Nairobi

Out to Lunch

OutToLunch: China Town: Protectionism and partnerships critical for African economies

OutToLunch: China Town: Protectionism and partnerships critical for African economies By Denis Jjuuko China Town, a retail shop, in Lugogo without placing a single advert became the talk of town providing invaluable lessons for advertising and marketing executives. Shoppers looking for bargain deals claimed to have queued up from morning and left when the shop closed without having even stepped into the store. In March 2023, I wrote about China Square in Nairobi that was giving Kenyan traders sleepless nights while making consumers happy. Obviously, we may not have paid attention as a country until a company with a similar name showed up. I have heard that they are similar China something everywhere on the continent, selling stuff at laughable prices. At 1.4 billion people, Africa has a huge population that needs goods and services and even though it is the poorest continent, the volumes businesses can push cannot be entirely ignored. That is why retailers like China Town, China Square, China Mall and a plethora of others are here. Their model is the same—lower prices than elsewhere. I hope that they are selling high quality goods that have passed the tests of Uganda National Bureau of Standards (UNBS). Many traders are worried that their business models are being disrupted and their enterprises will collapse. They claim that they can’t compete anymore. That could be true. The Chinese are probably enjoying incentives from their home governments. The more products sold in consumer markets; the more days factories remain open in the producer markets. The more days factories remain open, the more people remain employed. The more taxes governments in producer markets earn. And the entire value chain is huge. Of course, these shops may not always sell imported products. Some may be locally made. The owners of such shops may approach manufacturers and sign contracts that give them lots of stuff in bulk at low rates. If a manufacturer is guaranteed a market at a certain price, they can be able to supply and remain in business. With better experiences, technologies, capital, systems and structures, these retailers may become very hard for local businesses to compete. So what countries usually do is that they decide to protect their businesses. The Americans have imposed high taxes on electric vehicles not made in the US because they know that Chinese automakers would make the likes of Tesla collapse or see a significant chunk of their revenue shrink. They have also imposed bans on some Chinese smartphones like Huawei. They have been toying with the idea of banning TikTok, the popular addictive video streaming app. The Chinese also banned American apps, which enabled their messaging apps like WeChat and Weibo become so big in China. The Europeans do the same. They have provided huge subsidies for their agricultural sector. In France, if you own a cow, you get an annual subsidy of EUR280 (Shs1.16m) annually. If you add in subsidies on land and other incentives, the farmer is in business. That also means that a farmer elsewhere can’t easily penetrate that market. There are also restrictions on importing beef and dairy products. In Africa, South Africa has some of the continent’s biggest assembling plants for cars. To protect them, South Africa doesn’t allow the importation of vehicles at their end of life from Japan or elsewhere. In fact, they don’t allow you to import any used vehicles. You can only import a brand new car which is not made in South Africa. Basically, you can only import Ferraris, Lamborghinis, Rolls Royces and such other luxury brands. They impose hefty import duties on them as well. They know that if they allow anyone to import any car they want, the auto industry will die. Uganda needs to put in place some protection policies and implement them. If Kiira Motors is making buses in Jinja, then they should not allow the importation of buses from anywhere else. You either buy the bus made in Uganda or forget about it. If there are people making household electronics in Kampala’s industrial area or Kapeeka, then others should not be imported. That way the guy who set up his plant can keep their factory open. Of course, UNBS would have to double down on its quality inspection protocols so that they ensure that only products of highest standards are made and supplied. Government would have to nip corruption in the bud for this to take place. However, in a globalized world, foreign investment cannot be fully eliminated especially in poor and transitioning economies. Global retailers and businesses would have to set up shop. Ensure that these global businesses are in partnership with local entrepreneurs that way they can learn a thing or two and will remain even if the foreigner decides to go. There will also be some capital that won’t be evacuated. The writer is a communication and visibility consultant. djjuuko@gmail.com

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Out to Lunch

#OutToLunch: School trips to Dubai good but parents should manage their children’s expectations

