How do we cope with Chinese onslaught?

via How do we cope with Chinese onslaught? | The Zimbabwean 30.10.13 by Farai Mabeza

As the manufacturing sector, already reeling from domestic pressures, crumbles under the mountain of cheap goods flooding the market, analysts say Zimbabwe should take a leaf from western economies that have adapted and learnt to live with the dominance of Chinese imports.

Countries such as the United Kingdom have created service, financial and information technology industries to compensate for the loss of manufacturing caused by the Chinese onslaught. The Confederation of Zimbabwe Industries recently released a report which showed that industrial capacity utilisation had plummeted further to 39,6 percent from 44 percent in 2012.

The sector is also collapsing under a mountain of local problems such as constant power and water cuts, uncompetitive wage structures, rental costs beyond the rate of inflation and the threat of indigenisation that has crippled investor confidence.

Indigenisation is tightening its noose around the sector by preventing growth and deterring investors. In addition, regressive taxation policies hit small businesses especially hard. Economic analysts say that money is being spent mostly on imports and is therefore not circulating in the country. Local manufacturers complain that supermarkets pay foreign creditors first locals are left to struggle for what is owing to them.

Capacity utilisation was at a low 10% in 2008. It increased to 30% with the introduction of the multi-currency system in 2008. The upward trend continued in 2010 rising to 43,7% before reaching 57,2 in 2011.

Zimbabwe National Chamber of Commerce economist Kipson Gundani said Zimbabwe could recover in the long term but would need to come up with a new industrial structure.

“The industrial sector will not look the same as before. Many of our industries will be smaller sized and will come in the form of small and medium enterprises,” he said, adding that China had changed industrial dynamics in Zimbabwe.

“Some local industries have lost their competitive edge. For example the textile sector is gone because of the China factor,” he said.

The director of the Labour and Economic Development Research Institute of Zimbabwe, Godfrey Kanyenze, stressed the need for business reform to enable the economy to recover. “With no reforms even in the medium term the economy will continue on a downward trend and we can see that the trend has already started,” he said.

Kanyenze, an economist, said that the issues that should be addressed were access to credit, cost of credit, poor infrastructure and power shortages.

“Power issues, outdated technology and the liquidity crunch cannot be addressed in the short term. We need a shot in the arm,” he said.

Kanyenze said that international aid was migrating from humanitarian to developmental assistance. Zimbabwe’s lack of access to international finance was also hampering industrial development.

Debt resolution would be critical for the country, said Kanyenze, adding that that the Staff Monitored Programme negotiated by the Central Bank and the government with the International Monetary Fund would be a test of the country’s commitment.

“We may not be able to meet the preconditions,” he said. “The savings ratio and the investment ratio need to be transformed while the expenditure mix is not sustainable. 70 percent of the budget goes to cover labour costs leaving nothing for other initiatives.”

Analysts say that reckless election campaign promises have made life difficult for government.

“The government finds itself with lack of fiscal legroom caused by a number of factors such as the promises of salary increases made to civil servants,” Kanyenze said.

Former Confederation of Zimbabwe Industries president, Joseph Kanyekanye, said that some firms were only maintaining a presence in the hope of government intervention.

“In Mutare furniture and timber using industries are retrenching, scaling down or simply keeping up appearances in anticipation of a government stimulus package,” he said.

 

COMMENTS

WORDPRESS: 15
  • comment-avatar
    Tjingababili 8 years ago

    VOLUNTARY COLONISATION!

  • comment-avatar

    这是很容易应付中国。 所有你必须​​做的是说他们的语言,一切都会好起来。 当你要开始学习中文?

    • comment-avatar
      Mandy 8 years ago

      No we don’t want to learn Chinese. Thank anyway !!

    • comment-avatar
      Chivulamapoti 8 years ago

      Translated thus – It is very easy to deal with China. All you have to do is to speak their language, everything will be alright. When you want to start learning Chinese?

  • comment-avatar
    Brian 8 years ago

    Has a survey ever been conducted on what, if any, local employment generation is generated by the Chinese ? I would guess at very little so why are they here…using Africa as a dumping ground for both product and labour with no plan or vision for long term economic benefit..send them back to their own country

  • comment-avatar
    Sekuru Mapenga 8 years ago

    The environment for manufacturers is definitely very difficult. Imports are cheaper than locally produced goods and the consumers have very tight budgets. Our exports are cannot compete in quality or price. There are only some niche products. The situation looks bleak. An entirely new paradigm is needed, but we are a nation on our knees already. Dzakaoma.

