26 March 2016

Africa: Chinese Firms Hire More Locals Than Foreigners - Report

Chinese firms operating in Kenya hire more locals compared to foreigners in contrast to popular belief that the opposite is true. Most of the employees are however on temporary basis.

The World Bank in its Policy Research Working paper titled "Deal or no Deal; Strictly Business for China in Kenya?" said the country ranked fifth job creator through her foreign direct investments in the country.

"Contrary to the popular belief that Chinese companies only hire Chinese workers, 93 per cent of companies report hiring Kenyan employees; private enterprises are more likely to hire locals than state enterprises.

In addition, larger firms are more likely to hire Kenyans than smaller firms. Of the companies surveyed, Kenyans represent 78 per cent of full-time and 95 per cent of part-time employees," the report said.

Kenya currently hosts around 400 Chinese firms spread across every sector.

The firms have an average of 360 local employees with 70 per cent hired on part time while the rest on full time.

Those in the services sector hire 71 per cent full-time employees, but the manufacturing and construction sectors hire only three per cent full-time employees.

Ninety per cent of manufacturing employees are local, and 82 per cent of service sector employees are local.

BUSINESS PERCEPTION INDEX

In February 2014, the Sino-African Centre of Excellence (SACE) foundation launched the Business Perception Index (BPI) survey to learn the views and experiences of Chinese companies in Kenya.

Most firms in the sample were found to be in the manufacturing, construction, and resources sectors as others engaged in trade, tourism, hotels, and restaurants.

China constructed 905.5km of road in 2006 and invested Sh227 billion to rehabilitate the Nairobi-Mombasa road.

Many Chinese firms have been pre-qualified by the government to develop 2,000km of road in various counties, according to the World Bank report.

China Road and Bridge Corporation is building a 609km section of the Standard Gauge Railway (SGR) linking Nairobi and Mombasa for $3.6 billion, and the China Communication Construction company is building three berths at the port on Lamu Island for $467 million.

The projects are bound to increase as Chinese economy experiences a slowdown and the country's low-cost infrastructure providers will seek to market their services outside of China, including in Africa.

China ranks fifth overall among countries with significant FDI in Kenya with 2,170 jobs created, behind the United States, UK, Japan and India which tops with 7,422 jobs.

Chinese firms involved in labour-intensive activities identified the lack of skilled workforce as a constraint to doing business in Kenya while language barrier is hampering skills transfer.

Many Kenyans are already learning Chinese and the government of China offered 34 full scholarships to study in China in 2015.

Chinese companies also hire fewer female employees with women only accounting for five per cent of total employees for Chinese companies on average versus 29 per cent for all companies in Kenya.

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