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Thursday, 23 May 2013

Learning from Chinese entrepreneurs in Africa

A fascinating piece from Mothusi Turner (Think Africa Press) on how the Chinese (from China’s Fujian province) succeeded in Lesotho may hold for our own entrepreneurs:
Rather than being in some way tied to Chinese state assistance to Lesotho then, migrants come to Lesotho under their own steam, lured by rumours of easy profits. But they do not arrive as hostages to fortune, without a plan and alone. Rather, given that kinship networks are the main pull factor behind Fujianese migration to Lesotho, new arrivals usually have links to one of the local Fujianese business associations before they even land.

These commercial networks link Fujianese traders across Lesotho with wholesalers in neighbouring South Africa and suppliers in Mainland China, and help new arrivals in number of ways. The presence of Fujianese merchants in villages that, at first glance, seem too small or remote to support a retail business, is testament to the success these associations have had.

To begin with, these networks direct new migrants towards niches in the market and away from areas already saturated by Fujianese businesses; in this way, they create a centrifugal force, pushing new arrivals into remote corners of the country.

Fujianese commercial associations also give advice and provide start-up loans and insurance for new ventures. In fact, Fujianese traders typically spend their first couple of years in Lesotho paying off debts to these associations and to the migratory agents who facilitated their entry into the country. This is part of the reason Fujianese businesses have a reputation for being open 24 hours a day, seven days a week – their owners must work extremely hard and live very frugally simply in order to pay their initial debts.

Start-up capital, hard work and frugality are central to Chinese traders’ success. Also crucial, however, is the ability of Chinese businesspeople to undercut their local competitors. This is made possible by using local Chinese business associations to buy and ship goods in bulk. This helps lower wholesale costs and, additionally, given that the many of the goods sold by Chinese businesses are non-perishable, they can also be stored on site for long periods of time to save on transport costs.

All these factors help make the Chinese community in Lesotho commercially successful.
In short the Chinese entrepreneurs key features that makes them successful in Lesotho are simple: they forge formidable kinship networks; tap into commercial networks for knowledge and start-up capital; do not compete with one another – more collaboration as they seek to make money for themselves; and work very hard!

Unfortunately, instead of the locals trying to emulate these things they have resorted to vilify them. By the time they realise these lessons the Fujian may have become rich and possibly move back to China or some other richer parts of Africa. And there will be nothing left or worse, they may be replaced by another wave of foreign merchants – if not from China, then from West Africa or elsewhere in the global South. And one cannot really blame the Chinese for that!

Copyright © Zambian Economist 2013

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