The Chinese invasion: Nigerian firms lament takeover of local businesses

AYOOLA OLAOLUWA|   Chinese investors are quietly taking over strategic sectors of the Nigerian economy, making massive profits and displacing local businesses, Business Hallmark investigation can reveal.
The Asian giant, according to findings, is taking advantage of the nation’s lax laws and expansive market by unleashing its horde of investors on the trading, manufacturing and agriculture sectors to the detriment of local businessmen.

From oil and gas to construction; power to Information and Communications Technology (ICT); manufacturing and agriculture to education; healthcare to hospitality; transport to aviation; textile to defence and trading and general merchandising, China is spreading its tentacles in Africa’s most populous and largest economy.

All over the country, Chinese presence is swelling. Available data show that close to 800 Chinese companies are currently operating in various sectors of the Nigerian economy. The activities of these companies have seen the volume of trade between China and Nigeria grow from less than $2 billion in 2000 to $18.1 billion in 2014, according to the Chinese Ambassador to Nigeria, Mr. Gu Xiaojie. H said the figure represents 30 per cent increase over that of the preceding year.

The nation’s commercial capital, Lagos, has its own ‘Chinatown’, as do other cities, such as Kano and Abuja. BH observed during a visit to the China Town, Ojota, Lagos that the volume of cash that exchanged hands was massive. A driver with one of the companies in the town said that he travels every other day to Abia State to deliver container full of clothes, shoes, belts, antiquities, housing utensils and cosmetics imported from China.

“What we supply cannot but sell. They are what people need everybody. As long as you live, you must wear clothes and use shoes,” he said.

Checks at China town’s administrative office revealed that a shop space goes for N700, 000. Many prospective tenants were waiting during the visit to pick forms to get a place at the complex. Exclusive, gated hotels and restaurants, serving only Chinese food, are being built all over the country. They include Zenith Water Margin, Marco Polo Chinese Restaurant, Prime Chinese Restaurant, Pearl Garden, Oriental Garden, Jade, Saipan Restaurant and Bar, Wan Tan Fusion, among several others.

African cloths sold in markets across the country are now almost always imported, bearing ‘Made in China’ labels. In Kano State, local traders in textile materials are up in arms against their Chinese competitors. The traders, who alleged that the Chinese are on the verge of bringing down their business, as they allegedly did in ruining the country’s once-thriving textile manufacturing industry, said that the Chinese have infiltrated the famous Kanti Kwari Market.

From the market which attracts customers from all northern states and neighbouring countries like Niger and the Chad Republic, the Chinese are alleged to be reaping a fortune, to the detriment of local traders. More than 70 Chinese companies are estimated to have established their sales outlets at the market.
Among the Chinese textile factories that have opened shop at Kanti Kwari are NBTS, Chitex, Seinfeire, KFM, Golden Euro and WYFX. The Chinese, it was learnt, have formed a body tagged the Chinese Union at the market to champion their interest there.

Lamenting the situation, the Chairman of the Tofa Group of Companies, Alhaji Isyaku Umar Tofa stressed the need for government to address the situation.

“It is unfortunate that the Chinese have taken over the distribution of textiles in Kano. They import the textile materials from their country, rent shops here in Kano and they are retailing the materials themselves. This is not good for the country’s economy because they are doing this at the expense of our economy.

“No country allows foreigners to undertake petty trading as we are allowing the Chinese to do here in Kano now. Rather, they should be encouraged to be producing the materials here in the country in order to boost our own economy.
“The harm of allowing them is that our unemployment would be aggravated and soonest, they will dislodge our traders,” he said.

