Mr. New President, will you help Zambia’s private sector to learn from China’s manufacturing?

By Edward Chisanga

China’s imbalanced trade partnership with Zambia

Moving his mask from his mouth to ensure I was able to hear him without distortions, Mr. Chiyongoli, with reasonable social distance from me whispered, “It’s always nice to have a new leader, isn’t it?”

“Of course, it is. Why do you ask?”

“Nothing special Mr. Kanyelele. I just wonder how different interest groups react each time there’s a new government in Zambia. Soon after HH was elected, a non-governmental organization listed all the problems she envisages the new government can solve for poor Zambians. And I wonder how much of this HH will actually solve. Was it not President Kennedy whom they say told Americans, ‘Ask not what your country can do for you – ask what you can do for your country?”

“Yes, it was President Kennedy. And, you’re not alone Mr. Chiyongoli. I have also been wondering how the Zambian private sector hopes HH will help them solve their multitudinous list of headaches they have almost failed to solve in the last five decades. It began with the Kitwe Chamber of Commerce which announced that it has welcomed plans by the UPND administration to ‘promote value addition to Zambia’s exports.’ But since independence, this statement of value addition has never been a forgotten subject. Even every new leader talks about it. Yet, what we see is deterioration instead of growth of Zambia’s private sector which cannot compete even regionally.”

“That’s right Mr. Kanyelele. They always talk about it. Yet, today, as someone rightly said, it is only Trade King that seems to be doing manufacturing. I myself don’t have much praise for Trade King because I think they are also just the same as others, with nothing I would qualify as manufacturing. Trade King is very far from what an average small private sector in Viet Nam produces. A child who doesn’t travel praises his mother as the best cook. So, some see Trade King as the king while in Viet Nam this king would be carry an insignificant label.”

I told him that I was interested in a discussion between China’s trade with Zambia in the context of manufactured goods and its overwhelming retail trade in Zambia, and what the Zambian indigenous private sector is learning from that. And this seems to have aroused him.

“This is a topic one would expect Zambians to be debating and proposing answers to. More importantly, one wants to know the policy options of HH and his leadership. Everyone says that China’s trade with Zambia is uneven or imbalanced. What exactly does that mean?”

“You see, there are several ways. But one obvious one is that what China exports to Zambia is almost all manufactured goods while what Zambia exports to that country is almost all primary commodities or raw materials as Table 1 below shows. China’s exports of these is not exporting to that country? I challenge you to look at Unctadstat statistics and you will see that Zambia is ranked number 11 in Sub-Sahara Africa excluding South Africa in exports of manufactured goods to China. But in exports of primary commodities, Zambia is ranked number 5 after Angola, DRC, Nigeria and Ghana – all rentier states.”

Table 1: China exports to Zambia and vice versa in $ millions

			2020
		Primary commodities	Manufactured goods
China to	Zambia	20	661
Zambia to	China	2,380	16

Source: Unctadstat

What will the Zambian private sector show they learnt after China’s departure?

“You know brother. I always ask myself the question: What will happen when China leaves Zambia? I mean, is our private sector taking advantage of China’s presence now to learn to manufacture all the products we see in their retail shops? You know these Chinese goods? You know that they have brought some goods that were not made by Zambian companies? Some which were made by Zambians like hang wires had no quality. You have toothbrushes, face towels, hang wires, car marts, spoons, folks, and many other stuff. Although some of them exhibit questionable quality, we must also admit that several are better than those made by Zambians. For example, every household now can boast of having civilized quality hang wires in their houses. Remember what we used to have? It makes me wonder how rich Zambians or leaders used to hang their clothes with such miserable looking hang wires made by Zambians?”

“Yes, I do. But that cycle has been diminished by the arrival of China’s imports. Now Zambians can flaunt openly. I did a Lusaka wide research for about one-month last year and found that most households now have quality Chinese hang wires in their houses. There are good eating plates, cups, glasses, spoons, pots, trays, artificial flowers, car parts, tool kits, measuring tapes and many other products that were once unavailable in the country or if they were, certainly, good quality was largely missing. If the Zambian private sector was able to produce these manufactured goods, I think Zambia would have competed with China. And, in that case, we would not have allowed China to continue exporting manufactured goods to our country.”

