Opportunities that firms can use from the boom in China
A technician makes last-minute checks on a helicopter in Beijing. China has opportunities for traders. AFP
The saying goes that on the first day God created Adam and Eve, everything else was made in China. China has transformed itself into a manufacturing workshop floor. Like it or not, China is a world economic powerhouse of the 20th century.
In the early years of the last decade, many factories closed their factories in the US, moving to set up in China. This action was precipitated by the cheap labour available in the world’s most populous country. In economic terms, China is attractive to any capitalist.
First, China never cares about politics. It was the only country bold enough to defy the sanctions against the Sudan to do business with President Bashir, the man wanted by the ICC.
Secondly, China is politically and economically stable. While the opportunities in China were available elsewhere, it delivered on good politics, assuring investors of stability.
But more importantly, China has intentionally undervalued its currency to make its goods accessible to traders from other countries that might be restricted by high foreign exchange rates.
The resultant effect of this economic strategy is that China has become a key trading partner to African counties. According to UNCTAD, African exports to China rose from US$ 4.2 billion in the year 2000 to US$ 38 billion in 2009; the size of the Kenyan GDP.
With the world economy opening up eastward, many Kenyan traders are exploring new opportunities in the Orient. There are real opportunities in trading with China.
The imported products range from auto parts, phone accessories, mobile phones, electrical appliances, telecommunications equipment, transport machinery and of late even fashion items.
On the other hand, the oriental country has been accused of only being interested in oil, mineral resources and raw materials from Africa, a claim that the statistics seem to support. In the Kenyan case however, China has shown interest in our infrastructure contracts.
One important and surprising factor is that China has a trade deficit with Africa. One of the most important lessons that Kodak learnt the hard way is that you have to change with the times. If you are trading in manufactured goods, the next big thing is Chinese.
Odhiambo is the managing consultant of Elim Consulting.
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