Chinese investments in the Zambian textile and clothing industry and their implications for development.

Date
2012-03
Authors
Eliassen, Ina Eirin
Journal Title
Journal ISSN
Volume Title
Publisher
Stellenbosch : Stellenbosch University
Abstract
ENGLISH ABSTRACT: This thesis is a contribution to the “China in Africa” debate. Chinese development assistance includes Foreign Direct Investment (FDI), and recent literature argues a significant proportion of FDI goes to the manufacturing sector in African countries. FDI allocated to industry have the potential to create employment and reduce poverty. This paper takes Zambia as a case, and looks at the textile and clothing industry as a sub- sector of the manufacturing sector. The textile and clothing industry is seen as especially appropriate for Zambia, as it; (i) adds value to natural resources; (ii) creates links to other sectors of the economy; (iii) require only basic skills; and (iv) is labour intensive. Based on primary and secondary data, this paper seeks to understand how Chinese FDI in the Zambian textile and clothing industry impact economic development, measured by; (i) formal employment creation; (ii) technology and skill transfer; (iii) state revenue; and lastly (iv) market creation of the products. Through looking at Zambian national plans and institutions, the cotton-textile-garment value chain and the organisation of Chinese companies in Zambia, this paper found currently no textile and clothing manufacturing under Chinese investors. Although, cotton quality in Zambia has improved, the majority is exported out of the continent. There are currently few textile mills left and the clothing manufacturers largely use imported inputs. Second hand clothes and cheap imports from Asian countries, have taken over large parts of the domestic market for textile and clothing in Zambia. The largest integrated textile mill was the Zambia China Mulungushi Textiles (ZCMT) operating under Chinese investors between 1997 and 2007. Findings show that the Chinese management casualised the workforce, leading to more informal employment. In addition, there were few records of skill transfer to Zambian workers, although there were investments in improving technology. This paper explores the different reasons for the TC mill to close and argue that it was not viable under a liberal market. The Zambian workers were unhappy with the labour system, wage levels and terms of employment, which caused violent riots and strikes up until closure in 2007. The Chinese management was unable to restructure the work force enough to be cost effective and to stay in business. The Lusaka East Multi Facility Economic Zone (MFEZ) is under construction, and will focus on textiles and the supportive links in the industry. It is yet to be seen, how it impacts local economic development. Based on the assumptions of economic development, this paper shows limited impact of Chinese FDI in the Zambian textile and clothing industry.
AFRIKAANSE OPSOMMING: Hierdie tesis is 'n bydrae tot die "China in Afrika” debat. Die Chinese ontwikkelings hulp sluit buitelandse direkte investering (FDI) in, en die onlangse literatuur beweer dat 'n belangrike deel van FDI na die vervaardigingsektor in Afrika-lande gaan. FDI toegeken aan die industrie het die potensiaal om werk te skep en armoede to verminder. Hierdie verhandeling neem Zambië as 'n geval, en kyk na die tekstiel-en klere-industrie as 'n subsektor van die vervaardigingsektor. Die tekstiel en klere bedryf is veral geskik vir Zambië, daar dit; (i) waarde toevoeg tot natuurlike hulpbronne; (ii) skakels skep na ander sektore van die ekonomie; (iii) slegs basiese vaardighede word vereis; (iv) arbeidsintensief is. Deur middel van primêre en sekondêre data, word in hierdie verhandeling gepoog om die impak van die Chinese FDI in die Zambiese tekstiel-en klere-industrie, op die ekonomiese ontwikkeling vas te stel, soos gemeet aan; (i) formele werkskepping; (ii) tegnologie en vaardigheids oordrag; (iii) die staat se inkomste; en laastens ( iv) die skepping van ‘n mark vir die produkte. Deur te kyk na die Zambiese nasionale planne en instellings, die katoen-tekstiel-kleed waardeketting, en die organisasie van die Chinese maatskappye in Zambië, het hierdie verhandeling bevind dat daar tans geen tekstiel-en klere vervaardiging onder Chinese beleggers is nie. Hoewel die gehalte van die katoen in Zambië verbeter het, is die meeste buite die vasteland uitgevoer. Daar is tans min tekstielfabrieke oor, en die klerevervaardigers gebruik grootliks ingevoerde insette. Tweedehandse klere en goedkoop invoere uit Asiatiese lande, het grootliks die binnelandse mark vir tekstiel en klere in Zambië oorgeneem. Die grootste geïntegreerde tekstiel fabriek was die Zambië China Mulungushi Textiles (ZCMT) wat tussen 1997 en 2007 onder Chinese beleggers was. Bevindinge toon dat die Chinese bestuur niepermanente aanstellings gemaak het, wat gelei het tot meer informele indiensneming. Verder, is daar min rekord van vaardigheids-oordrag na die Zambiese werkers, maar daar was beleggings in die verbetering van tegnologie gedoen. Hierdie verhandeling ondersoek die verskillende redes vir die TC meul/fabriek se sluiting, en bevind dat dit nie lewensvatbaar in 'n vrye mark was nie. Die Zambiese werkers was ontevrede met die arbeidstelsel, loonvlakke en terme van indiensneming, wat gewelddadige onluste en stakings veroorsaak het tot die sluiting in 2007. Die Chinese bestuur was nie in staat om die arbeidsmag te herstruktureer om koste-effektief genoeg te wees nie. Die Lusaka-Ooste Multi Fasiliteit Ekonomiese Sone (MFEZ) is onder konstruksie en sal fokus op die tekstiel en die ondersteunende skakels in die bedryf. Dit moet nog gesien word hoe dit die plaaslike ekonomiese ontwikkeling beïinvloed. Op grond van die aannames van ekonomiese ontwikkeling, toon hierdie ondersoek ‘n beperkte impak van die Chinese FDI in die Zambiese tekstiel en klere bedryf aan.
Description
Thesis (MA)--Stellenbosch University, 2012.
Keywords
LDCs, Theses -- Political science, Dissertations -- Political science, China -- Foreign economic relations -- Zambia, Textile industry -- Capital investment -- Zambia, International economic relations
Citation