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Opinion and Analysis

China firms in Kenya increasing despite hurdles in labour laws, skills shortage

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The Standard Gauge Railway being built by China Road and Bridge Corporation. PHOTO | FILE

The Standard Gauge Railway being built by China Road and Bridge Corporation. PHOTO | FILE 

By ARTING LUO

Posted  Wednesday, January 11   2017 at  18:29

There are more than 400 Chinese companies in Kenya and a Chinese population of around 50,000 people.

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It may sound exaggerated but when you look at the standard gauge railway being built by China Road and Bridge Corporation, the Thika Road constructed by China Wu Yi Co Ltd and the recent China Trade Week hosting 16,000 visitors, the figures become real.

What does this mean to local Kenyan businesses? With the limited interaction between the new Chinese community and local businesses, the Chinese presence is perceived by many as a threat and there are many myths about them.

As researchers, we interviewed 75 Chinese companies in Kenya, which indicated that there is indeed a market for them locally.

We asked Chinese companies about the challenges they are facing in doing business in Kenya and published a report, Business Perception Index: Survey on Chinese Companies’ Perception of Doing Business in Kenya. The report discusses issues of workforce, security and legal struggles as they relate to the companies.

The recurring theme about Chinese companies is that they bring Chinese workers from home and never give jobs to locals. Statistics, however, contradict the popular assumption.

In Kenya, 93 per cent of Chinese companies hire local workers and the remaining seven per cent are mainly micro companies with less than five employees.

Up to 78 per cent of full-time employees in Kenya-based Chinese companies and 95 per cent of their part-time employees are Kenyans.

From the research, Chinese companies complain about the lack of some skills in Africa, which forces them to bear the high costs of bringing Chinese workers, which costs them 7-8 times more than they would pay locals.

According to data collected from nine large construction companies in Kenya, a demand gap of more than 800 skilled labour cannot be fulfilled in a single month (June 2016).

Skills needed vary from trades requiring 2-3 year training such as bulldozer driving, to more common trades such as bricklaying and steel fixing.

Apart from technical skills, Chinese employers are particularly concerned with the lack of soft skills and work ethic in local talents with many workers not being punctual, being in need of close supervision, often absent after pay days and many lacking sound financial and management skills.

The reality is that there is an underexplored market for human-resource or micro-project sub-contractors.

As solution providers, African companies can source quality talent based on their local networks and knowledge, provide trainings according to employer requirements and manage the workforce to complete tasks assigned by the companies, or simply contract them out to companies.

Thus, local human resource providers will be able to capture good profits by saving Chinese companies painful human resource management work and related expenses.

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