Chinese herbal medicine and electromagnetic therapy are gaining ground across the nation among all generations seeking for the secrets of longevity and everlasting youth. The influx of cheaper Chinese products in Nigeria’s domestic markets is very evident despite questions raised about the quality of the products.
In the GSM Village, Ikeja, Lagos, as well as several other markets, checks reveal that most mobile telecom shops are overflowing with Chinese-made products ranging from phones to laptops, bluetooth devices, headphones, hands free devices, among others. A shop owner at GSM village, Ikeja, Lagos, Chidinma Orji, narrated how easy and beneficial it is to sell Chinese products.
“It is usually more expensive to buy products from western countries like the US, England, Germany and Spain, but that is not the same for China. Most of us here can now go to China ourselves and buy products under very flexible terms and conditions,” he said.
Buyers share the same feeling about buying Chinese products.
“If you compare the Chinese smart phones with those from Europe, there is little or no difference at all. And the Chinese ones are even cheaper. So why should I spend more money on something equivalent to this one?” asked Bose Oladiji at the SLOT shop at No 2B, Medical Road, Ikeja Lagos.
Beside the Falomo Shopping Centre area in Lagos is a shopping complex where most shops are owned by Chinese selling cheap jewellery, clothing and substandard Nigerian fabrics.
Some Chinese traders were seen at the Balogun Market in Lagos hawking their wares. Others also hawking their goods were spotted in the Apapa area.
The nation’s minerals and metals sector are also dominated by Chinese and Indians to the detriment of millions of jobless Nigerians.
BH findings revealed that many Chinese quarries have a high number of expatriates employees; their companies provide little or no safety precautions for local workers and language barrier continues to hinder proper communications between the Chinese and Nigerian nationals.
An official in the Ministry of Solid Minerals who did not want his identity revealed because he was not authorised to talk, informed BH that most Chinese and Indian mining operations in Nigeria fail to meet the minimum employment targets for Nigerians which includes having higher number of locals employed in expatriates companies; safety precautions for workers on site; proper salary structure to protect the rights of local workers as well as proper tax clearances to ensure federal government gets its due.
“If the Chinese can close their doors and give only a handful of visas to their own country, then it is high time we shut our doors to their invasion. A reasonable percentage of our imported materials and goods come from China. What are we exporting to them?” he asked
“The ministry under the leadership of the minister, Dr. Kayode Fayemi, is trying to control the domination of the two nationalities who have invaded Nigerian quarries and disobeyed the laws guiding their acceptance into the sector”, the official said.
BH investigation also revealed that Chinese businessmen now drive a thriving illegal trade in timber from Nigeria.
In many states, including Kogi, Ekiti, Ondo, Ogun, Taraba, Kaduna, Adamawa and Cross River, a voracious demand by Chinese businessmen for an ornate species of wood, rosewood (Pterocarpus erinaceus), locally known as Kosso, has, since late 2013, fuelled an unprecedented frenzy of illegal logging of wood that is fast depleting the nation’s natural forestry resources.
The Pterocarpus family of which rosewood is a part belongs to the Hongmu (meaning red wood in Chinese) wood family, which refer to a range of exotic, high worth hardwood highly sought after by the elite and royalty in China and is used in making furniture, floorings and art works. Ownership of such exotic furniture and art works are considered as worthy investments by the very rich in China.
Timber merchants working for Chinese businessmen, it was gathered, now move from one state to another depleting the rosewood resources in their forests, leaving behind blighted and raped landscapes.
Investigations indicate that the hub for the illegal rosewood export trade in Nigeria is Sagamu, in Ogun State although increasingly some activity is springing up in the Ikorodu axis.
A visit to Sagamu showed that the Lagos/Ibadan Expressway and the Lagos/Sagamu/Ore Road are littered with depots where hundreds of thousands of rosewood and other logs are prepared for exports.
At the depot, logs of rosewood were seen being loaded into 20ft and 40ft containers in readiness for transportation to the ports for exports.
Companies from China are also supplying the much-needed infrastructure projects, such as roads, bridges, railways and trains.
Many state governments are now turning to Chinese firms for help at a time many indigenous construction firms are lamenting low patronage.
President of China Institution of Contemporary International Relations (CICIR), Mr. Cui Liru, said recently that the volume of trade between Nigeria and China is now in the neighbourhood of $13.3billion.
Liru added that over 217 construction projects have been completed in Nigeria by Chinese as at November 2015. Most of them were executed by China Civil Engineering Construction Corporation (CCECC).
The Chinese also have a huge investment in the nation’s oil and gas industry. In 2006, Chinese President Hu Jintao visited Nigeria. He got four oil drilling licences for his country. In return, he pledged China’s investment of $4 billion in oil and infrastructure development projects in Nigeria.
China has also expressed interest in buying controlling stake in Kaduna refinery, which has a daily production output of 110,000 barrel. Chinese state oil firm CNOOC also completed a £2.3bn deal to buy a stake in an oil field.
A huge loan has also been granted by China for building of three refineries in Nigeria. In 2005, Nigeria agreed to supply Petro China with 30,000 barrels per day (4,800 m3/d) of oil for $ 800 million. In 2006, CNOOC purchased a share for $ 2.3 billion in an oil exploration block owned by a former defence minister. These moves have consolidated China’s access to crude oil for its energy needs back home. Unconfirmed reports said China is now the second largest buyer of Nigeria’s crude oil.
In transportation, Chinese workers have been engaged in rail projects across the nation, amid protests from local railway workers.
A visibly angry railway worker, Segun Ojo, told BH that Nigerian workers would soon be out of job from such huge projects.
Several Chinese brands such as Viju Milk, Huawei, ZTE, Alcatel, Golden Gate, Lagos, Oasis Bakery, dominate the nation’s landscape and enjoy tremendous patronage.
A source in the Nigerian Immigration Service (NIS) said that over 100,000 Chinese are resident in expensive estates in the commercial cities of Lagos, Port-Harcourt Kano and Aba. Magodo Estate in Lagos plays host to a sizeable Chinese. Residents of the estate who spoke complained that rents have skyrocketed since they started arriving.
