Economy

The Rise Of 'Made In Ethiopia' — With The Backing Of Beijing

Women workers sowing children's underwear at a modern textile factory in Addis Abeba, Ethiopia
Women workers sowing children's underwear at a modern textile factory in Addis Abeba, Ethiopia
Emeline Wuilbercq

HAWASSA — Peter Wan is smiling from ear to ear. The 50-year-old walks past huge warehouses, where dozens of Ethiopians are busy working on spinning and thread-dyeing machines. "We are in the production test stage," he says, at the Chinese factory of JP Textile at the entrance of the industrial park of Hawassa, some 270 kilometers south of the Ethiopian capital of Addis Ababa.

Soon, the labor force will transform the thread imported from China into cloth fabric, explains Wan. Then this fabric will be shaped into "Made in Ethiopia" shirts for brands such as Calvin Klein or Tommy Hilfiger, so they can be exported to wealthy customers in Europe and the United States. This park, which was built by the Chinese in just nine months, is officially operational. But it has not yet started to export garments.

The $260 million project is proof of the quick industrialization of Ethiopia. China, its first trade partner, is leading this process: whether it's construction, transportation, or telecommunications, Beijing has invested in all sectors in this Horn of Africa country, the continent's second most populous nation with nearly a 100 million inhabitants. China has also built a new railway between Addis Ababa and Djibouti.

Deprived of free access to the sea since neighboring Eritrea became independent in 1993, Ethiopia needs Djibouti, a small country through which it routes 95% of its exports. China is also betting on this area to be an important part of its "new silk roads' project.

Through the Suez Canal, transportation to Europe from Djibouti only takes a couple of days. The same goes for central Asia, through the Indian Ocean. Such ambitious plans require infrastructure to make the trade of goods easier. China is ahead in Ethiopia, where it has already built roads, a highway, and where its influence is doubtless.

All in all, the 279 Chinese companies operating in Ethiopia registered more than $550 million in financial capital over the past five years. In 20 years, Chinese investments have totaled more than $4 billion and are said to have created 111,000 jobs.

A mainly farming country, Ethiopia wants to become the "industrial hub" of Africa. To become a middle-income country by 2025, Addis Ababa is strictly applying the second phase of its growth and development plan (GTPII) with Beijing's unfailing support.

Better than Bangladesh

For now, the manufacturing sector only represents 5% of the country's GDP. On July 8, top Ethiopian authorities and foreign investors inaugurated with great pomp the industrial park of Kombolcha, 380 kilometers north of the capital. The following day, it was the inauguration of another park, this time in Mekele, 760 kilometers north of Addis Ababa. The Chinese want to make the most of Ethiopian industries such as textile and clothing, which should soon turn the country into a new Bangladesh. "Even better than Bangladesh," says Yang Nan, the president of JP Textile.

Yang Nan knows what he's talking about. The Wuxi Jinmao Foreign Trade Company, where he chairs the executive board, has been producing fabric in Bangladesh for 12 years. Only five months after his first trip to Ethiopia, he decided to open branches here: JP Textile now stands in Hawassa and C&H Garment is housed in Bole Lemi, another industrial park, near Addis Ababa.

"Ethiopia has two advantages," he says. On the one hand, he says, there is a profusion of cheap energy harvested from hydroelectric projects across the country. On the other, there's the possibility of benefiting from tax exemptions thanks to the African Growth and Opportunity Act.

A textile factory in Addis Abeba, Ethiopia — Photo: Kay Nietfeld/ZUMA

It is this American piece of legislation that allows some African countries, including Ethiopia, to be exempted from customs duties for goods exported to the U.S., to ensure the economic development of the continent. "Everyone knows the U.S. is the biggest textile importer across the world," Yang Nan says.

"In some ways, Ethiopia can represent a Trojan horse for Chinese firms who want to use the country as a re-exportation hub towards more promising markets," says Xavier Aurégan, an independent researcher for the French Institute of Geopolitics.

Another major advantage for Ethiopia is the country's young, cheap and abundant labor force. "Labor cost here is the lowest in the world," says Yang Nan — just like China 30 years ago. But nowadays the average wage in China is more than $800 a month, too much to remain the world's factory. China's future therefore depends on Ethiopia, where there is no minimum wage.

At JP Textile, for instance, most workers are paid less than $35 a month. Isn't this exploitation?

"Workers don't go to the factory threatened with a gun to their head," says Arkebe Oqubay, special counsel to the Ethiopian Prime Minister and author of the 2015 book Made in Africa: Industrial Policy in Ethiopia.

I haven't punished anyone — yet

While there is no gun, there certainly is apprehension. By relocating its factories, China is also exporting the country's work methods and discipline. At JP Textile, workers who arrive late have to do push-ups or clean up the storehouse, says Selam Negusie, a 23-year-old supervisor, who was trained in Wuxi on China's eastern coast, and speaks fluent Mandarin.

