Huajian, Chinese Shoe Factory: An Examination of the China’s Impact on the Ethiopian
Shoe Industry
Annie Hudson
Ethiopia has the largest livestock population in Africa, consisting of 25.5 million sheep
and 22.7 million goats, which have allowed it to become the global producer of fine leather (UN
Industrial Development Organization 2012, 05). Ethiopia’s leather shoe industry is competitive
in the domestic and international market because of its large supply of semi-processed leather,
disciplined workforce, and cheap prices (Embassy of Ethiopia, 01). Anbessa shoe factory, Ara
shoe factory, Ramsay shoe factory, and Jamica shoe factory are among Ethiopia’s most
successful shoe companies (UNIDO 2012, 06). There are thirteen shoe factories in total located
in Addis Ababa. Together, they produce 10,000 pairs of shoes every day (UNIDO 2012, 07).
Mr. Teshome, President of Ethiopia, stated, “Chinese companies can set up their
factories in Ethiopia and sell their products to the US and the EU and also save on import duties
that they would have to pay if they were produced in China” (World of Garment Organization
2014, 01). China’s investment in Ethiopia’s shoe industry “marks a shift in China's traditional
investments in Africa, which mainly involve heavy infrastructure development and oil
production, while for Ethiopia it offers an alternative to export of unprocessed raw materials”
(World of Garment Organization 2014, 01).
CHINA’S EMERGENCE BOOSTS ETHIOPIAN ECONOMY
Despite a rise in competition between Chinese shoe factories and Ethiopian ones in
the Ethiopian local market, some Ethiopian companies have gained tremendous success as a
result of China’s emergence. Peacock Shoes, an Ethiopian shoe company earns $4 million
annually from exports to Europe (Brautigam 2011, 01). China’s engagement in the Ethiopian
shoe industry also led to creative destruction. Ethiopian companies have improved quality,
design and durability of shoes as a result of competition (Brautigam 2011, 01). In January 2009,
the leather tanning institute “began benchmarking work, under which best practices in the
industry from across the world are implemented from Europe” (Brautigam 2011, 01).
Some argue the Huajian shoe company is making Ethiopia a more dynamic and
productive economy (Toro 2014, 01). Ethiopian workers at Huajian have had the opportunity to
go to China for training and to gain more specialized skills (Toro 2014, 01). Workers get paid
regularly; unlike in the informal sector workers and the shift from low productivity to high
productivity occupations put upward pressure on wages (Toro 2014, 01). The Ethiopian
government expects the Huajian Shoe Company will provide higher wages than informal sector
jobs which will guarantee greater consumer consumption and will allow the government to
establish of a taxation system to maintain infrastructure and development projects.
CHINESE SHOE FACTORIES
Local shoe companies were hit hard in 2000 when China entered the Ethiopian shoe industry.
Cheap imports from China forced locals markets to leave local markets and target export ones.
Huajian Group, a Chinese shoe company decided to move to Ethiopia when the Ethiopian
government offered four-year tax breaks, cheap land, preferential access to European and U.S.
markets, and free electricity to investors (GebreEgziabher 2006, 01). According to Jenny
Vaughan, AFP’s Ethiopian correspondent, stated “Huajian is one of six Chinese factories
operating in the Chinese-built Eastern Industrial Zone, Ethiopia’s first industrial park, which the
government hopes will attract private foreign investment and boost the country’s manufacturing
and export sector” (Vaughan 2012, 01). Huajian is expected to provide 10,000 employment
opportunities for Ethiopians (Vaughan 2012, 01). Additionally, the new Ethiopia-China Light
Manufacturing Special Economic Zone will eventually employ 100,000 workers who will be
given food, housing, and schooling on site for Ethiopian workers (William 2012, 01). Many
African countries are establishing SEZs "in an attempt to attract foreign direct investment in
labor-intensive manufacturing industries" (Davies 2008, 137). However, the Chinese are
designing the SEZs; they are the initiators and African countries are the recipients (Davies 2008,
137).
Mr. Teshome, President of Ethiopia, stated, “Chinese companies can set up their factories
in Ethiopia and sell their products to the US and the EU and also save on import duties that they
would have to pay if they were produced in China” (World of Garment Organization 2014, 01).
China’s investment in Ethiopia’s shoe industry “marks a shift in China's traditional investments
in Africa, which mainly involve heavy infrastructure development and oil production, while for
Ethiopia it offers an alternative to export of unprocessed raw materials” (World of Garment
Organization 2014, 01).
IS CHINA A NEO-COLONIST?
Huajian shoe factory is a business with strategic interests and objectives, which do not
include helping Ethiopia, develop (Toro 2014, 01). China benefits economically and politically
from the Sino-Ethiopian relation. China receives valuable natural resources, cheap labor, and
political backing in exchange for low interest loans for infrastructure. Little to no foreign direct
investment and aid from the West to Africa has encouraged a relationship of dependency
between African countries and Chinese investors. In many cases, African governments become
servants of foreign investors as opposed to their constituents, because they are reliant on their
financial support. Should Chinese shoe factories only hire Ethiopians? Should the Ethiopian
government invest in the manufacturing sector although it does not ensure sustainable
development?
Despite “cultural difference, language barriers, poor telecommunications, the absence of
a port in the landlocked country, and locals’ poor work ethic,” China invested in Ethiopia’s
manufacturing industry (Vaughan 2012, 01). Large-scale investments in Ethiopia are considered
a high risk due to its lack of infrastructure and limited access to basic amenities (water,
electricity, and etcetera). However, Paul Lu, the Human Resources manager at Huajian stated
“the availability of labor and raw materials were key attractions” (Vaughan 2012, 01). Chinese
companies also have duty-free access to EU and U.S. markets (Wenfang 2013, 01). Some
consider China to be a neocolonist because its foreign policy in Ethiopia is one of “infrastructure
for natural resources” (African Union Commission and UN Economic Commission for Africa
2011, 58). According to the UN Economic Commission for African and the AU Commission,
“participation in infrastructure by western firms is limited to social development programs while
that of Chinese firms is usually associated with infrastructure investment to facilitate the
evacuation of commodities to the coast” (African Union Commission and UN Economic
Commission for Africa 2011,57). As a result of my research and knowledge of the SinoEthiopian relation, my perspective is Sino-pragmatism in that I do not believe the China’s
engagement in Ethiopia is beneficial to the poor communities in Ethiopia and China does not
provide sustainable development projects.
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