China brings jobs to Ethiopia but at what cost?

By James Melik
Reporter, Business Daily, BBC World Service
(BBC News) – China has fast become Africa’s largest trading partner – but who exactly is reaping the benefits?

While Europe is struggling with recession, it is a very different story in Africa where the continent overall is expected to enjoy growth of 6% in 2012.

But there is concern that the fruits of economic expansion and foreign investment are not being evenly shared around.

One example of Chinese investment is a shoe factory just south of the Ethiopian capital Addis Ababa, on a huge industrial site known by locals as China Town.

Two production lines make 2,000 pairs of shoes every day for global brands, including Guess and Tommy Hilfiger.

Despite perks such as the factory having its own canteen and tennis courts, and the workers being supplied with their own uniform, the workers often receive a wage which is only a fifth of what a worker in an indigenous factory would receive.

Delivering skills

The shoe factory is run by the Huajian Group, whose vice president Helen Hai says that instead of receiving higher wages, the workers are trained in shoe-making skills.

“I took 86 Ethiopian graduates to China to teach them how to make shoes,” she says.

“Now we have a programme working closely with the government to train another 300.”

She is adamant that after their training, workers can choose to remain or to work for other shoe factories.

“We offer tennis courts, uniforms, food – and in the future we will also offer free accommodation,” she says. “And we are also in the process of applying for a Fairtrade certificate as we definitely treat our workers fairly.”

She adds: “In the past China has given a lot of money to African countries, but now we want people here to have the capability to make goods themselves – that is why training is always the core in our strategy.”

Local sourcing

Shoe manufacturing has something of a tradition in Ethiopia, and another smaller factory is run by Bethlehem Tilahun Alemu.

After being educated in the US, she returned to Ethiopia in 2004 and started her company to provide employment for people from Zinabwork, a small village on the outskirts of Addis Ababa.

Her Sole Rebels employs 75 men and women, making the soles of shoes from recycled car tyres and the uppers from Ethiopian spun cotton.

“The culture of recycling has been in Ethiopia for a long time and recycled tyres have long been used for shoes,” she notes.

“It is a cheap material and locally sourced, whilst we source the spun and dyed cotton from the local community,” she says.

She explains how it is her ethos to employ local people, and says that 99% of the shoes they produce are exported.

“This is a local grass-roots business that we built from scratch. We have a brand and authenticity,” she says.

She is also proud that her company is certified as Fairtrade.

“We pay our people four or five times what other people are paying,” she says, adding that she is not worried about her workers getting trained and then going to work for Chinese factories – because they will not get paid as much.

Local attraction

Helen Hai says the Huajian Group plans to invest $2bn in Ethiopia for a variety of reasons, including Ethiopia’s “good economic policy”.

Its competitive labour in the global market was also an attraction – compared with China it is one seventh cheaper to employ

The good supply of raw materials – leather for making shoes – and its good geographic location, allowing easy access to Europe and the rest of Africa, were also factors.

“We signed an understanding with the Africa Development Fund,” she says.

“We will jointly invest $2bn in the next 10 years – which will create job opportunities for 100,000 people.”

She maintains that the biggest challenge for investing in Ethiopia is that people are not familiar with doing international business, although she is confident that will change over time and her company is working closely with the government to solve that issue.

Investment encouraged

Long-time Africa campaigner Sir Bob Geldof says people should not worry about Chinese investment in Africa and rebuffs the idea of economic colonialism.

“China is not interested in that. Africans are not going to go through that kind of experience again, ever,” he says.

“Shut up, get down here, get on with it and it is mutually beneficial. You can talk about what sort of government works best, about values, about rights.

“Those things are being talked about. When they are ignored there is no growth, just instability, war and hunger.”

He further maintains that democracy is not a prerequisite for growth.
“How do we know that? Look at Singapore or China. Business leaders there work with whatever government they have to – their job is to create business.”