The level of China’s investment in Africa is increasing at a fast pace. Until recently, China’s investments in Africa focused on large projects in a few sectors, including mining, oil and infrastructure. Chinese companies are major players in the world’s textile market and important customers in the cotton market. Cotton exports from Africa to Asian countries are increasing.
Textile production in China is facing numerous issues, including rising wage levels, higher energy bills, enhanced logistical costs and quotas on the import of cotton. Therefore, Chinese textile companies are investing overseas. For example, Wuxi No. 1 Cotton Mill Textile Group, recently signed a memorandum of understanding with a partner in Ethiopia to invest in a 3,00,000 spindles spinning mill. Wuxi No, is the largest producer of high quality compact yarn globally.
The group produces in China with 5,00,000 spindles annually 26,000 tonnes of yarn. Wuxi’s president Zhou Ye Jun says, the encouraging message is that Africa has some unique advantages for Chinese investors. In comparison with Asia, Africa’s location is physically closer to the European and American markets. It also enjoys more favourable trade policies with the EU and the US.
African market of textile manufacturing has less competition as well. The huge population and immense space in the continent provide great potential for manufacturers to develop.
