Lesotho’s Dilemma: Chinese trade or Chinese traders?

It’s not often that Lesotho is featured in the international press, but every now and then the tiny mountain kingdom is plucked out of obscurity and thrown into the limelight. Usually this means that Prince Harry is visiting the country, but sometimes it means a canny journalist has chosen to use Lesotho to illustrate some broader trend in Africa. This was the case  in an insightful article by Andrew England, which appeared on page eight of today’s edition of the Financial Times.

The article in question gives international prominence to popular grievances held by Basotho business-owners, who feel that Chinese competitors are driving them out of business. The author then describes the dilemma faced by Lesotho’s leaders, who know they must attract Chinese trade to their country, but are wary of the growing animosity towards Chinese traders amongst the local population. The idea that “Chinese trade cuts both ways in Africa” is not invalid but, as Mr England himself points out, one needs to make a distinction between the type of trade represented by investments from Chinese state-owned and private sector firms, and the petty trade conducted by individual Chinese migrants across Africa.

Mr England sets the scene for his article by describing a forlorn Mosotho merchant, trading from a makeshift stall, complaining about business lost to Chinese traders who have set up permanent stores all around him. He then switches focus to the BRICS summit in neighbouring South Africa, and the renewed promises made by China’s President Xi Jinping to the world’s developing nations. He then asks whether these visions are reconcilable. Can African leaders pursue Chinese investment, whilst protecting local businesses from the proliferation of chinese traders in their countries? Mr England seems doubtful. In his own words: “for every welcome investment there is a migrant running a shop resented by local traders.”

I have, in the past, made the argument that there are important historical links between the presence of Chinese traders in Lesotho, the presence of Chinese and Taiwanese textile plants in the country, and the efforts made by Beijing and Taipei to court the Lesotho government in recent decades. However, as relations between China and Africa continue to intensify, these different facets of the ‘Chinese’ presence in Africa are increasingly being driven by various, and sometimes conflicting, sets of priorities.

During his visit to Tanzania on Monday, President Xi renewed China’s vows to continue to offer government-level assistance to African countries “with no strings attached”. Ignoring the minor exception of China’s refusal to assist countries that have official relations with Taiwan, Mr Xi’s comments are a reminder of China’s munificence in providing turnkey infrastructure gifts to African governments. Indeed, it was poignant that Mr Xi’s statement was delivered from a gleaming Chinese-built convention centre in Dar es Salaam. In Lesotho, the Chinese government has bankrolled the construction of a new parliament building, a new convention centre and a new state library. However, beyond creating opportunities for state-owned firms such as China State Construction to make modest inroads into the Lesotho market, state-level interactions between Maseru and Beijing have not amounted to any significant economic transformation of the country.

Chinese funded convention centre in Maseru

Chinese funded convention centre in Maseru

China State Construction billboard in Maseru

China State Construction billboard in Maseru

By far the most significant ‘Chinese’ investments in Lesotho have been private investments in Lesotho’s garment sector. Rather than being the result of official interactions and pledges between Maseru and Beijing, Lesotho’s garment factories are the result of several privately-owned Taiwanese firms and some Mainland firms’ relocation of their assembly operations to Lesotho, in order to take advantage of tariff-free acces to the U.S. market under the African Growth and Opportunities Act. Today’s FT article acknowledges that the Lesotho textile industry is predominantly Taiwanese-owned, and implicitly asks the question whether the lack of Basotho-owned garment factories is somehow symptomatic of a larger problem of foreign takeover of the local economy.

While it is certainly true that the Lesotho government could, and should do more to encourage effective skills transfer in the garment industry and better entrepreneurship training for Basotho overall, Lesotho is not an unusual victim of globalisation in having a foreign dominated assembly sector . China itself has long been a manufacturing hub for foreign companies. Like Lesotho, China’s largest private employer is a Taiwanese firm – in China’s case it is electronics giant Hon Hai Precision Industry (Foxconn), whose assembly lines manufacture the iPad, iPhone, iPod, Kindle, PlayStation and Wii U devices. However, unlike Lesotho, China has succeeded in learning from foreign investors and moving up the global manufacturing value chain. As Mr England’s article points out, the Basotho have not used the experience of hosting foreign manufacturers to set up their own garment manufacturing operations: “in spite of Lesotho’s hosting of the industry for a decade, there are no Basotho textile factories.” While the need for the skilling of the Basotho labour force is a pressing one, there is little evidence to suggest that the successes of individual shopkeepers described at the start of today’s FT article are related in any significant way to Chinese involvement in the garment industry.

Outside a Taiwanese-owned textile factory in Maseru.

Outside a Taiwanese-owned textile factory in Maseru.

Inside a Taiwanese-owned textile factory in Maseru

Inside a Taiwanese-owned textile factory in Maseru

This leaves us with Lesotho’s community of Chinese traders, most of whom hail from China’s Fujian province, and who are increasingly the target of xenophobia and xenophobic violence because of their perceived takeover of the country’s retail sector. Mr England  describes his interview with the Chinese owner of a clothes shop in Lesotho. He asks the proprietor how many shops his family owns. “Too many” is his reply.

The author is right to point out that many Basotho are increasingly disgruntled with the presence of Chinese traders across their country. He is also right to hint that there is a risk that this sinophobia could affect the large-scale foreign investments that Lesotho desperately wants and needs. However, the article lacks some clarity when it comes to defining the relations between these groups of ‘Chinese’ players in Lesotho.These are important distinctions to make, not least because of the high level of mutual distrust between Chinese government officials, Taiwanese factory owners and Fujianese traders in Lesotho.

As Mr England’s article point’s out, it is the traders who have attracted the brunt of anti-Chinese sentiment from the Basotho. However, in spite of this, the Chinese embassy in Maseru has done little to support these traders, and it certainly had nothing to do with their entry into Lesotho in the first instance. During the xenophobic riots of 1991, the Chinese embassy in Maseru shut its gates in the face of distressed Fujianese who sought help there. Given that many of these traders probably entered Lesotho through illegal channels, they represent little more than an embarrassment to the Chinese state, which continues to portray its engagement in Africa as having “no strings attached,” and is keen to dispel rumours that Beijing is using Africa as a dumping ground for convicts and unwanted citizens. These traders are often the subject of derision and condescension by Taiwanese investors in Lesotho, who view them as being of lower ‘quality’ (素质) than themselves. Based on my experiences, the Taiwanese in Lesotho are broadly resentful of Fujianese traders, who they blame for spoiling the reputation of ‘Chinese’ people in the country.

A sign advertising a Fujianese-owned furniture store in Lesotho.

A sign advertising a Fujianese-owned furniture store in Lesotho.

A sign advertising a Fujianese-owned furniture & hardware store in Lesotho.

A sign advertising a Fujianese-owned furniture & hardware store in Lesotho.

Today’s FT article does well to set out the dilemma facing African leaders seeking deeper ties with China. Lesotho’s prime minister is quoted as saying “the compensation we are looking for is not to kick out a chap who has a shop and so on but rather to increase the more useful part of our co-operation with China”. Herein lies the crux of the issue: both African leaders and ordinary Africans like the despondent shopkeeper at the beginning of the article need to realise that different risks and opportunities can arise from engagement with different ‘Chinese’ players in Africa. The growing proliferation of these risks and opportunities means that the need for nuance has never been greater.

–      Views expressed are entirely the author’s own unless stated otherwise –

COVER IMAGE: The new Chinese-built parliament building in Maseru.

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