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Nigeria China Economic And Business Forum by nigeriachina: 12:12pm On Jan 07, 2020
The Nigeria China Economic And Business Forum is a Forum powered by Trade Nigeria Organization for Public-Private Cooperation on business, investment and commerce between Nigeria and China.

NIGERIA-CHINESE TRADE RELATIONS AND TEXTILES

Chinese trade relationship with Nigeria has been severely criticized both in the press and in academic writings. Sansui, the former governor of the Central Bank of Nigeria, stated in 2013 “China takes from us primary goods and sells us manufactured ones. This was also the essence of colonialism,”. Others have been equally scathing. Agubamah (2014) writes: “The relationship between Nigeria is not a Win-Win situations as being claimed by China but rather Win-Lose situation as reality shows…Nigeria should be wary of being used as a dumping ground for cheap Chinese exports…”.

Umejei (2015) surveys articles from two prominent papers Thisday and Punch for the period Sept to Dec. 2012 along with soliciting views of journalists through a Linkedin “Everything Journalism Forum” to inquire if the relationship is viewed as one of opportunism or opportunity. He finds a mixed perspective with views that China provides investment and aid, a model for success and a potential partner for development. He also found that writers also depicted China as neo-colonialist in its behavior, exploitative and a dumper of “sub-standard products”. Others argued that China was “was not different from other global powers”.

A particularly heavy criticism has focused on the claims that Chinese imports have completely undermined the textile sector. Both China and Nigeria have long histories of textile production which dates back to the hand-weaving in the eighteenth century in the Yangtze valley in China under the Qing dynasty and city of Kano under the Sakoko Caliphate which began in 1804. Both were affected by colonialism, foreign ownership and mechanization in the 20th century. In China, cotton textiles rapidly expanded after the nationalization following WWII. In Nigeria, the modern history of textiles began in the 1940s and 50s as part of the textile development scheme centered in Kano and Kaduna with support from overseas capital. The first indigenous factory was commissioned in Kano in 1952. Later a number of factories were opened by the Emir of Kano with the financial support of Lebanese businessmen. Other factories were opened in the 1960s with capital from Britain, Sudan and the Hong Kong based CHA group which provided financial support for United Nigeria Textiles Ltd (UNT).

In the 1980s Nigeria had 175 textile plants employing 250,000 people with many more employed as traders and suppliers of cotton and other inputs including thousands of cotton farmers. It accounted for around 25% of manufactured value added with roughly 35% exported to West African countries. However, production thereafter began to decline while production in China led by FDI in the SEZs dramatically increased.

By 2007, Nigeria had only 26 companies still operating in textiles with employment of roughly 24,000 people. Closures included early plants like the UNT. Growth of Chinese imports was facilitated by the massive influx of Chinese company representatives to Nigeria and Nigerian traders flocking to China. The numbers by 2008 had reached 50,000 Chinese reps in Nigeria and 20,000 Nigerians in China. (Muhammad et al, 2017, Umejei, 2015, Renne, 2015). Muhammad et al (2017) go as far as to call this “Chinese textile imperialism” and blames the decline on the Chinese. “From this healthy state the textile industry began to decline steadily. This was largely due to cheap imports from China”(p.676)

Renne (2015) takes a more nuanced view. Nigerian textile production fell apart in the 80s and 90s due largely to internal problems though illegal cheap Chinese imports might have been present from the 70s. The main source of the decline was poor and unstable leadership which failed to provide consistent supporting industrial policy, decline of infrastructure including the failure to maintain the power grid, and the impact of structural adjustment after 1986 which among other things devalued the currency and made spare parts and modern weaving equipment prohibitively costly.

While Nigerian production declined, the Chinese industry began to prosper after the mid-80s. The initial success of the four SEZs led to their expansion and development of SEZ industrial clusters focusing on textile production in cities in Zhejiang and Hebei provinces. They started importing state of the art equipment and producing high quality textiles in an efficient manner. In


1980, China was the tenth largest producer of textiles. By 1995, the improved equipment, large low wage labor force and modernized infrastructure propelled China to become the largest producer and exporter of textiles in the world. By the late 1990s and early 2000s Chinese textile companies and their representatives had institutionalized new trading practices in Nigeria while fostering the presence of Nigerian trading representatives in China.

The structure of trade is very important from a development perspective. At least since the work of Prebisch (1950) and Singer (1950), development economists have been aware of the need to increase manufacturing exports and the problems with continuing to rely heavily on unprocessed resource exports. Among other things, manufacturing is subject to increasing returns, is a conduit for the transfer of technology, has higher income elasticities compared with other activities, generate employment, is very tradable, is more heterogenous which can allow for better market segmentation which helps avoid the price volatility of homogenous commodities, and can stimulate extensive backward, forward and demand linkages (Stein, 2013).

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