Turning Ethiopia Into China’s China

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Ethiopian workers walking through the parking lot of Huajian Shoes’ factory outside Addis Ababa in June chose the wrong day to leave their shirts untucked. The company’s president, just arrived from China, spotted them through the window, sprang up, and ran outside. Zhang Huarong, a former People’s Liberation Army soldier, harangued them in Chinese, tugging at one man’s polo shirt and forcing another worker’s into his pants. Amazed, the workers stood silent until the eruption subsided.

Zhang’s factory is part of the next wave of China’s investment in Africa. It started with infrastructure, especially the kind that helped the Chinese extract African oil, copper, and other raw materials to fuel China’s industrial complex. Now China is getting too expensive to do the low-tech work it’s known for. African nations such as Ethiopia, Kenya, Lesotho, Rwanda, Senegal, and Tanzania want their share of the 80 million manufacturing jobs that China is expected to export, according to Justin Lin Yifu, a former World Bank chief economist who teaches economics at Peking University. Weaker consumer spending in the U.S. and Europe has prompted global retailers to speed up their search for lower-cost producers.

Shaping up employees is one part of Zhang’s quest to squeeze more profit out of Huajian’s factory, where wages of about $40 a month are less than 10 percent of what comparable Chinese workers may make. Just as companies discovered with China when they began manufacturing there in the 1980s, Ethiopia’s workforce is untrained, its power supply is intermittent, and its roads are so bad that trips can take six times as long as they should. “Ethiopia is exactly like China 30 years ago,” says Zhang, 55, who quit the military in 1982 to make shoes from his home in Jiangxi province with three sewing machines. He now supplies such well-known brands as Nine West and Guess (GES).

Almost three years after Zhang began his Ethiopian adventure at the invitation of the late Prime Minister Meles Zenawi, he says he’s unhappy with profits at the plant, frustrated by “widespread inefficiency” in the local bureaucracy, and struggling to raise productivity from a level that he says is about a third of China’s. Transportation and logistics that cost as much as four times what they do in China are prompting Huajian to set up its own trucking company, according to Zhang. That will free Huajian from using the inefficient local haulers, but it can’t fix the roads. It takes two hours to drive 30 kilometers (18 miles) to the Huajian factory from the capital along the main artery. Oil tankers and trucks stream along the bumpy, potholed, and at times unpaved road. Goats, donkeys, and cows wander along, occasionally straying into bumper-to-bumper traffic. Minibuses and dented taxis, mostly blue Ladas from Ethiopia’s past as a Soviet ally, weave through oncoming traffic, coughing exhaust.