By Denis Jjuuko One night many years ago, I tried sleeping and failed. I think, like other kids, I was anxious. I kept staring in the dark, wondering when day would break. The night seemed longer than usual. Eventually, it was time to “wake up.” Time to dress up and embark on this dream journey that I and believe many other kids had been looking forward to. The school had organized a tour of a few “attractions” in and around Kampala over a few days. We jumped in a Mercedes Benz bus, the size of today’s coasters, all smartly dressed and made our way to Kampala from Masaka. Our first stop if I recall correctly was Mukwano Industries. On arrival, we were taken onto a guided tour, climbing up metal stairs to see the huge boilers that mixed liquids that turned into bar soap. Mesmerizing. The next stops were even more interesting because at least we would be able to consume some of the products being made — soda and bread. We wondered why Mukwano didn’t give us soap, didn’t they think we also wash clothes or bathe? Anyway, we moved on to Entebbe International Airport, climbed up to the first or second floor from where we saw planes on the tarmac. This wasn’t as exciting as the trip to the factories. I had been here before while escorting or welcoming back one of my relatives, a frequent traveler to Europe but to many other kids, this was the pinnacle of their trip. Realizing that planes are not as small as what they see when they are flying over at 30,000 feet above sea level. We returned to tell stories to the kids who didn’t make the trip and of course our parents and guardians. I think this is one of the reasons I am a big fan of factories and seeing things being made. Although I am not overly enthusiastic about traveling, I think it is a good thing that exposes a person to the world unknown to them. I thank my parents, guardians or whoever paid for that trip. Of recent, some Kampala schools have outgrown taking kids to Freedom City, Garden City and any other building bearing the word city on its façade and started organizing trips to Nairobi, Mombasa, Johannesburg, Dubai and European countries. Last weekend, such a memo trended on social media and people wondered why should schools organize such trips. People argued that those who wouldn’t make the trip will feel left out and their mental wellbeing could be affected. That could easily be the case but there are many things that can affect a child’s mental wellbeing. A better school bag or pair of shoes or even a watch. Regularly, my children come home and ask for certain things. Stuff they have seen with their colleagues at school or even cousins. Apple watches, tablet computers, wheelable school bags, water bottles and every little thing that catches their fancy. Sometimes on the road, whenever they see a nice car, they ask me to buy one like that. On visits to relatives or friends, they sometimes demand that I convince that aunt or uncle to sell the house to me. Kids demand all sorts of things and schools, since they are commercial enterprises, know that many parents will not spare a coin to make their children happy. Many will borrow and forego their own happiness. Because many can’t afford and fear to disappoint their children, they want the schools to stop the trips. That explains why parents were on social media putting pressure on schools to stop these trips. The trips are not inherently bad for those who can afford them. Most people in developing countries like Uganda dream of flying and it would expose some of the kids to working hard to afford life in the future or even build Uganda the way Dubai or Rome is built. But parents should not put themselves under unnecessary pressure because Junior has been besieging them for a trip to Dubai or Italy. They should sit down with their children and explain to them what is possible and what is not. In many cases, the children will understand that this is not possible. When my children ask for those unrealistic stuff like buying my friends or relatives homes or the fanciest car on the road or even Apple watches, I tell them the truth. All the times, they understand what is not possible and sooner than later, they will be demanding something else. That is how kids are wired. Although there is no blueprint on raising children, giving them whatever they ask for is setting them up to fail in the future. Schools can go ahead and organize these trips, after all they are not mandatory, but it is also the parents’ responsibility to manage their children’s expectations. The writer is a communication and visibility consultant. djjuuko@gmail.com

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#OutToLunch. What we could learn from Kenya’s China Square

By Denis Jjuuko If you are an ardent follower of regional news, you have most likely come across China Square, a popular retailer located inside Kenyatta University’s Unicity Shopping Mall in Nairobi. China Square has been in the news for committing a heinous crime of selling its wares way cheaper than Kenyan traders prompting action from Kenya’s cabinet secretary for trade. The secretary said foreigners should be involved in manufacturing not running retail outlets in glitzy shopping malls. One Kenyan distributor had even petitioned the country’s standards bureau to complain about the quality of some of the products on China Square’s shelves. The standards bureau found the product to be genuine from the same manufacturer. The Kenyan distributor was selling them at a very high price compared to China Square. Buoyed by the revelations of the standards authority, many Kenyans like they usually do, turned to Twitter to argue that Kenyan traders were charging so much for the same product and they had no problem buying from China Square. Back home in Uganda, many foreign traders particularly from Asia have set up shop in every little building known as an arcade or mall. Ugandan traders too complain about the Indians and the Chinese and how they are undercutting them with cheaper prices though being Uganda, these complaints haven’t received the attention of a minister or permanent secretary. But what makes products of Ugandan traders from the same manufacturers expensive? There is the issue of high interest rates on bank loans. It is inconceivable how a trader borrowing money at highs of 25% can be able to trade and survive. Some even go to informal money lenders who charge as much as 10% per a month or 120% annually. Unless you are selling contraband, it is not possible to do business where the loan interest rate is 5-10% per a month. It is a license to fail. The foreigners are usually coming in with loans at under 3% annually. Many actually don’t even have loans, they are using supplier’s credit where suppliers and manufacturers give them goods on credit to pay back in a particular period long after goods have been sold off. Many Ugandans also have access to the supplier’s credit though we are good at abusing it. Many Ugandans once they get goods on credit once or twice, they change numbers and location. Eventually, they become endlessly broke and blame everyone but themselves. If you think this isn’t the case, how many people have borrowed money from you and paid it back? Or even paid it on time? If people complain if you send them money on their mobile phone before asking them which number where they don’t have a credit they don’t want to pay back, what about a supplier in the far east? So we end up all the time looking for money to pay new suppliers instead of cementing lasting relationships with one who has been extending goods on credit. Then the cost of doing business. In downtown Kampala, you will find four traders or more renting one shop but each is suspicious of the others. So, each of these four traders flies to China, Dubai or Turkey to bring the same product. That is four air tickets, four hotel rooms (or some shanty digs in Deira) instead of one. The foreigners would send one person to do the shopping. In fact, they wouldn’t even send, they would simply send an email and goods are shipped in. A foreigner who will save four air tickets and accommodation for a week will certainly sell their merchandise at a cheaper rate. Ugandan traders must create lasting collaborations with suppliers and also embrace technology. And then of course our other weaknesses such as diverting money for self-actualization projects. A house in the village in which we spend less than 10 nights a year, a wedding deserving a top member of the royal family, a residential house in the city the size (and even shape) of a midsize shopping mall, a fancy but old SUV, a mistress in each corner of Kampala (for men), and a long line of children. As many Kenya traders are building and buying fancy apartments, the China Square people are most likely renting one in a walkable distance to their shop and only having a few children. The writer is a communication and visibility consultant. djjuuko@gmail.com

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