China and Botswana: ‘fong kong’ products have helped drive local manufacturing – study

Chinese products are frequently viewed as inferior and inexpensive, contributing to their negative reputation. This is true in African countries too.

Nonetheless, Chinese merchandise has played a pivotal role in shaping economies by accelerating globalisation and fostering local development.

Take the case of Botswana. Botswana has a population of more than 2.4 million people. Its economy is primarily driven by mineral extraction and diamond mining. Despite efforts at economic diversification, Botswana’s manufacturing sector remains relatively small, contributing only about 3.7% to its GDP. This is due to a limited domestic market and reliance on South Africa for supplies.

In 2011 the Ministry of Trade and Industry introduced policies to stimulate the growth of citizen-owned enterprises and enhance the country’s competitiveness. These included the Economic Diversification Drive and the Citizen Entrepreneurial Development Agency.

The government also began welcoming Chinese entrepreneurs in local trade and manufacturing.

I have been studying Botswana’s economy and the country’s economic relations with China since 2011. My latest research looks at how Chinese merchandise has shaped Botswana’s economy, especially in helping contribute to manufacturing, and how this has been guided by Botswana government policies.

The study found that some Chinese investors in Botswana, some of whom started as traders of goods regarded as “fong kong” (low quality and cheap), had upgraded into manufacturing businesses. This upgrade was part of government policies since the mid-2000s which restricted the number of trading licences issued to Chinese traders. There was also an increase in regulations targeting activities such as the sale of counterfeit goods and tax evasion. Threats not to renew existing licences were issued.

The Botswana-China case demonstrates that Chinese businesses can be a building block for the development of an economy like Botswana’s, including manufacturing. But this depends on how Chinese companies are guided by the African host government’s policies.

The journey with China

For decades the Chinese and Botswana governments purposefully overlooked the issue of counterfeit consumption within their domestic markets. Counterfeit production was employed to satisfy local market demands and foster the growth of domestic industries.

Initially in China, counterfeit production served as a stimulus for industry. It led to exports of made-in-China goods to Europe and the evolution of China into a manufacturing superpower.

Botswana too felt the impact of this shift. Since the 2000s, China’s impact on the country, particularly through the proliferation of “China shop” businesses, has been significant. By 2013, there were approximately 1,000 China shops spread across Botswana, found in nearly every town and rural area. They offered a variety of goods, from clothes, shoes and cellphones to other everyday items. The shops became primary points of interaction between local people and Chinese business owners.

A few phrases have become part of everyday use in Botswana. An example is ni hao, which means “hello” in Mandarin. It became synonymous with Chinese people after the then Chinese premier, Li Peng, visited Botswana in September 1986.

By the early 1990s, Chinese street traders were referred to as caca by local people. The word in Chinese means “rubbing” and came from the early traders selling essential balm oil.

In the 2000s, the rise of Chinese merchants selling counterfeits earned them the nickname “fong kong”.

The transition

The Botswana government’s efforts at fostering a manufacturing sector began to show signs of bearing fruit by 2018 when Chinese products with “made in Botswana” labels began to appear.

This transition showed the influence of Chinese merchandise on Botswana’s trade and industrial landscape. And Chinese goods had been adapted to bolster the local economy and cater to consumer preferences.

This process was not without its tensions between Chinese-run and owned businesses and local enterprises. Nevertheless, China shops have facilitated Chinese merchants’ progression in business – from retail sales to wholesale and even manufacturing.

Additionally, they have catered to local market needs, supported local traders, and contributed to domestic manufacturing initiatives. This, despite the fact that successful cases remain rare, and the changes have yet to be reflected in the statistics.

A 2023 survey by Afrobarometer showed that people in Botswana saw China as being more influential than the US, the European Union (EU) and Japan.

In 2021 Botswana signed a memorandum of understanding on the Belt and Road Initiative – the China-led infrastructure project. Zhao Yanbo, the Chinese ambassador to Botswana, expressed intentions to:

• encourage Chinese enterprises to increase investment
• explore cooperation in industrial parks, special economic zones and regional development belts
• enhance Botswana’s industrialisation process.

Chinese investors are increasingly being seen as crucial in addressing Botswana’s industrialisation challenges. This sentiment was echoed recently by the minister of trade and industry, Mmusi Kgafela.

What next

Botswana policymakers should consider a number of policy refinements:

1. Steer foreign businesses, including Chinese enterprises, towards paths that benefit society in the long term.
2. Address the counterfeit phenomenon. The best way to do this would be to recognise the counterfeit phenomenon as a form of “creative destruction”, blending innovation, lower quality and illegality. Policymakers should aim to legalise production and consumption processes while preserving innovation ecosystems. This would mitigate negative effects on the local market.
3. Establish a China-Africa think tank as a platform for dialogue and collaboration between China and Botswana. This would help both countries understand each other’s strategies. It would foster balanced, mutually beneficial partnerships, contribute to more informed policymaking and enhance economic cooperation.

Yanyin Zi, Assistant Professor of Global Studies, Rikkyo University

This article is republished from The Conversation under a Creative Commons license. Read the original article.