“Getting accommodation here now is tough. The Chinese are ready to offer triple whatever Nigerians offer the house owners”, Toyin Alege, a resident lamented.
Meanwhile, manufacturers and traders have urged the Federal Government to checkmate Chinese invasion of markets.
The Chinese, according to them, have taken over virtually all the trading activities at the detriment of struggling local industries.
A former President of the Manufacturers Association of Nigeria (MAN), Chief Kola Jamodu, lamented that their incursion into distributive business activities is taking businesses out of Nigerians.
Jamodu, who is also the Chairman of PZ Cus­sons Plc, said that the incursion of the Chinese into small vending businesses, such as retail trading, textile, electronic among others has become even more worrisome.
He also expressed worry over the faking and passing off being carried out by Chinese businessmen in the process of importing their wares.
“While we appreciate Chinese investment in the country, we don’t think they should be allowed to venture into distributive trade, we therefore urge the Federal Government to look into this situation,” Jamodu said.
Similarly, the Embroidery Dealers Association and the Association of Nigerian Marketers of the Balogun Market and Ereko Idumota area of Lagos Island, recently staged a protest to the office of the Iyaloja of the market, late Alhaja Habitat Mogaji, and office of the state governor, Akinwunmi Ambode, over the alleged invasion of their markets by some Chinese, who they claimed have almost taken over their business.
The protesters alleged that the Chinese importers had allegedly brought disrepute to the smooth running of their business by flooding the market with inferior quality textile and hair products that were being sold at ridiculously cheap prices.
One of the lace fabric dealers, Alhaja Muheebat Adeoye, said the Chinese were not only allegedly robbing the traders but also short changing the consumers.
“These Chinese have Nigerians fronting for them in the markets where they mix high quality products with the inferior quality and they sell at very cheap rates, noting that buyers cannot differentiate between the imitation and the original.
“The imitation is so perfect that one will hardly know the fake and they are killing our business because we don’t sell anymore,” she stressed.
Dealers in textile and allied materials at the Balogun Market in Lagos blamed the low sales during the last Christmas season on the alleged invasion of the market by Chinese traders.
They appealed to the Federal Government to introduce measure to enhance the quality of Nigerian-made products.
President of Phones and Allied Products Dealers Association, Ikeja, Lagos, Ik Nwosu, believes the Chinese are firmly associated with faking popular brands.
“They don’t have any other thing to sell than fake products. The reason they come here and sell these fake products is because they are either duplicating one popular product or another. Any genuine business person that wants to project a brand knows that there are phases or procedures for you to pursue your brand.
“You can’t just bring 10,000 pieces of unknown brands into an economy and expect to sell those products. So, they fake popular brands. The advantage for them here is that people buy anything that goes by these brand names. It is easy for them to come here and sell their fake products. We’ve caught them many times,” Nwosu said.
Nwosu added that his group has an issue with some Chinese businessmen at the Consumer Protection Council (CPC), expressing worry at the ease with which the Asians invade Nigeria.
An economist,Mr. Adesoji Tayo, argued that the relationship with China can only benefit Nigeria if critical and positive steps are taken in order to put the country at an advantageous level.
“It helps us to negotiate better, because they are competing for us. It is an opportunity to look at cheaper technology, goods and services. And we are also in a good political shape to reap these advantages.
“We need political will to develop our own economy. The government should introduce implementable policies to encourage local content and production. There should be an enabling environment, through provision of basic infrastructures. And we should be able to produce goods and services that are competitive enough,” he advised.
He stated that awakening docile industries like textiles can become a major way of stimulating rapid growth and development in our economy.
“We can only decrease importation through continuous production. And overtime, the continuous production would lead to the improvement of quality,” he said.
Adesoji also said that the government should look for ways to discourage capital flight by foreign companies, and discourage the increase of inexperienced expatriates whom are mere artisans in their country, thereby creating lesser job opportunities for Nigerians.
In his reaction, a newspaper columnist, Arinze Alinnor, warned the Federal Government against the complete takeover of the nation’s economy by Chinese interests.
“Our manufacturers are crying. Many cannot remain in business because of the influx of the Chinese goods and services. If they really want to contribute to the growth of our economy, what stops them from setting up industries that will employ our youths and manufacture most of those goods here?
“The ones who have their companies here fill them up with their own people and leave little or no space to employ our youths. The ones they even dare to employ are contract staff of those companies who are sacked at will.
“Our government should wake up from this deep sleep before the Chinese invasion halt whatever they project for vision 2020 economically.
“I read some time ago that China was listed amongst the countries that are mostly likely to offer bribe to get whatever they desire from foreign public office holders. Does it mean our own office holders have been bought to turn deaf ears and blind eyes to this invasion?
“We have seen different Chinese trade delegation visit our country. After their visits, every contract given out by the government goes the way of the Chinese companies from railway contracts to other sectors of the economy.
“One good turn deserves another. Love is not a lopsided affair; you cannot give and not receive, you cannot receive and not give back. We are giving visas and permits to the Chinese nationals who wish to come and do business here. They should reciprocate by making it much easier for our businessmen to procure Chinese visas.
“They should consider aiding our government curb the menace of counterfeiting and piracy by their nationals who hide under different fronts. They should genuinely help our economy by bringing down their people to come and build industries that will employ our people here, instead of helping close down our industries by their nefarious activities. Nigeria deserves more than what we are getting from the Chinese diplomatic or bilateral relationship”, Alinnor said.