Nov 4, 2017
Author Irene Yuan Sun argues in her now book that Africa is poised to become the world's next manufacturing boosted by Chinese investment and production expertise. With costs steadily rising in the PRC, more and more companies are looking to offshore production from China to more affordable countries. Africa and its abundant population of young workers, free trade access into the US market and proximity to the European Union make it an attractive investment destination for cost conscious manufacturers.
But Africa is not alone vying for the estimated 85 million jobs that will be in play as China transitions away from manufacturing to a services/consumption-based economy. African countries will have to compete vigorously against Vietnam, India and other Asian nations to lure Chinese manufacturers.
Time is also a key factor. Major international manufacturing companies like Foxconn and Pegatron, contract manufacturers that both produce hi-tech products for Apple, HP and Dell among others, are working very hard to automate their production lines using robots powered by artificial intelligence. With more companies, including once low-tech industries like apparel and furniture assembly, moving as quickly as possible to automate their production lines, African policy-makers must no doubt be concerned that with the pace and sophistication of automation steadily increasing, might encourage Chinese manufacturers to keep their operations rolling back home, albeit with fewer workers.
Sun, for her part, argues the fear of technological dislocation is overblown. "The essential point automation alarmists miss is that technological adoption happens through millions of individual decisions by companies that are constrained by the demands of their value chain, the financing capability of their balance sheets, and their own managerial know- how. Just because they could produce something in a more automated way doesn’t mean they will," she said. Already, Sun contends, Chinese-factories in Africa are using robotics and automation with human labor still playing an essential role throughout the production process.
Sun joins Eric & Cobus to talk about her new book, "The Next Factory of the World: How Chinese Investment is Reshaping Africa." The book is part travelogue, part business intelligence of a fascinating trend that operates largely out of sight yet has potentially massive implications for the future direction of almost every economy in Africa.
Join the discussion. Do you think Africa is well positioned to become the world's next manufacturing powerhouse or do you think the high-levels of corruption, poor infrastructure and weak governance in many parts of the continent will inhibit this kind of industrial development? Let us know what you think.