Implications for Africa

Procurement opportunities from Chinese original equipment manufacturers (OEMS): African companies need to familiarize themselves with their product origins as tiepai can unnecessarily increase the cost burden. Various international firms have spent time and money to develop suppliers and put in place internationally recognized quality controls, but some Chinese firms are making strides and in most cases can export their own brands emerging from the same factories. With some due diligence and groundwork African firms can benefit from this trend.

Rethinking “Made in China”: A company had been procuring from Europe for years. Efforts to convince them to explore the manufacturing options in China were unsuccessful. It was only after competition from China started to eat into their market share that they finally ventured into China.

Then much to their astonishment, they found their European supplier had been producing under the OEM for over a decade, while they had been paying three to four times the price for the same products!

Made in China 2025 vs. Africa’s development requirements: China is placing renewed emphasis on improving agricultural machinery and medical equipment in its manufacturing country plan. At the same time, there is a great need for mechanization across Africa. The potential to reduce costs in agriculture while increasing yields stands out as an opportunity.

On the other hand, China’s setting its sights on developing high-performance medical devices also has the potential to reduce health costs. It has been said that in Africa, “the Chinese build hospitals, but India staffs and supplies them.” China’s manufacturers are looking to challenge this phenomenon and it could be a boon for Africa’s health sector.

Chinese firms face an uphill battle in developing their brands in a way that will challenge the perception of cheap, poor quality products. Meanwhile foreign firms, looking to earn cost savings while at the same time procuring quality products, are advised to seek to understand China’s rapidly shifting manufacturing sector and re-calibrate their procurement managers’ view of China as a sourcing destination. (Walter Ruigu is managing director of the CAMAL Group, a trade and investment advisory firm based in Beijing, Nairobi and Lusaka)