China has become what Huffington Post refers to as, “the world’s factory”, and has remained one of the top manufacturing countries in the world. However, the Chinese economy is undergoing a drastic change, transforming from manufacturing and big industry to a service based economy. By switching to services, around 85 million jobs will be spread across the globe, and the question rises as to where these jobs are going to be relocated.
Chinese investment companies have established an interest in Africa, where they have invested an estimated 75 billion dollars from 2001 to 2011. Ethiopia, Kenya, Mozambique, and Zambia are among the top countries developing factories in Africa. More specifically, Ethiopia is a country that is considered very promising. The wages in Ethiopia are comparatively lower than the wages in China and Vietnam, and therefore, Ethiopia has become attractive for foreign investors and companies. In addition to the lower wages, through the U.S. Africa Growth and Opportunity Act, Ethiopia has duty-free access to US markets. However, compared to other regions around the world, such as Southeast Asia, Ethiopia’s workforce is less skilled, and their infrastructure is less developed. These factors will strongly influence the decisions for Chinese companies when they decide where to relocate and invest.
Chinese companies have earned a reputation for failing to practice corporate social responsibilities around the world, most specifically in Africa. In spite of the stories of Chinese companies violating labor and environmental policies, research from the International Institute for Environment and Development revealed that the relationship between China and several African nations seems to be growing. In the past, some Chinese companies were reluctant to communicate with the local people and media, and kept a strong separation from the people they did business with. However, the replaced managers of these Chinese companies have changed the way they interact with the local people, and have increased and improved their communication and relationships immensely.
While China continues to search for investment opportunities in Africa, many officials are enthusiastic and eager to be considered such a great place for growth. These Chinese investments will provide the workforce in several African countries an extensive amount of profitable opportunities, and will be of great value for their surrounding communities.