  • comment-avatar

    CHINESE FAKE PRODUCTS VE MANAGED TO DESTROY LOCAL QUALITY MADE PRODUCTS ALL OVER DI WORLD, SO ZANU PF GOVT BE WARNED .LOCAL COMPANIES WILL NEVER COMPETE WTH FAKE CHINESE PRODUCTS DUMPED IN AFRICA. ZIM INDUSTRY WILL NEVER RECOVER IF NOTHING IS DONE . LOCAL INDUSTRIES N ZIMBOS AT LARGE NEED PROTECTION FROM CHINESE FAKES . HOW CAN ZIM GOVT TRUST DI CHINESE TO BUILD ZIM SCHOOL BUILDINGS N I BETTER CALL DEM TRAPS FOR OUR SKUL KIDS

  • comment-avatar

    BTW. soko says “It is very easy to deal with China. All you have to do is to speak their language, then everything will be alright. When do you want to start learning Chinese?”

    I think we are more concerned about the rape and pillaging of Zim’s natural resources. ZANU is mortgaging the entire country for short term results. Long term our children will have to learn Mandarin.

    All I can hope is that tens of millions of Mandarin speaking people from Africa will sail back to China’s shores and re-colonise them. muhaha!

  • comment-avatar
    Fallenz 8 years ago

    Reports show some manufacturing is returning to the West because of quality issues, and improved efficiency to reduce costs. More would return except for labor issues, as some unions in the West have locked in unrealistic wage and benefit requirements, which hurt members more than helped. Overly-stringent governmental and environmental regulations, and high corporate taxes have hampered some manufacturing sectors. Those points are noteworthy. Also helpful might be a “Buy Zim” campaign… but, that would be effective only when there are Zim products competing in the marketplace, and the people have wages to spend. All hinges on foreign investment, which hinges on confidence, which hinges on ZANUPF being removed from power and their replacement proving themselves capable of governing without fraud and corruption and threatening nationalization.

  • comment-avatar
    Mandy 8 years ago

    The Chinese have “DESTROYED” Zimbabwe , what a shame.

  • comment-avatar
    Charles Chamunorwa 8 years ago

    What does the Standards Association of Zimbabwe say about these products or it has been told hands-off chineese products. The big problem which zimbabwean companies find themselves in is following regulations and requirements which chineese companies don’t follow. For example chineese don’t pay wages according to gazetted rates, they don’t follow health and safety requirements, substandard work and all these requirements have a direct bearing on the end product. Obviously chineese products will be cheaper than there zimbabwean counterpart. If I am paying my worker $10 per day and the chineese guy is paying $2 per day for the same employee and furthermore I am required to provide protective clothing to my employee and the chineese guy is not required to do the same, obviously my product will be more expensive and the zimbabwean will eventually be pushed out of business and the employee will wallow in poverty and disease due to low wages and unhealthy working conditions. Chineese business must be subjected to the same rules and regulations which everyone else is subject to and indeginisation should be applied to chineese companies in zimbabwe. There are no Zimbabwean companies in china.

  • comment-avatar

    Yellow devil masters of looting puppets. Our stolen assets and zanu bank accounts are in China Malaysia singapore hongkong Angola equatorial guinea etc

  • comment-avatar
    Chivulamapoti 8 years ago

    China can be compared to the world’s largest retailer = Walmart. Walmart is the world’s largest buyer of Chinese goods too, we must remember!
    The comparison – like China, Walmart seeks out a weak, no competitor area in the world, builds a Super Center and the local businesses fail, go bankrupt and cannot compete.
    China looks for ‘stoohes’ like Zimbabwe, Botswana and Zambia, where the stupid leaders have looked East, and pounce.
    Zimbabwe will feel the negative effects of China much longer than any Western colonization in the future. “Cry, My Beloved Country, Cry”.

  • comment-avatar
    WAKE-UP 8 years ago

    You got it all wrong ! Stop blaming the “Illegal sanctions “, The Colonialists , The White farmers, The CHINESE , ZANU-PF DID IT ALL BY THEMSELF