“That is exactly my point. That is why I brought this topic up. I’m worried Chiyongoli. I’m worried about what will happen to the Zambian private sector when one day, China bids farewell to Zambia. I mean, what exactly will they emulate in terms of manufactured goods? So many Chinese shops are available in the country with all these products. What surprises me is that I have not heard that a Zambian entrepreneur is copying what Chinese shops sell and is producing these goods. Have you seen any Zambian shop that makes good tooth brushes like the ones we buy from the Chinese shops? Is there anyone out there who is making hang wires as good as the ones you buy from Home Essentials owned by the Chinese? Manufacturing these hang wires can make Zambian entrepreneurs compete with their Chinese counterparts.”

“True, if I were them, I would begin manufacturing the Chinese products that I see on the Zambian market. Surely, I thought all it needs is for a Zambian company to ask government for financial support to import free of duty machinery that produces these products. Some machineries would be too expensive to afford for an average Zambian entrepreneur. But why aren’t Zambian banks lending promising entrepreneurs to buy machinery and inputs from China? Or why are we not seeing Chinese companies making these products in Zambia? The availability of these products seems to present an opportunity. The fact that many Zambian households buy these products seems to suggest that Zambian companies could successfully establish themselves in some product portfolios, don’t you think? It means demand for them is certain.”

“I cannot agree more with you Chiyongoli. Instead of emulating them, Zambian entrepreneurs seem contented with buying these products from the Chinese shops. I often see them lined up buying brooms, socks, shoes, plates and other stuff made in China. Politicians too, including those from UPND flock to these shops and buy in abundance. Every one seems to be preoccupied with what is on the Chinese shelves today and hardly think about China’s eminent departure from our country. Do politicians really think that the Chinese have come to settle here permanently…that these products will continue to be found in their shops?”

“I have been hearing the new leaders talk about big things like structural transformation, climate change, democracy and human rights, even economic development I must admit. But none of them sees the importance of copying as an important tool for building manufacturing. They say China’s emergence as a power house in global manufacturing is partly a result of copying American companies. One expert recently said, “China has a reputation as a rip-off artist, shamelessly cloning US tech firms and business models. But some experts are saying that US companies are now ‘borrowing’ from China more and ever before.”

“True, few companies create new things. Often, products are copied. Availability of many Chinese products in Zambia would seem to suggest that our entrepreneurs would copy and start making their own products. I think it is high time our new leaders put this idea on the economic agenda and let entrepreneurs debate with them. It would make a lot of sense if several indigenous Zambian entrepreneurs learnt from their Chinese counterparts, either inside Zambia or in China. On the other hand, if we wake up one day and find that the Chinese have left this country, and no Zambian ever learnt from them or was able to copy their successes in manufacturing, it would be a great shame.”

“If China is a master of copying and cloning, and now we hear that some US companies are doing similar things concerning Chinese products, it makes perfect sense for a small country like Zambia to follow this path. Of course, there are international rules at the World Trade Organization (WTO) in Geneva that stop member states from copying. But if these rules are being flouted by their very creators, it is worth copying for Zambian companies. I doubt if big members would direct their efforts towards blaming Zambia and suing it in the dispute settlement body. China is right at the door step of every Zambian entrepreneur, exposing its copying act with all these products on the shelves. Yet, they simply continue to buy and buy.”

The State of Zambia’s manufacturing in the economy

“Finally, I wish to bring to the attention of the new leadership that any strategy to build manufacturing in Zambia must be based on understanding the history of performance of manufacturing. It makes a lot of sense for them to know the degree of erosion of manufacturing value added in the GDP. As Figure 1 below shows, it is important to understand that once upon a time, manufacturing’s role in the economy was significant. But over the years, this importance has eroded equally significantly. The image below clearly shows which leadership fingers should be pointed at for neglecting the manufacturing sector, in fact for allowing its downturn while it also shows the leadership that invested more and built the industry.”

“Finally, as a matter of practice, I would advise new leaders to, whenever possible use statistics to show where they’re beginning from. They should show Zambians statistics like this that show that someone before them created a problem which they are required to fix. If they don’t, the risk is that Zambians may blame them for what they did not cause.”