What will be the consequences of the Chinese textile industry invasion in African countries?
During recent years China has been expanding its clothing and textile industry to Africa and invested heavily in opening new factories all over the continent but mostly around southwestern African countries such as South Africa and Botswana. The motives behind this expansion are simply financial: Today even the ‘promised land’ of textile manufacturing has become too expensive due to continuously rising labour and overall production costs in both China and other Asian countries. This has left the textile industry’s major player without any other option but to reallocate its production to cheaper countries and, not surprisingly the African continent is next on the radar. Offering both a rich environment in affordable production capability and a huge growth market with a rising middle class, Africa combines the best of both offer and demand.
An example of this is Ethiopia. The entry-level salaries for textile industry workers are between 35 and 40 dollars per month which is nothing in comparison to the average wage of 500 dollars in China. There is no minimum wage in Ethiopia and due to high unemployment, most people are ready to work for lower salaries. Furthermore, Africa’s location makes it an interesting destination for investors: it is closer to Europe and the United States which gives the Chinese manufacturers an opportunity to save on delivery expenses and pay lower tariffs. Delivery times are also shorter which helps the manufacturers to keep up with the pressure of the growing concept of fast fashion.
Undeniably, the Chinese investments have some positive effects: they create jobs and bring new and more developed technology as well as new skills to the continent.
The worrying question which arises is whether Africa will truly benefit from the investments or if the Chinese companies are only going to exploit the locals and their resources? How can we make sure that they are not only taking advantage of the natural and human resources Africa has to offer, but also giving back to the community?
African countries, including South Africa, have been struggling with high unemployment rates and as a result have attracted international investors, and in this case investors from the international clothing industry. However, while the Chinese factories will offer new jobs and management skills, they are also threatening competition to local manufacturers.
Smaller local companies are not able to compete with the Chinese competitors’ low production costs and ability to scale production quickly, enabling lower costs, therefore cheaper products. This might eventually lead to the shrinkage of the local textile sector.
Furthermore, African countries have become an increasingly attractive option for Chinese citizens to build their lives and their businesses in, in many sectors, including the textile sector.
This said, what would stop the Chinese textile and clothing factories from hiring expatriates who already have the required skills and experience, the same cultural background
and communication habits, instead of offering jobs to locals and investing money and time in training them?
When we talk about Cultural similarities, let´s have a quick look at the African continent´s main cultural differences, compared to China, the US and two of Europe´s leading fashion producing countries (Spain and Italy). The framework we use for comparing the different
national cultures are based on the work of a famous Dutch management guru, Prof. Geert Hofstede.
The main thing that stands out from the above graph is that comparing various countries is extremely difficult and this means we can´t simply compare one continent to the next. Already within South Africa the cultural differences between the various races is large, let alone the different tribal cultures in e.g. Kenya.
If you do take a helicopter view then the Chinese tendency to source work to the Han population can be explained by its collectivism – which is something that also plays a role in the tribal regions of Africa – in terms of ensuring smooth operations this will most likely lead to Chinese organisations bringing their own experts in (creating in-groups), leading to minimal skill development on the African continent. In general, more individualistic societies tend to be more meritocratic (less group think = employment based on competence as opposed to employment on the basis of family ties) thus typically investing more in local competency development.
If we step out of employment related questions, another question arises. When we think about ethical and sustainable production. China is not known for actively focusing on ensuring work place safety or ensuring environmental safety. The working conditions in the factories are publicly known to be extremely poor and unsafe which is an immense problem in the textile industry in general. Excessive overtime, health issues, exposure to toxic chemicals and violence against workers, especially women, are some of the main issues in many Chinese factories, which is something the Chinese government has only recently started focusing on in terms of improving the standards. The environmental damages in China are dramatic: According to statistics around 20% of the industrial water pollution is a result of textile dyeing and treatment. Around 70% of the toxic chemicals in Chinese waters are a consequence of textile dyeing and, what is even worse, 30% of these chemicals are impossible to remove. This kind of permanent environmental damage in African countries like South Africa, which is already actively making decisions at this very moment to defeat the water crisis through water consumption restrictions, could have terrible consequences for the local communities.
