Association.

And there is concern that some Chinese producers are not playing fair – being accused of mimicking African textile trade marks and unique designs.

“In order to compete favourably, African governments must stop [the] influx of counterfeit and smuggled textiles,” says Dr Walid Jibrin, the chairman of the Northern States Chapter of the Nigerian Textiles Manufacturers Association.

He identifies African prints, shirts, fine wax print textiles, unique Guinea brocades and lace embroideries as examples of African designs and textile trade marks being copied on cheap Asian fabrics and dumped in West Africa.

“The counterfeits have destroyed the handmade traditional textile industry in Nigeria, Ghana, Ivory Coast and Guinea,” says Dele Hunsu, the president of the National Union of Textile Garment and Tailoring Workers of Nigeria.

AGOA’s preferential access
But probably the most devastating effect of the Chinese textile industry on sub-Saharan Africa’s economic growth is its ability to piggy-back on the US’s year 2000 African Growth and Opportunity Act (AGOA).

Chinese firms have benefited from the region’s preferential access to the US by establishing Chinese-owned subsidiaries in the region. AGOA of course creates a trading advantage for sub-Saharan Africa’s textile industries to access the United States market.

According to Ms Ciliaka Millicent Gitau, a lecturer at the University of Nairobi’s School of Economics, its success was rapid but short-lived. By 2005, many Chinese companies had established subsidiaries in countries including Ghana, Kenya, Lesotho, Madagascar, Malawi, Mauritius, Namibia, Nigeria, Tanzania and South Africa.

“The issue is that AGOA did not have rules of origin that would have curbed transhipment of the Chinese textile commodities,” said Gitau who is an expert on the emerging Sino-Africa geo-politics and trade relations.

The result has been local African clothing and textile companies closing, unable to compete with Chinese firms’ aggressive export-oriented tradition, low production costs and technological superiority.

And while AGOA has been extended to 2015, Chinese clothing makers in sub-Saharan Africa will continue exporting more textiles to the US at the expense of African companies.

“In essence, in the last two decades, China has placed itself in a strategic position to reap benefits from sub-Saharan Africa, not only in the textile industry but in other sectors as well,” says Gitau.

New sales opportunities
And Chinese manufacturers are in no mood to pull back. With weakening demand in Europe and the US since the financial crisis, plus continuing disputes at the World Trade Organization (WTO) with key mature market trading partners, China’s clothing and textile industry wants to diversify its sales.

From January to August 2012, China Customs figures show textile and apparel exports to the European Union (EU) dropped 14.4% year-on-year to US$32.02bn, while they rose 12.2% to US$9.82bn to Africa.

“We have got lots of inquiries from clients in Africa recently. They are less demanding, and some of them are happy to accept our private brands,” says a director at a Shanghai clothing manufacturer who so far has been supplying the EU, US and Japanese markets.

“There are many economic communities in Africa, which allows us to enter other African countries easily once we are in one of the community countries. We would like to look into the African market,” she adds.

Other Chinese manufacturers are using Africa as a hassle-free, alternative way to access the US and EU markets.

“In Ethiopia, we rent a plant and hire local workers make clothing for clients in the US and EU,” says a business manager at a Shandong province-based textile firm, who stresses that the African Growth and Opportunity Act offers companies such as his legal opportunities to access the US market.

And Chinese companies continue to see Africa not only as a huge market for export, but also a possible place for massive investment.

For example, in August, China Garments, a Beijing-based former state-run manufacturer, announced it will invest about US$29.7m in Zimbabwe to form a joint venture with the Cotton Company of Zimbabwe. The JV is expected to be a major cotton supplier of China Garments.”

Author: Sheng Lu

Professor @ University of Delaware

10 thoughts on “China’s textile and clothing firms expand in Africa”

  1. The first portion of this reading was extremely shocking to me. As American’s, we are so used to hearing about China creating counterfeit goods or creating counterfeit designs and calling them their own. We primarily hear about China copying the designs of popular fashion labels, such as Coach, Louis Vuitton, and most recently, Tory Burch. I have never even though about counterfeit African prints. I feel very guilty reading this because I’m sure that I’ve seen these products in store and not even though twice about it. I’m really saddens me to think about this because Africa already experiences so much poverty. We see the effects counterfeit goods has on successful companies, and how it makes a major dent in the companies profits. African designers likely can’t afford losing a single penny. Yet Chinese manufacturers are so money hungry to destroy a continents potential growth.

    1. I totally agree Kristen. Whenever I am in New York I go to China Town to get the knock off bags that they can make right in front of you but I have never thought of the counterfeit prints. So much attention is always placed on designers such as Gucci, LV or even the signature Louboutin red sole that has aggressively taken on any copying or fraudulent production of their patented print. However, I feel as though we have a very naive and ‘media based’ idea on the poverty in Africa, and probably has just as a negative effect on Chinese production when consumers, like myself, buy fake bags.

  2. good comment. this is an angel I didn’t think of. But I can fully understand why IPR will become an thorny issue in the fashion apparel industry

  3. I had no idea that China had been creating counterfeit african designs. Being an american you usually hear about how china copies the U.S. Nigeria already being a poor country, its sad to hear that because of these counterfeit design, it has resulted a job loss for many Nigerians. What was also interesting to read was that the chinese manufactures use africa as a way to access U.S and E.U products. This case made me realize that in business the fight to access cheap and better products can really affect a country’s potential growth.

    1. remember on Thursday I mentioned about intellectural property right protection? this is an area with growing tensions between countries. not all foreign markets enforce IPR as strict as in the US… many complicated social, economic and political reasons behind. Unfortunately we are short of time in the class, I wish i could share with you guys some real examples.

  4. i have always seen and heard about counterfeit products but along with other comments about i never knew about the false African prints that are created. it is horrible that people would actually waste there time making fake things and ruining the success of business to make money that isn’t really meant for them.

  5. Things like this often go unnoticed and it is great to see that this hasn’t, it is a shame to think that the Chinese are copying the designs of many Nigerians. Nigerians suffer enough from not having enough money, food or clean water to now have to worry about loosing business because people are making fake imitations of something they had originated. This should be stopped, it is not right to let these items be sold and have the Chinese gain access to the benefits of these sales.

  6. This was a devastating article. I remember discussing in class how South Africa has recently been able to join BRIC the top emerging economies however it is sad that China will always have an advantage over them. The poverty level in Africa is increasing a significant amount on a daily basis and for China to take away their one niche (African print) it is sad. I understand this is a business and at the end of the day every country is for them selves but it is still a disappointing factor.


    THANK YOU!!!!!!

  8. After reading this article is was extremely shocking to know that China is the major problem for counterfeiting. I know that they have always made products just like the real ones but I did not know that they would go as far as taking African patterns and counterfeiting those. It is appalling to me to see China take away Africa’s pride and joy. They are the originators of these patterns and they should be the ones selling and being known for them. It makes me sad to see that China has taken jobs away from these people all because of counterfeiting.

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