The Reporter (Addis Ababa)

Ethiopia: Big Chinese Presence in Town

Close to 150 Chinese private and, most predominantly, government-owned or controlled companies have been in Addis Ababa's Millennium Hall since Thursday, to demonstrate how interested the Chinese government is in relocating most labor-intensive companies into Africa, where comparative advantage prevails.

The presence of the Chinese companies in town is based on the event 2013 Africa, China Commodities, Technology and Services Expo, hosted by the Ministry of Commerce of China. Han Shengjian, deputy director of the Chinese Trade Development Bureau, said at a press conference on Thursday that the coming of 150 Chinese companies is to cement cooperation between Africa and his country. However, he said labor-intensive companies at home are facing challenges since cheap labor is no more the reality in China.

"Ethiopia lacks some important factors, important industries potential for economic pillar. From the global point of view, we see relocation from European countries to the Eastern Asia in the early 1970s and China had benefited from that relocation. In China those factor endowments are changing. Especially those labor- intensive factories in China have faced some difficulties by the increasing costs," Han said. The Expo, hence, is organized with the intention of introducing Chinese companies where they can be relocated. According to Han, the government of China has selected Ethiopia as it could be a destination for industrial relocation for most Chinese ventures. From the Expo participating companies, Han says a dozen of them are believed to come back and start operation after the Expo is over on Saturday. However, the Africa China Expo is planned to be held every year in Ethiopia.

Most of the Chinese companies were interested to know the challenges they might be faced with in Ethiopia for their engagements, The Reporter learnt. Some were posing questions in relation to where the Ethiopian government is able to give financial guarantees, full expatriation of profits and related benefits of their operations. The Chinese companies were eager to know how the labor laws are functioning here.

The interests of Chinese companies to invest here is elapsing and newcomers are also taking part. One good example is Tsehay Real Estate which has been in town for a while and started developing 180 thousand sq.m land in the Eastern part of the capital, specifically at CMC area, in front of the roundabout.

The company chose a local name, Tsehay, to easily assimilate and become closer to the local community. And most meaningfully, that part of Addis Ababa is where the sun rises. The urban complex will be completed in the coming three and a half years' time where the company will spend some 20 billion birr to erect 13 blocks of 12-storey residential buildings. Two four-star-rated hotels, offices and commercial blocks are under construction. Qian Tang Construction Plc is the Chinese contractor which has already begun the construction of the foundations in just about three months.

Tsehay real estate developer will sell out the buildings on cash and carry basis upon completion.

The other company which has been in Ethiopia for some four years is Foxtail Millet Institute of Zhangjiakou Academy of Agricultural Sciences in China. This institution is not here for research alone. They have come to introduce what they call "yellow grain and golden kernel" to Ethiopia. The millet grain is still under research yet becoming a real alternate and substitute to the predominant Ethiopian staple food injera which is made from teff grain which is defined by some food and nutritional as a member of the millet family. And for visitors of at the Expo, it was hard to differentiate foxtail millet injera from the regular teff injera.

The institute is now collaborating with the Ethiopian government-led agricultural research institutes to familiarize the golden millet in Ethiopia and get into households by half price down against teff in the coming years. Currently, foxtail millet is under research in many places to which productivity per hectare has jumped to 45 quintals.

Well and already established companies like Lifan Motors, Huawei, ZTE, Sino Hydro and many others are also taking part in the three-day expo. Liafn is set tol launch its new 530 model car at the new premise at Eastern Industry Zone in Dukem town by the coming February and March, 2014. Sino Hydro, another big Chinese company under the subsidiary is bidding to develop Beles phase two project, according to a representative approached by The Reporter at the Expo, Hydro China will develop a 25 thousand hectares irrigation scheme and sugar factory plant. The company will also be involved in developing a 3,041 hectares of irrigation from the Rebbi River in the Amhara Regional State. Hydro China is also bidding to pave a 125 km road in the South Omo, where the town of Jinka and Hanna will have a standard paved roads.

Vehicle and spare parts, electric power and new energy technology equipment, textile and leather processing industry, engineering and machinery, agricultural engineering and machinery are some of the companies exhibiting their products at the expo.

According to the data obtained from the Ministry of Industry, since 1999 a total of 131 Chinese projects have ventured in Ethiopia's investment landscape. They have invested some 5.8 billion, creating some 55 thousand permanent and temporary jobs.

However, such an engagement of the Chinese is not far from criticism. David Shinn, former ambassador of the US to Ethiopia, said on a number of occasions that Chinese involvement in Africa is based on China's interest to access Africa's natural resources. "China sees Africa and its population of one billion people as a growing market for Chinese exports," Shinn said in 2010, at a symposium by Social Investment Forum International Working Group. The former diplomat noted that these are some of the interests of China vests in Africa.

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