Wednesday, December 26, 2012

Chaina Shoeing into Ethiopia|Business|

Shoeing into Ethiopia
Seyoum Mesfin, Ethiopian ambassador to China, says his country prefers the non-intervention policy that Chinese investors follow when doing business there. Zhao Yanrong / China Daily
East African country welcomes Chinese manufacturers to take on a larger presence
As China's labor, manufacturing and resources costs continue to rise, Ethiopia, one of the least-developed countries in the world is hoping Chinese companies will consider opening more factories there.
"China is one of our country's main donors in building infrastructure, a big constructor and a major technology provider," said Seyoum Mesfin, Ethiopian ambassador to China. "But China will also be a major factory owner in Ethiopia and a big market for products made in Ethiopia in the future.
"Chinese companies are assembling goods in Ethiopia to ship back to China, which is more profitable than producing in China today."
Mesfin said a good labor supply, low energy costs and high-quality materials support development in his country.
It was with plentiful labor, low-cost manufacturing and an export-driven economy that China accomplished its rapid development over the past three decades, and that is the model Ethiopia wants to borrow from.
To follow in the footsteps of Chinese constructors and engineers of its infrastructure, the Ethiopian government has been inviting more manufacturers in recent years, making two industrial zones available for entrepreneurs to set up business.
Huajian, a shoe maker, is one of the best known Chinese manufacturers in Ethiopia.
The company is an original equipment manufacturer from Dongguan in Guangdong province for leading global brands such as Calvin Klein, Coach and Louis Vuitton. After a meeting Ethiopian senior government officials last year, Huajian opened its factory near the country's capital, Addis Ababa, using an investment of $2 billion, which will create more than 100,000 jobs for local communities over the next decade.
"Ethiopia is an important manufacture base for us since we are going to be the OEM for world brands," Zhang Huarong, chairman of Huajian International Group, said during the World Footwear Development Forum in Dongguan last November.
Zhang said a manufacturer should not only be able to build its own reputation, but also should be able to help others by providing insight on global strategy.
"Within China, there are few opportunities to extend our manufacturing capability quickly," he said. "The best we can do is to maintain the status quo. But in Ethiopia, which is like China 30 years ago, we find many possibilities to make our business even bigger, with sufficient supplies of raw materials and labor. It's a beneficial business for the company and local people."
By the end of April, the company had opened three assembly lines in Ethiopia and hired 630 local workers in addition to 160 Chinese employees. A big contributor to Ethiopia's international trade, Huajian produces more than 2,000 pairs of shoes a day, all exported to Europe and the United States.
Three more Chinese companies started operating in Ethiopia in September and October.
"It's exciting to see more Chinese companies moving to Ethiopia," the ambassador said. "They bring excellent experience to our garment and textile industry."
With 85 million people, Ethiopia is the most populous country in East Africa. The ambassador said more than half of the population is engaged in productive labor. The average wage for workers in Addis Ababa is 300 yuan ($48) per month, a quarter of that in Dongguan, one of China's main manufacturing bases.
"We also have plenty of hydropower and wind power," Mesfin added. "In almost all major infrastructure programs in Ethiopia, you can find a Chinese company's footprint. They help us collect more natural resources and lower the cost of energy, which has become a major attraction for international investors."
The Ethiopian government said China is the third-largest foreign investor in the country by direct investment volume, which to date totals $364 million. The funds are distributed across the automobile, textile, hotel and machinery equipment sectors, and in the manufacturing of products for general use.
In an interview with China Daily earlier this year, Ethiopia's then-prime minister Meles Zenawi said he highly valued China's role in his country's development.
"Many countries can see those advantages and opportunities in Ethiopia," Mesfin said. "Chinese companies didn't get those contracts easily. They are winning in a very competitive market."
Compared with Western countries, which are the usual investors in Africa, Mesfin said they prefer the way Chinese investors do businesses in his country.
"Chinese investment has a very good policy of non-intervention in internal affairs," he said. "This doesn't mean that China does not care about the situation of African's human rights or democracy. The highest-level investments from Western countries are attached to concerns about those issues, which damages prospects."
To encourage more Chinese investment in Ethiopia, the embassy will host a weeklong event in Beijing next year to promote business opportunities and improve cultural exchanges between the countries.
Thousands of Ethiopian students are studying in Chinese universities. Besides learning about China, they also attend activities at their schools to introduce Ethiopian culture to Chinese friends.
"Our relationship is based on cultural exchanges at the people-to-people level," said Mesfin. "The more we understand each other, the better we can cooperate and seek common interest together. We welcome friends in China to come to our Ethiopian Week in Beijing next year to get to know us better."
Contact the writers at and
(China Daily 12/25/2012 page13

Sunday, December 16, 2012

World Bank praises Ethiopia's battle against runaway inflation-PANA

Ethiopia's battle against runaway inflation - The World Bank has praised Ethiopia for initiating reforms to reduce the runway inflation and reduce public debt to manageable levels, in a new report indicating ambitious goals to cut poverty are within reach.
Ethiopia’s economy has been growing at twice the rate of the Africa region over the past decade, averaging 10.6% of the Gross Domestic Product (GDP) yearly between 2004 and 2011, compared to 5.2 percent in sub-Saharan Africa, according to the report released Friday.
“Ethiopia has made progress in tackling the persistently high inflation which affected the economy over the past two years by tightening its fiscal and monetary stance,” it noted.
Annual inflation dropped from 33% in 2011 to 15.8% in October 2012, while public debt is on a declining trend at 35% of GDP in 2011/12. Ethiopia has a low risk of external debt distress.
“This is good news for the poor and for the overall economy,” World Bank Country Director for Ethiopia Guang Zhe Chen said.
“The Government target to reduce poverty to 22.2% by 2014/15 is ambitious but attainable,” the World Bank official said.
Some 2.5 million people in Ethiopia have been lifted out of poverty over the past five years as a result of strong economic growth, bringing the poverty rate down from 38.7% to 29.6% from 2004/05 to 2010/11.
Ethiopia’s fiscal performance appears to be adequate, given the current state of the economy and financing requirements for development, according to the Bank report.
Growth of goods exports has mainly been driven by volume of growth across a variety of product groups, implying that Ethiopia is increasingly diversifying its export base.
Although aid to the state including grants declined from 1.6% of GDP in 2010/11 to 1.2% of GDP in 2011/12, tax collections have been boosted by the 2010 tax reform, while reforms in the budgeting process have strengthened public expenditures.
“Ethiopia is one of the few large, land-locked economies in the world that exports more services than goods,” said Lars Christian Moller, Bank’s Lead Economist and Sector Leader for Ethiopia.
The Bank attributes Ethiopia’s economic growth mainly to agricultural modernisation, the development of new export sectors, strong global commodity demand, and government-led development investments.
“There is widespread perception that the comparative advantage of a low-income country like Ethiopia lies in export of primary products and labor intensive, low-skill manufacturing goods,” Moller said.