China Develops New Model To Reach New Markets In Africa
Chinese goods have been gaining increasing popularity in the African markets and Chinese companies are exporting in huge quantities of a wide variety of products directly into many African countries. In the last few years, China’s trade with Africa has been growing with leaps and bounds, as has Chinese investments into several African nations.
In 2018, China-Africa trade reached US$204.2 billion, up 20 percent year-on-year, and China has emerged as Africa’s largest trading partner for 10 straight years.
Price-sensitive markets in Africa are hungry for cheaper-priced Chinese goods. Wholesalers, traders and merchants in Africa have also been quick to meet the rising demand for Chinsese goods in Africa and are now sourcing a large portion of their requirements from China.
By cutting out the middlemen and buying directly from Chinsese manufactures has also helped them increase profit margins. This trend of buying from China and selling locally and regionally is being repeated in almost all African countries and the result is clearly visible in almost all African markets that are now flooded with low-priced Chinese goods – whether it is tyres, automobile parts, stationery, perfumes, cosmetics, computer hardware, furniture or machinery, China has dominated the African markets in the last decade.
The main products China exports to Africa are machinery and electronics, textile and apparel, hi-tech products and finished goods, while imports from Africa concentrate on crude oil, iron ore, cotton, diamond and other natural resources and primary goods.
To help the countries in Africa expand exports, China has exempted import tariffs for certain commodities of these countries. China has also announced the names of over 25 African countries that enjoy zero tariff treatment and special preferential tariff rate for exports of some 190 products to China. In fact, Africa’s resource-rich nations are getting even more reliant on China for their exports. Chinese imports from Africa include crude petroleum from Angola and South Sudan, zinc and copper ore from Eritrea, cobalt from DR Congo, raw tobacco from Zimbabwe, besides iron and titanium from Sierra Leone.
China has committed to set up a $10-billion special fund for development financing, showcasing a possible change from a resources-for-infrastructure model of financial engagement.
