Chinese factory owners, driven by a strengthening currency and rising salaries at home, are relocating to secure more competitive margins. One of these destinations is Rwanda. While most Chinese companies are looking at opportunities close to home in Southeast Asia, more far-flung countries are also beginning to benefit. One of the attractions of African countries is their preferential trade agreements with the US and Europe, which mean that finished products, such as textiles, avoid import duties of up to 30 per cent.
Chinese businessmen believe the advantages of Rwanda’s business-savvy government, the country’s cheap, disciplined labor force and readymade garment factory space outweigh transport and other logistical challenges. And Rwanda, which runs a 17.2 per cent trade deficit, offers hefty tax concessions and other support in an effort to boost foreign currency earnings.
The Chinese, often blamed for destroying African industry by flooding the continent with cheap goods that undercut local markets, are now at the forefront of foreign manufacturers expanding their footprint across the continent. A Chinese garment company will equip Rwandan students with various textile skills. At least 600 students will be trained in embroidery before being taken on for work at the factory.