occam:


So buying Yuan bond is a smart move when even the Chinese have more confidence in U.S. bonds as a safe haven compared to their own unverifiable Yuan. What exactly is the Yuan worth? Besides, the lifeblood of the Chinese economy is the U.S. Visit any Walmart store and you’ll begin to understand why China is totally dependent on U.S consumers

Why don’t we develop our own local industries and encourage export instead of buying Yuan bonds? China is simply looking for more market to dump its low quality products; hence the reason it’s opening up the tightly controlled bond market to gullible African countries.

China has a very weak consumer market, totally dependent on exports to Europe and the US, currency is artificially pegged lower than the dollar and still one of the poorest countries in the world. All this talk about Yuan becoming an international currency is wishful thinking.

That the Chinese are creating alternative export markets to the US is smart business logic . . .unlike Nigeria where we sell more than 60% of our crude oil to the US alone - a clearly risky venture.

Decades ago, China and India had the poorest households but the story is totally different today. A quick glance at any forbes listing will convince you - China in particular has added hundreds of forbes rated $ millionaires than any other country in the world in the last 5years. Infact just the other day, Bentley said they sold far more GTs in 2010 in China alone than Europe and Africa combined. And the story is similar for other luxury brands as well. If you are still in doubt take a trip to Shanghai. This is evidence that the disposable income available within the domestic consumer market has increased substantially (almost) to the point of cushioning adverse shocks in exports.

Sound economic strategy and huge lessons for Nigeria.

Kossy04:



I do not agree with you. You don't seem to understand the challenges that were thrown at the Americans by the Japanese and the Koreans. Look at it this way;

Cost of living in Japan is calculated by Yen which is significantly lower in value to Dollars {app. 80 to 1 Dollar}. In a typical American factory, a person earns, at least, 50 Dollars a day. Use Nigeria as an example; can you pay your factory worker 8,000 a day {240K} a month? Na banker? Now replace the Naira with Yen {from a Nigerian point of view}. At the end of the day, Cost of Production in Nigeria will be far lower than in the US. And then, we export things produced in Nigeria, which is very similar in quality to things produced locally in the US, to that same US. The average consumer will take a look at both, with similar quality but greatly differing prizes, and go for the Nigerian made. The Americans will also want to cut costs, or else they'd just stand by and watch as they loose their own markets. They cannot devalue their currency like the Japanese, so many countries are reliant on it, and that'll simply be disastrous. How will they cut costs? By continuously manufacturing in America? 

No sir . . . The issue is not about cutting costs but remaining competitive. The rule in business is simple - if you have a sharp competitive strategy you will ultimately cover your cost no matter how high. Businesses still make money in Nigeria even with pretty high diesel costs & other overheads. Even businesses that relocated to Ghana due to high diesel costs are gradually working their way back eg. Nestle commissioned a $120m brand new factory in Ogun State late last year.

Be careful outsourcing will diminish if not eliminate your competitiveness!!

DJTee:

That the Chinese are creating alternative export markets to the US is smart business logic . . .unlike Nigeria where we sell more than 60% of our crude oil to the US alone - a clearly risky venture.

Decades ago, China and India had the poorest households but the story is totally different today. A quick glance at any forbes listing will convince you - China in particular has added hundreds of forbes rated $ millionaires than any other country in the world in the last 5years. Infact just the other day, Bentley said they sold far more GTs in 2010 in China alone than Europe and Africa combined. And the story is similar for other luxury brands as well. If you are still in doubt take a trip to Shanghai. This is evidence that the disposable income available within the domestic consumer market has increased substantially (almost) to the point of cushioning adverse shocks in exports.

Sound economic strategy and huge lessons for Nigeria.

DJTee:

That the Chinese are creating alternative export markets to the US is smart business logic . . .unlike Nigeria where we sell more than 60% of our crude oil to the US alone - a clearly risky venture.

Decades ago, China and India had the poorest households but the story is totally different today. A quick glance at any forbes listing will convince you - [b]China in particular has added hundreds of forbes rated $ millionaires than any other country in the world in the last 5years. Infact just the other day, Bentley said they sold far more GTs in 2010 in China alone than Europe and Africa combined. And the story is similar for other luxury brands as well. [/b]If you are still in doubt take a trip to Shanghai. This is evidence that the disposable income available within the domestic consumer market has increased substantially (almost) to the point of cushioning adverse shocks in exports.

Sound economic strategy and huge lessons for Nigeria.

True, its sound business strategy for China to diversify its export market but doesn't mean they have to dump their cheap goods on Nigeria. What we need is strong partnership to help develop our own manufacturing sectors. People say China is helping most African countries develop their industries; but not much evidence yet. Personally, I believe China simply wants to control the vast natural resources in Africa. And what do we get in return? Nothing, plus 20th century styled colonialism. That's the way I see it. One of the reasons I'm really wary of this love dance with China and Nigeria.

Also since the Yuan is strictly controlled by Beijing, not market forces, how can we be sure we’ll get a fair deal with any currency swapping agreement or bond investment?

On your observation (bolded): Chinese urban dwellers may be doing very well but the level of abject poverty in rural areas is truly astounding. Most Chinese people live in villages.

@Occam

The responsibility of ensuring substandard goods do not end up in Nigeria is ours - Nigerian government.

We need to shine our eyes when dealing with any of the major economies because none of them have permanent friends, only permanent interests. The Labour party in the UK learnt this bitter truth when after following Bush to invade Iraq, not a single reconstruction project came their way - not even serviced based jobs like security. Thats why they have now revenged by ring-fencing America out of the action in Libya.

So friend, they do not and will not have our interests at heart or give us what is ours on a platter of gold - thats naivety of the highest order. We have to enforce action to get what we deserve. End of story!!

a friend in the know informed me that part of the reasoning behind this is to control the demand for US $ which is weakening the nair. most people importing from china tend to buy dollars in the first instance which they end up converting anyway. since a lot of our imports are from china this makes sense.

regarding dumping of chinese goods there is the role of the government in standard regulation and consumer rights which are quite robust in europe. chinese manufacturers are bound by one year warranties and it is not in their interest to sell low quality products in europe. our own importers on the order hand specifically order cheap low quality products without warranties and the rest is geography