Why China Could Loose its Global Production Hub


China has served as a global production hub for past 30-40 years. As more Chinese seek empowerment, and open up to more employment rights, labor costs seem to be going up. Poor countries in Africa, Asia and Latin America have an opportunity to take over from China.

But taking over from China does not need noise alone. It needs a strategy and more importantly three things; massive investment in education to create a skilled labor force, massive investment in infrastructure from rail, roads, ports, to things like water and power, and three, which is easy but quite complicated, dealing with corruption mercilessly.

On corruption, no multinational will take a risk of building a multi-billion plant that can be shut down anytime because some silly politician has failed to get a kick back, or because the stupid KRA can suspend operations over a misunderstanding, like they have done at Keroche. Big firms need a guarantee that their operations will not be interfered with indefinitely.

Bringing foreign billions into Africa is what is needed most. While applauding those students from Kenyatta University, you shouldn’t forget the cost of sustainably assembling ventilators is billions. That means it is either the boys get the billions, or their efforts will end after this crisis. We all know Africans billionaires do not invest in startups. As long as Africa ranks far behind on those three strategic issues, firms will exit China to neighboring rising Asian giants that have solved the issues. If Uhuru had invested his Ksh. 350B SGR money in education, we could have solved one problem. But he chose one important, but mistimed and inflated project.

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