I am helping an Ethiopian friend set up a wedding dress hire business in Addis Ababa by importing dresses from China, and I have to say I have been really impressed by the small Chinese firms we are dealing with. I am not speaking here about the cheapness of their goods. Of course there are major issues regarding low labour wages and standards in China, which while ensuring competitiveness of Chinese products, also produce low quality jobs. That aside, however, there are many other qualities that make Chinese firms globally competitive. After all, labour is cheaper in some places in Africa, for example, but these have still not become as competitive as China.
Chinese firms seem to instinctively know how to insert themselves into global supply chains. First of all they are very well connected to global buyers through Information Communication Technologies. All I had to do was do a google search for wedding dress suppliers in China, then send a request for what I needed via a website that connects with hundreds of suppliers. By the next day, offers where flooding in via email. Most firms had their own websites, with pictures of all their products for buyers to easily choose from. When it came to payment time, this was effortlessly done using Paypal, where the company already had an account. Secondly, they appreciate the need for "Just in Time" and good quality production, which are highly appreciated by global buyers. Our emails were responded to almost immediately every time with all the information we needed to make decisions. Also, the products were dispatched in a timely way and conformed to all our specifications. Thirdly, they have a flexible approach and a strong client orientation. While the initial order we made was smaller than the minimum quantity, they agreed to deal with us, recognizing the potential for repeat business. Also, any changes or additional requests we asked for were accommodated, in a "customer is king" type of approach.
This client orientation went to the extreme of our Chinese contact person signing off emails with a western name "Larry" to, in his words, facilitate communication. While I don’t feel that this was at all necessary, I think it would make a difference to some global buyers. All these and other measures help facilitate trust, which is crucial to business relations conducted across thousands of miles, often without ever meeting face to face. While buyers fear doing business with certain places due to perceptions of difficulties in communication, cultural barriers and low quality standards, Chinese firms have managed to overcome these issues and show they are worthy of business trust. Unfortunately, many places in Africa still suffer from these negative perceptions among buyers, in some cases justifiably. Unless African small firms and entrepreneurs across the board improve the trust of global buyers through better communication, flexibility, efficiency, timeliness and customer service, they will continue to lose business opportunities.
While development programmes are increasingly focusing on private sector development, I think that more grassroots level initiatives are needed. Programmes focusing on value chain development, business to business support, quality upgrading, etc are all very useful interventions to improve the competitiveness of African firms. Yet I doubt that they can reach businesses across the board. It would be great to hear from others on what locally led initiatives could also be implemented to, firstly, encourage entrepreneurship in Africa, and secondly, to improve business performance?