About Me

My photo

I am a qualified Attorney. I specialise in Property Law, Commercial Law, Corporate Law and Trusts.
 
Please visit our website at www.prop-law.co.za for more details.
 
I am an elected Committee Member of the Property Committee of the Association of Pretoria Attorneys and through my involvement, I like to ensure that I am constantly at the "sharp-end" of Conveyancing Practice.

I am the elected Chairman on the Gauteng Council of SAPOA. The South African Property Owners Association (SAPOA) is the biggest and most influential institution in the property industry. SAPOA members control about 90% of commercial property in SA, with a combined portfolio in excess of R150 Billion (about $22 Billion). I am also on the National Council and the National Legal Committee of SAPOA.
 
Member of the Institute of Directors South Africa and Member of the Sirdar Governance Panel.

09 December 2011

How to fix Africa - China perspectives

How to fix Africa - China perspectives

Revealing insights from a key Chinese leader.

African countries are getting the cheap goods they deserve and are forcing Chinese companies to keep prices so low that other operators can't compete on the continent. What's more, businesses in Africa pay their workers too much money, who also don't work as hard as the Chinese.

If poor quality goods get through border posts, we should blame our own officials for failing to enforce controls - not Chinese manufacturers. And, while we are pondering China's successes in Africa, we may as well come to terms with the fact that China is indeed hugely interested in cushy resources deals and extra money-making opportunities for itself and its citizens.

Of course, it sounds very unPC to set out the facts in this way. This is in an era in which China wants to be seen as the developing world's benevolent big brother, and its growing band of supporters across Africa shudder at the mere mention that the world's emerging superpower may be little more than a self-interested neo-colonialist.

But that's pretty much the way one of China's most influential political figure in Africa, Lu Shaye, Director-General of the Department of African Affairs explained the Chinese viewpoint in a recent interview with Jeune Africa.

China's propaganda commissars were so pleased with the outcome of his chat with Jean-Louis Gouraud that they had the full text translated and posted this week on the Chinese government-sponsored Forum for China Africa Cooperation website, for all China's followers across Africa to digest.

Usually the Focac website makes for bland reading. It carries blatantly biased articles aiming to paint China as a benign operator in Africa and endless pieces involving African political leaders shamelessly flattering the world's new emperors in the east.

China censors the news and has a highly effective system to monitor its citizens' reading habits and activities in cyberspace. The Jeune Africa article seems to have slipped through the state censorship net.

It makes for fascinating reading for anyone with a hint of concern about the traction China's state machinery is gaining in Africa. Lu's comments provide rare insights into what Chinese leaders really think about Africa.

It will be interesting to see how long the piece it remains posted; if past controversial articles about China's motives in the world are anything to go by, it won't be available for long. After all, China is working hard at enhancing its image in Africa as part of its overall move to build its soft power in the developing world.

So, while it is up, let's have a look at what Lu thinks about China's friends in Africa.

Although Lu is at pains to state that China doesn't expect African countries to follow it as a model in any way, he gives a glimpse of what the Chinese think African countries are doing wrong or need to fix. Here are some pearls, starting with his ideas on how African companies and enterprises can improve their lot:

Competitive labour costs: Treat ‘em mean

Citing the example of government assistance projects in Africa, Lu says Chinese companies are competitive because they scrimp on labour costs, spending 95% on the project compared to western companies' 80% on "on their own staff".

"It is true that the Chinese workers work in harsh working conditions. The Chinese employees work in tougher conditions than the employees of western companies. The Chinese have a spirit of enduring hardship," says the Chinese leader candidly.

"They live a hard life, eat simple food and live in simple domiciles so that they can send home the money they earned to raise their families and improve their living conditions. The Chinese workers can endure hardship.

"They work in three shifts a day and work all day and all night to speed up project schedules. That is why the Chinese companies are competitive. They spend less on the workers," he says.

China's under-cutting strategy benefits local government

Low labour costs are among the reasons Chinese companies can out-bid local companies in the African market, says Lu. The others are low materials and equipment costs and high labour productivity.

"With the respect to the claim that the Chinese companies take a low-cost strategy in the contract market of Africa, the advantage of Chinese companies is actually low cost...This is good for the local government, because the local government can spend less in constructing a project."

Lu says this strategy does have a "big impact on local companies of the same trade" and that "Chinese companies have no other purpose than making more money".

He notes that "the free economy is about free competition" and says that African companies "need to increase their competitive power".

Low pay for Africans: a better deal than in China

Responding to criticism that Chinese companies exploit local labour in African countries, Lu points out that Chinese wages and salaries aren't just low compared to norms in Africa - they're low back home, too.

Look at this issue objectively, he implores China critics. Comparing the ¥4 000 (roughly the same equivalent in South African rands or about US$700 to $800) being demanded by Zambian workers of their Chinese employees, he notes that pay is much lower in China.

"The minimum wage of Shanghai, the most developed city in China, is ¥1 100. The average wage of construction workers in Shanghai, Guangzhou, and other developed cities in the east of China is just over ¥2 000.

"The wage of manufacturing workers is between ¥2 000 to ¥3 000. What does ¥4 000 a month mean? It is the wage of an ordinary white-collar (worker) in China," explains Lu.

Labour laws in Africa are too strict

Although Lu says it is basically not China's business to comment on government policy, he reckons countries in Africa shouldn't raise wages and salaries "beyond reality" or they will "scare off investors" to the detriment of economic development.

"In some African countries, the labour laws are very strict. The governments even copy the laws of western countries. With such labour laws, companies are afraid of recruiting staff, including the western companies. They will not easily recruit employees because they cannot fire employees," he says.

Good deals for Africa's resources

A major criticism about China's intentions in Africa is that it is largely interested in getting its hands on natural resources at attractive prices. Lu says that in this regard China is no different from the West.

He says: "China's investment in Africa is mainly concentrated on resource-rich countries. Maybe you are right. Aren't the western countries the same? We should be realistic.

"Resource-rich countries do have more business cooperation opportunities and investment opportunities. Capital is always profit-driven. Where there is no profit or no return on investment, I don't think the west will go.

"In the African countries that China has invested in, there are always a lot of western companies, far more than Chinese companies. China's investment only accounted for a small part of foreign capitals in these countries. Most of foreign capitals still come from the west," says Lu.

Thanks, Mr Lu, for finally setting us straight on some contentious issues. At least we can't accuse Mr Lu of speaking to his friends in Africa about our problems with a dagger between his teeth - or saying one thing and meaning another - as the Chinese proverb goes.

Is it time for African countries to rethink their labour laws so that African businesses can become more internationally competitive? Are Chinese companies doing governments a financial favour by undercutting local operations? Share your views below this article.

No comments:

Post a Comment