She says it's in China that she learned "hard work and punctuality" — two values written on banners everywhere around the factory, and translated into English, Mandarin, and Amharic, the official language of Ethiopia.

"When the Chinese scream at you, they're doing it in a positive way!" she says.

"To develop an industry, we need hardworking people," adds Yang Nan.

The goal here is to train local supervisors who will take over from their Chinese counterparts. And their methods?

"I haven't punished anyone yet but, if I have to, I will," Negusie says. Rumor has it that in some Chinese factories like Huanjian, one of the world's biggest shoemakers, some Chinese supervisors don't hesitate to hit workers with shoes to punish them during their training.

China is Ethiopia's "most reliable partner," Chinese Foreign Minister Wang Yi said during his visit to Addis Ababa in June.

"Until now, China has been the most generous with us," says Arkebe Oqubay. He sweeps away accusations of neo-colonialism. "Who blames China? The formers colonial powers. Ethiopia doesn't have any preferences for any country. We are only taking care of our own interests."

This is a "win-win partnership," says Sisay Gemechi, CEO of the Ethiopian Industrial Parks Development Corporation, adding that the country needs China because it needs investment and infrastructure.

Nevertheless, "Ethiopia represents only 2% of the commercial relations between China and Africa," says Xavier Aurégan, the French researcher. Indeed, the African country imports 90% of finished products from China, which makes the trade balance highly uneven. Despite the advantages, the business climate is complex in Ethiopia and transportation costs are high.

"Ethiopia is not the only one to dream about all the possibilities China is offering: Djibouti, Kenya and Tanzania could be serious competitors to attract Chinese capital and projects," Aurégan warns. In any case, the two countries will continue to have a good relationship. The Chinese-Ethiopian industrial park of Dongguan is under construction in the suburbs of Addis Ababa. In 2020, it will be the country's biggest special economic zone.

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Green

In Argentina, A Visit To World's Highest Solar Energy Park

With loans and solar panels from China, the massive solar park has been opened a year and is already powering the surrounding areas. Now the Chinese supplier is pushing for an expansion.

960,000 solar panels have been installed at the Cauchari park

Silvia Naishtat

CAUCHARI — Driving across the border with Chile into the northwest Argentine department of Susques, you may spot what looks like a black mass in the distance. Arriving at a 4,000-meter altitude in the municipality of Cauchari, what comes into view instead is an assembly of 960,000 solar panels. It is the world's highest photovoltaic (PV) park, which is also the second biggest solar energy facility in Latin America, after Mexico's Aguascalientes plant.

Spread over 800 hectares in an arid landscape, the Cauchari park has been operating for a year, and has so far turned sunshine into 315 megawatts of electricity, enough to power the local provincial capital of Jujuy through the national grid.


It has also generated some $50 million for the province, which Governor Gerardo Morales has allocated to building 239 schools.

Abundant sunshine, low temperatures

The physicist Martín Albornoz says Cauchari, which means "link to the sun," is exposed to the best solar radiation anywhere. The area has 260 days of sunshine, with no smog and relatively low temperatures, which helps keep the panels in optimal conditions.

Its construction began with a loan of more than $331 million from China's Eximbank, which allowed the purchase of panels made in Shanghai. They arrived in Buenos Aires in 2,500 containers and were later trucked a considerable distance to the site in Cauchari . This was a titanic project that required 1,200 builders and 10-ton cranes, but will save some 780,000 tons of CO2 emissions a year.

It is now run by 60 technicians. Its panels, with a 25-year guarantee, follow the sun's path and are cleaned twice a year. The plant is expected to have a service life of 40 years. Its choice of location was based on power lines traced in the 1990s to export power to Chile, now fed by the park.

Chinese engineers working in an office at the Cauchari park

Xinhua/ZUMA

Chinese want to expand

The plant belongs to the public-sector firm Jemse (Jujuy Energía y Minería), created in 2011 by the province's then governor Eduardo Fellner. Jemse's president, Felipe Albornoz, says that once Chinese credits are repaid in 20 years, Cauchari will earn the province $600 million.

The Argentine Energy ministry must now decide on the park's proposed expansion. The Chinese would pay in $200 million, which will help install 400,000 additional panels and generate enough power for the entire province of Jujuy.

The park's CEO, Guillermo Hoerth, observes that state policies are key to turning Jujuy into a green province. "We must change the production model. The world is rapidly cutting fossil fuel emissions. This is a great opportunity," Hoerth says.

The province's energy chief, Mario Pizarro, says in turn that Susques and three other provincial districts are already self-sufficient with clean energy, and three other districts would soon follow.

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