Southern Africa: Increasing Hostility Towards Chinese Traders

In the last decade, Asian migrants have fanned out through southern Africa, opening shops in small towns and rural backwaters. While consumers in countries facing increasing economic hardships have come to depend on their low prices, local shop owners complain they are being forced out of business, pressuring governments to introduce restrictions on foreign traders.

In Malawi, Chinese-owned shops and restaurants have proliferated since the country established diplomatic ties with China in 2007. But the government was recently prompted by bitter complaints from local business owners to introduce legislation preventing foreign traders from operating outside of major cities.

The new law has mainly targeted Chinese traders, many of whom are now being forced to shutter their businesses in rural areas and to apply to the Ministry of Industry and Trade for business licenses to operate in Lilongwe, Blantyre, Mzuzu or Zomba – the country’s four major cities.

“They can operate in rural areas when they are in production and big business, not doing petty trading,” Malawi Minister of Industry and Trade John Bande told IRIN, adding that the government would continue passing legislation that encouraged serious foreign investment “to the benefit of Malawians”.

But human rights groups have described the legislation as xenophobic, and consumers like Arnold Mwenefumbo, from Karonga District in northern Malawi, complain that forcing out the Chinese traders will mean paying much higher prices for products sold by Malawians and other African nations.

“[The Chinese] were also employing our son and daughters,” said Mwenefumbo.

Lesotho

In Lesotho, a tiny land-locked country facing high rates of poverty and unemployment, the relatively recent appearance of thousands of foreign, mostly Chinese-owned, businesses has generated similar resentment from local business owners, but little government intervention.

Before the mid-1990s, Makhabane Theko ran a successful retail business in the capital, Maseru, but now leases his building to the same Chinese traders who he says pushed him out of business. “It’s difficult to compete against the foreign investors, especially the Chinese. You sell 500g of sugar for 8.00 maloti (US$1.4) and they will sell it for a price that is almost half that,” he told IRIN.

Stories like Theko’s are common. Although the exact number of Chinese in Lesotho is unknown, estimates range between 10,000 and 20,000, or up to 1 percent of Lesotho’s population of 1.9 million, according to a recent report released by the Brenthurst Foundation. “Business is good here,” said one Chinese trader.

Unlike neighbouring South Africa, which has a long history of Chinese migration and Chinese-run businesses, Lesotho has traditionally been a country of out-migration and has little experience with immigrants. National legislation limits ownership of small businesses to Basotho citizens, but the government has largely turned a blind eye to corrupt practices allowing Chinese migrants to purchase trading licenses or even national identity documents.

“Chinese are now selling makoenya [fat cakes], loose cigarettes, even beer at retail prices, but their business category forbids them from doing so,” said a street vendor who sells cigarettes in Maseru.

Yoon Jung Park, coordinator of the Chinese in Africa/Africans in China (CA/AC) International Research Working Group, has conducted research on perceptions of Chinese in southern Africa. She noted that small countries with struggling economies like Lesotho are seeing funding from Western donors dwindling; many may view Chinese investment as their next best hope. This is reflected in the lack of government action to regulate the proliferation of small Chinese-run businesses.

“I think there’s a link between official ties [with China] and the messages that get filtered down to people, especially in these small countries that are desperate for foreign aid, that the Chinese are the great hope and we need to be nice to them,” she told IRIN.

Many complain that the Chinese add little to the local economy because they send all of their money home, but according to Park, few Chinese migrants in Lesotho send remittances home. Instead, they spend their first two or three years in the country repaying loans, and then they tend to reinvest in their businesses. Most also employ at least one local to interact with customers.

They keep their prices as low as possible by buying from other Chinese (often at a slight discount), forming cooperatives to make bulk purchases and focusing on rapid turnover rather than high profit margins. Rumours that the more unscrupulous also engage in under-handed practices like re-packaging expired food and removing a few ounces from bags of flour and sugar before resealing them may also be true in some cases, said Park.

“Profit margins are so narrow, that they probably do resort to some of those things. And government in Lesotho isn’t doing enough to prevent them,” she commented.

In the run-up to Lesotho’s general elections in June, several political parties indicated their intention to expel foreign traders from the country, but apart from several raids on Chinese supermarkets said to be selling expired meat, no action has been taken to prevent them from operating.

Zambia

Zambia’s open-door investment policy has seen hundreds of Asian migrants setting up businesses in the country in recent years, but locals employed by them complain about low wages.

“Yes, they are giving us jobs, but these are not jobs to help us [improve our lives]. They are jobs to help them make more money. I am paid 350,000 kwacha [US$70] every month, and what can you do with that amount? It is like my salary just goes for transport to come here and go home,” said Melinda Daka, a shop worker in a Chinese-owned business in Kamwala, Lusaka’s upmarket trading area.

“Zambian employers pay much better, but they are very few, and they only employ very few people… So, there is nothing we can do but work for these same people [foreigners].”

In July, the Zambian government increased the monthly minimum wage for shop workers and other general workers, from $80 to $220, but employers are reluctant to pay the new salaries, saying they could make the cost of business unsustainable.

Positive relations

But negative attitudes toward Chinese traders are not uniform throughout the region. In countries such as South Africa and Swaziland, where Chinese migrants arrived several generations ago and now run businesses that fill gaps in the market without competing with locals, relations have remained fairly good.

Park’s research in Zimbabwe found that during that country’s severe economic crisis, consumers were grateful to Chinese traders for getting goods into the country when no one else could. “They said that if it hadn’t been for them, they wouldn’t have been able to send their kids to school with basic supplies. They helped them survive the crisis,” she told IRIN.

However, in countries with struggling economies, the arrival of large numbers of entrepreneurial Chinese migrants combined with a lack of enforcement of laws and regulations have fuelled tense relations with locals.

“Oftentimes, they know it’s not the fault of the Chinese. They respect them for their work ethic, but they’re angry that the government is allowing them to do some of the things they do,” said Park.