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Chinese vs local traders: Is beef about competition or dumping?

 

Last Tuesday afternoon, I was driving to Nairobi from upcountry where I had gone for a funeral. As I approached Kenyatta University, I saw hundreds of cars parked alongside the Thika superhighway, side by side. I had no idea what was going on. I assumed there was a function at the university, maybe a graduation.

Only later did I learn on social media that all those people had come to China Square, which is next to KU to shop and look around for bargains. I noted this was Tuesday, not a weekend when most people do their shopping.

There’s a sense the government had handed China Square free publicity when it was suddenly put in a negative spotlight.

This no doubt added to the curiosity factor for many shoppers who flocked to the retail bazaar on Tuesday. Traders from Nyamakima, River Road and Gikomba had held a demonstration in the streets of Nairobi, protesting that the supermarket’s Chinese proprietors were undercutting them. One side of the government vigorously supporting the traders wanted the outlet closed, or at least protective measures taken to “prevent dumping”.

China Square was even raided by the Anti-Counterfeit Authority and goods worth Sh50 million impounded on grounds they were counterfeit. It turned out they were not, and the agency grudgingly returned the merchandise. The hub had been forced to close temporarily under the pressure. It soon reopened triumphantly.

China Square

There was the other side of government, which argued the measures being sought against China Square were discriminatory, anti-free enterprise and even illegal. China is a major investor in Kenya, and discriminating against its businesses operating legally would bring dire consequences to our relations with the Asian dragon.

 For now, this faction has won. China Square remains in business. Afterwards the director-general of China’s Department of African Affairs, Wu Peng, tweeted: “A non-arbitrary and non-discriminatory investment environment is vital to the healthy development of practical bilateral cooperation.” China had officially spoken.

You couldn’t miss to sniff a whiff of local post-election politics if you cared to follow the China Square saga. Azimio supporters were laughing at the Nyamakima traders for deluding themselves that they would enjoy protection from undue competition by the UDA government. The traders had trashed Uhuru Kenyatta’s administration and accused it of “persecuting” them, ostensibly because it cracked down on counterfeit goods and insisted every trader pay tax.

One very knotty issue turned out to be duty on imported consolidated containers. Pressed by the Nyamakima traders, the Uhuru government allowed their consolidated cargo to be taxed according to weight — Sh200 a kilo.

Now KRA has reportedly reversed this concession and will tax consolidated goods like conventional cargo — that is, as per invoiced value of the goods. This will increase the traders’ import duty burden. KRA says this will eliminate tax disparities by creating a level playing field for all importers. Hahaha! Traders, it’s time for prayers.

‘Regional politics’

Many UDA adherents were also uncomfortable with the posturing of the Nyamakima traders and particularly the politicians supporting them. The latter were scolded for playing “regional politics”. Foreign Affairs PS Korir Sing’oei complained that the trend of targeting China was bound to be counter-productive.

Then on March 8, I got a long, rambling email from a guy pompously calling himself “Mwana wa Mau Mau”. His economics sounded muddled but clearly he was speaking for the Nyamakima crowd. Here’s the slightly abridged text:

"Gitau; allow me to comment on China Square. I noticed you support the idea. From the look of it, it looks like a nice cheap ‘mali mali’ shop that will help us to save money. Do you remember Nelson Kajuma and Uhuru Park shops? [KU vice-chancellor Paul] Wainaina is reinstated and a few days later business at China Square looks up?

Did you notice that all those who supported it are the young Kalenjin MPs? Here’s the economic implications: its a perfect marketing strategy for the Chinese. It’s right at the gate of Mt Kenya region, a region with huge purchasing power. [It will be] a dumping site.

There’s no ‘Kenya Square’ in China. China Square is collecting Sh15m daily to build manufacturing industries in China. CS [Moses] Kuria got it right. He said China Square will drive out the entire Kenya supply chain that employs thousands of Kenyans and supports complimentary businesses. [China Square] also picked up after taxman [Githii] Mburu was fired.

Substandard goods

Senior civil servants....are collecting substandard goods, bending all the rules and dumping [the goods] at China Square, with the athletic speed on (sic) Moism. The Chinese should be limited to stock deliveries in warehouses in Nyamakima but not retail otherwise the hawkers and small shops and the tiny hotels and bars and transport businesses will close down and that will mean rise in crime.

 The marketing process is not about prices only; it’s about multiplier effect that’s why boda boda business is crucial.

 It promotes local rural banking, hotel industries, ‘mali mali’ business and creates economic freedom so young people don’t have to be colonised (sic) by Indians in Industrial Area.

China Square is the opposite of this. The key beneficiary is the manufacturing sector in China because they got a ready market [here]. Unfortunately Mt Kenya people are the casualties. They’ll be driven out of business and their income will help to build China. The next step you will find Chinese-speaking Kikuyu and Swahili in your home area, marketing their goods. Next, fish and chicken with very small eyes (sic) will hit our villages. They'll all be Chinese and they'll introduce a ‘dog choma’.

Kenya Kwanza can’t actualise manufacturing in Kenya. [Rigathi] Gachagua studied oral literature, [William] Ruto botany and they learnt politics from Moi, who is (sic) a beneficiary of Old Kenyatta’s anthropology lessons."

Eish! If I was a Nyamakima trader, I’d definitely change my business model.   BY DAILY NATION    

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