Will Africa Be The Next Generation Of Textile Manufacturing Center?

In recent years,

According to the statistics of Ministry of Commerce,

Africa is one of the fastest growing economies in the world, according to the International Monetary Fund (IMF) report, which shows that the overall economic growth rate in Africa over the past ten years has almost been higher than the global average.

In recent years, in search of sustained economic development and breakthroughs, many African countries are also actively creating a more friendly investment environment to attract foreign investment. This will undoubtedly become a great opportunity for Chinese enterprises to develop "one belt and one road" emerging market.

Africa has 55 countries and 1 billion 200 million population. The overall GDP has been growing steadily for 5% consecutive years. In the next five years, IMF also predicts that the region's economic growth rate will continue to exceed the global average.

At the same time, the population of Africa has also increased at an alarming rate.

According to the United Nations report, the current global population of about 7 billion 600 million people, is expected to increase to 9 billion 800 million people in 2050, of which Africa will contribute more than half of the world's population growth.

The number of African continent population is expected to double by 2 billion 500 million.

That is to say, one out of every 4 earth people comes from Africa.

At present, the pace of "going out" of China's textile industry is increasing. The African continent with great investment potential is a new destination for Chinese textile enterprises to focus on and explore opportunities for cooperation.

Ethiopia, Egypt and other countries have landed many investment projects in China's textile and clothing industry.

Textile and clothing industries play an important role in helping African countries to shake off poverty. Ethiopia is a case in point.

Ethiopia has lower production costs, and multinationals such as Swedish clothing retailer H&M and British chain supermarket Tesco have planned to set up garment processing plants in Ethiopia, and the textile and garment industry has attracted substantial growth in foreign investment.

The latest figures released by the Ministry of industry of Ethiopia show that the rapidly developing textile and garment industry has brought nearly $90 million to the country in the 2016 to 2017 fiscal year.

The newly completed industrial park, which is built with overseas investors (mainly from China), has spread all over the country, which has led to the growth of the local textile and garment industry.

In recent years, Ethiopia's textile and clothing exports have also increased dramatically. The export products are mainly clothing, yarn, textile fabrics and cultural clothing.

Ethiopia currently has about 100 million people, of whom labour force accounts for half.

According to world bank data, the total labour force in Ethiopia has exceeded 50 million mark in 2017, and is the second largest labor force country in Africa after Algeria.

Moreover, Ethiopia has more infrastructures such as water, electricity, railways and roads, which are more perfect than Algeria. At the same time, the labor cost is low (about $3 per day), which is cheaper than many Southeast Asian countries. With the increasing quality of education and popularization of the labor force, the whole workforce is highly competitive and is called "the last pure land of manufacturing industry".

According to the world trade development investment report released by the United Nations Conference, Ethiopia attracted nearly half of foreign capital of 7 billion 600 million dollars in East Africa in 2017.

In 2017, the plant was set up by the US PVH company (supplier of CK and Tommy Hilfiger), Dubai Velocity Apparelz (supplier of Levi's, Zara and Andrea) and China Jiangsu Sunshine Group (Armani and Hugo Boss supplier).

Mina Textile Co., a Chinese textile enterprise, has invested in Zhejiang's labor resources and related preferential incentives. In the past 10 years, it has invested in timber, spinning, dyeing and printing projects in the past 100 million years, with a total investment of US $100 million.

Among them, the spinning project bought the largest state-owned textile enterprise in the country.

In 2016, Mina invested $64 million to buy more than 30 mu of land, built a printing and dyeing workshop with an area of 36 thousand square meters, and 5 production lines including knitting, weaving, printing and dyeing.

Production equipment is mainly from Korea, Japan, Italy and the United States and other countries, the products are sold to the European and American markets.

Looking at the advantages of Ethiopia's investment environment, apart from having an abundant and educated workforce, the country has also provided many deregulation and preferential treatment at the level of domestic regulations and international trade bills.

For example, the new decree issued by the Ethiopia government in 2014 stipulates that most of the raw materials and auxiliary materials imported for processing garments are duty-free, which effectively solves the investors' dilemma of tariff tariff rate of up to 35% of the clothing and accessories of Ethiopia in the past, and encourages foreign investors to invest in the textile and garment industry.

At the same time, Ethiopia is also known as the "African Growth and Opportunity Act" (AGOA), the European Union's "Everything but Arms" and Africa's "East".

