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ANALYSIS: Protests over Chinese retailers

Chinese traders are a common sight in many of Kampala’s multi-storeyed shopping arcades.

Consumers want the cheap prices but local traders want the profits

Hostility towards Chinese petty traders appears to be growing in Uganda but so is the dependence on Chinese imports.

On April 19, the hostility erupted once again as hundreds of traders in the capital city, Kampala, staged a closed-shop protest and marched along some streets brandishing placards telling the Chinese to “Leave our country.”

The protests were led by the Kampala City Traders Association (KACITA) and its spokesperson, Issa Sekitto, told The Independent on April 22 that the local traders are angry that the Chinese are opening up distribution shops on every street in downtown Kampala.The local traders say if the Chinese are in the country as investors, they should set up factories, production plants, and leave retail business for Ugandans.

KACITA’s move is popular because retailing provides one of the easiest entries into employment for thousands of young people in Uganda but the opportunity is being eaten into by Chinese competitors. The locals say that because the Chinese have more capital and connections, they easily undercut them in all areas right from manufacturing, transportation, distribution, and retail.

KACITA which boasts of close to 200,000 traders says over the last seven years the traders have been complaining to the government over aliens doing petty trade but with little success, hence the street protests.

What is at stake, it appears, is the control of the growing trade in imports from China into Uganda. China is the second largest exporter of goods to Uganda after India and, according to the Uganda Investment Authority (UIA), the value of trade between China and Uganda in the last 10 years increased from US$15 million in 2006 to US$222 million in 2014, which shows an annual growth rate of 42%.

But the flow of goods is almost one way – from China to Uganda. According to World Bank statistics, the imports from China are mainly consumer goods (47%), followed by intermediate goods (26%).  Capital goods are a close third at 22% and raw materials are just 4% because Uganda still has a very low manufacturing base. This means Uganda is dependent on imports for almost all of the manufactured goods it consumes.

In a sign of this growing dependence, when the Chinese traders re-opened their businesses a day after the latest protests, their shops were choking with customers eager to catch up on business they missed during the protest.The local consumers happily patronise Chinese businesses for the low prices, substantial variety of goods, and lack of alternatives.

Ugandan traders do not like that. They appear to prefer the old arrangement where the Chinese imported the goods but remained in the background as their main suppliers of wholesale goods and the locals ruled in retail.

Before the influx of Chinese retailers, the leading lights of Uganda’s trading community were making a killing from importing cheap goods directly from China and selling directly to the consumers. That changed when a few Chinese ventured into the country and set up large whole-selling ventures of consumer goods.

Finally, it appears, the Chinese clearly want the extra buck they get when they deal directly with the buyers and appear determined to cut off the middleman and brave the animosity. Chinese traders are now a common sight in many of the multi-storeyed arcades along streets like William, Wilson, Ben Kiwanuka, Nakasero and Market Square in Kampala where they occupy hundreds of outlets selling mobile phones, shoes, textiles, ladies’ accessories, electronics, and other hardware.

Lawrence Bategeka, the MP for Hoima Municipality and vice chairperson of the Parliamentary Committee on National Economy says the Chinese partly got attracted to Uganda after they observed the flow of trade between Uganda and China.

“The Chinese came and found a liberal environment; they saw a big opportunity after noticing that the Ugandans who were doing business were getting remarkable margins,” Bategeka recently told The Independent.

Another explanation could be that many of the Chinese, in fact do not have capital to run the big operations that the locals are pushing them into.

So far, it is not clear how this tussle will end but there have been many fights before and the Chinese have won all of them. As a result, despite the animosity, the number of Chinese nationals in Uganda has been growing rapidly in the past decade. Currently, conservative statistics put their population at over 10,000. And the Uganda government appears too handicapped to stop the influx.

One comment

  1. in that case , if the government is to stop these chinese from the retail business, then the same government should regulate the price of all commodities being sold. because our local traders, b4 these foreigners opened up shops here, they were really making everything so expensive en a luxury to us all. for example 100usd could only get you a 2nd hand tv. a new one would be 300usd. yet they would buy it at 70usd. in china or india. but now with these stores in town. new things are at a fair price. and let the customers decide. KACITA is one of ur biggest problem u traders. they own the buildings you do business from and they make them so expensive thus increasing ur cost of operation, this group should be bargaining for a fair tax from government on ur behalf, a group of 200,000 traders, you should have ur own bank giving you loans at a reasonable interest rates, if you stop getting money from those other banks, they’ll come back to their senses en reduce theirs too. all you need is a really nice organised KACITA to give you a fair competition aganist the chinese. no ugandan would buy from a chinese if you are all selling at the same price. you should also make groups and buy in bulk as a group at a cheaper price rathed than coming one by one to buy things from china at a higher price. just get organised en compete.

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