Many African societies are facing severe problems such as government corruption and high levels of crime and poverty, which are correlating with cultures being hierarchical and tribal. In the South Africa of 2017, 26 years after the ending of the apartheid, not a massive improvement has been seen concerning inequality and racism. The poorest citizens still live in the remote areas of South African cities in overcrowded townships where poverty and the lack of food, water, electricity and security makes people’s lives devastating. Only a small percentage of households in the townships have access to proper electricity. Outdoor taps and toilets are shared between from ten to twenty families and because of the shortage of space, more unsafe self-built shack settlements are popping up around the townships. Many townships have become infamous for their crime and violence, which in some areas is so bad that even the police refuse to go into the area.
We understand that there are massive issues that need to be fixed and investors targeting Africa could do their part by helping the communities in many ways. However, what worries us the most is the possibility that these investments that look good on paper and should, in theory, do good for the local community, could make things even worse for African countries and their citizens that have to deal with the aforementioned problems. Unemployment is reported to be almost 30% in South Africa.
Imagine the common reality of a single mother living in a township in extreme poverty trying to provide for her children. She would, as very often is the case, be ready to take any low paid job in a textile factory despite its questionable and unsafe working conditions, just to have the hope that one day it could improve her family’s life and the conditions in her community. Yes, it leads to employment, but does it really help the family and region to develop in the long run? Or does it lead to broken families, where grandparents are left to raise children while parents work long days?
So how can we make sure that foreign companies, whether they are Chinese or Western, take care of the communities whose resources they are exploiting? Companies, local and foreign, are expected to pay taxes, treat their workers correctly and take responsibility for the impact their activities have on the society and the environment.
Unfortunately, problems like tax evasion and pollution are common especially in African countries since the surveillance monitoring these activities is often inadequate. The watchdog institutions are often weak, badly structured and sometimes corrupted. A fact which many companies understand and are prepared to take advantage of.
The biggest dangers lay beneath the surface. It is vital to stop corruption which stands as a major obstacle for economic growth, and to make a change in the institutions and in the political infrastructure to improve the surveillance of companies arriving in African countries. Investing in Africa is not a simple path and to avoid being taken for fools, Africans need to be ready and understand what they are getting themselves into. That is the only way to guarantee that foreign companies do not come to Africa only to profit and exploit at the expense of the locals, using their natural resources and cheap labour force without giving anything back to the community in terms of economical and competence development.
After all, this is also in the financial interest of the organisations themselves as creating a larger middle class will stand to benefit these companies as well – produce locally, consume locally = higher profits. It also stands to benefit those organisations when wanting to sell in the key European markets they are targeting. Most European consumers value those products which are made sustainable. As the graph below shows, as Africa itself is developing its main purchasing focus is on affordable goods, offering immediate gratification. For more mature markets like Europe the impact an individual´s purchase decision has on society is becoming increasingly important. Producers stand to benefit from larger profit margins if they take this into account:
In the table above, a high score means that immediate gratification upon a purchase is more important than the social or environment impact whereas a low score stands for considering the impact of a purchase prior to the actual purchase.
Besides the local employment and financial component for organisations and societies involved, an important part of this chain is the consumer him/herself, which means you.
How can you make sure that the organisations you purchase your products from don´t only “green wash” their products, but really are sustainable? And not just sustainable for the environment but also sustainable in terms of really impacting the local environment in which the products are made?
A good start is to check for brands from well-known organic certification organisations, testifying that the supply chain of an organisation is ethical. A next step is to promote to organisations that for them to align their sustainability strategy, their organisational culture should also promote sustainable production – favouring long term returns instead of short term gains. And this is where Chinese culture might actually come in handy as the Chinese understand very well that it´s better to invest in the long run (just look at the one road, one belt policy). All it takes is for you as consumer to remind them of this – pay more for sustainable products and ensure organisations can profit from this- enabling them to support sustainable production facilities and invest money in the areas production is located.
Helsinki Fashion Week
Helsinki Fashion Week is a new fashion week sponsoring its designers and showing only sustainable and ecological fashion for its international group of buyers and press.
HFW is also involved in sustainable consulting activity and projects with corporations world wide./ www.helsinkifashionweeklive.com
Group CEO Hofstede Insights
Hofstede Insights assists organisations in managing the impact of culture on work and life by aligning culture and strategy – ensuring consistency in what is being said and what is being done.