"Membership" not only allows foreign investors to invest in factories in the country to sell goods to the United States and the European Union, but also to export to 23 African countries with a total tariff of 300 million people, with unlimited market potential.

China's labor-intensive industries can actively grasp the advantages of Ethiopia's production and tax burden, and at the same time, with reference to local experience of Chinese enterprises, vigorously develop new markets.

Africa, the next textile manufacturing center?

Many African countries have listed the textile industry as a key development industry and have their own advantages in developing the textile industry.

For example, the textile industry in Egypt is a traditional field. Egypt has a relatively complete textile production chain, and the textile market is the best in Africa. In Lesotho, the textile industry has become the largest employment pillar, almost 50% of the official employment and the mature labor force. The Namibia government has issued a series of regulations to encourage and protect foreign investment, especially the preferential policies in the export processing zone. The advantages of Mozambique's textile industry in attracting foreign investment are mainly domestic political stability, the production of high-quality cotton, the low cost of land and labor.

More advantageously, the country can provide investors with a share of market access to textiles.

"Made in Africa" is a common expectation of the local people in Africa.

China hopes to help Africa complete its industrialization. Tian Xuejun, Chinese ambassador to South Africa, said at the 2016 Johannesburg summit of China Africa Forum that China hopes to turn "made in China" into "made in China and Africa".

Under the call of the state and the overall planning, many Chinese enterprises with capital and technological advantages have gone to Africa to invest and build factories, not just ordinary clothing, leather products, plastic products and shoes have begun to pform into "African Manufacturing".

Chinese enterprises, while acquiring a large number of low-cost labor and raw materials, have also promoted the development of textile and garment manufacturing industry in African countries and achieved mutual benefit and win-win results.

The great potential of Africa's development of textile and garment industry has always been a common consensus. However, due to various factors, Africa's development to become the next textile industry center remains to be seen.

1. infrastructure problems

Over the past more than 10 years, some countries in Southeast Asia, such as Vietnam and Bangladesh, have become a strong participant in the world's textile and clothing free trade and become a strong competitor in China's overseas orders for textiles and clothing.

Africa's import and export trade in textiles and clothing accounts for a small proportion of world trade. Their textile industry, in general, is still mainly processed from processed materials, and the added value of its exports of textiles and clothing is very low.

Because compared with Southeast Asian countries, the textile industry in most African countries has a weak foundation and is at the initial stage. It faces problems such as backward production technology, outdated equipment, shortage of skilled personnel, tight labor relations and confusion in management.

The trend.

At present, Chinese enterprises have to build a factory in Africa and have to face a series of problems such as inadequate infrastructure such as water, electricity, pportation and so on. For example, pportation costs from Rwanda Kigali to Kenya port Mombasa are often higher than those pported from Mombasa to Guangzhou. In terms of power generation, more advanced Nigeria still has power outages during the summer peak period, and enterprises need to have their own power generation equipment or power plants.

All these increase the cost of investment.

2. environment of public order

Security is also an important factor for investment in Africa.

In recent years, the traditional security problem in Africa has been alleviated, but it has not disappeared completely. There are still some outbreaks, mainly in the handover crisis, military coup and social order.

Many African countries have unstable political situation, poor social security and high crime rate.

At the same time, non-traditional security issues in Africa are becoming more and more serious and become the most serious security threats.

Such as trialism, "resource curse", piracy, infectious diseases, climate change, lagging economic development, low governance capacity, interference from foreign forces and infiltration of terrorism seriously affect the economic and social development in Africa.

Traditional security problems and non-traditional security problems are intertwined, making the sense of security of the African people missing, and the normal production and operation of enterprises are also threatened.

Professionals suggest that textile enterprises invest in Africa must be careful and meticulous to investigate, combine investment in Africa with the development strategy of enterprises, and do not blindly act.

When choosing a country of investment, we should take into consideration the factors of political stability, the rule of law environment, the perfection of supply chain, the comprehensive production cost, the talent reserve and logistics and so on.

In addition, we should take into account the factors of market access costs and give priority to countries that have preferential regional trade arrangements with export target markets. For example, the main export to the US should be the beneficiary countries of the African Growth and Opportunity Act (AGOA).

With the sustained efforts of African governments represented by Ethiopia and Egypt in attracting investment in textile and clothing industry, more and more African countries have begun to attach importance to it.

We hope to accelerate the upgrading of our industries through international cooperation and set up African characteristics.

And provide more job opportunities.