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Chinese retail spreads in Uganda amid local jealousy

Despite jealousy of local merchants and rapacious officials, Chinese retail spreads in Uganda

Chinese retail spreads in Uganda amid local jealousy

KAMPALA, Uganda (AP) -- The last time men posing as immigration officials showed up at Wei Kun's shoe store in the Ugandan capital of Kampala, the Chinese trader forked out $1,000 in bribes to prevent his business from being shuttered.

"I have many, many problems. It's very difficult to make money here," Kun said as he waited for customers inside his shoe store.

Yet Kun's perseverance in the face of such obstacles, including the rising hostility toward local merchants, is a measure of how profitable it is for Chinese merchants to run small businesses in Uganda -- and the rest of Africa. Over the past 10 years, Chinese industrial giants have invested billions across Africa, and there has been an accompanying explosion of petty retailers opening small shops from Senegal in the west to Algeria in the north, Zimbabwe in the south and Uganda in the east.

China's direct investment in sub-Saharan Africa jumped from practically nothing in 2002 to $18.2 billion in 2012. According to the Chinese General Chamber of Commerce in Africa, there are about a million Chinese living in Africa, mostly engaged in commercial work.

Inexpensive Chinese goods have long been popular in Africa, and in the last decade Chinese merchants have started eliminating the middle man and setting up retail outlets of their own -- much to local merchants' chagrin.

"The price undercutting will chase us out of the market," said Issa Sekitto, spokesman for the Kampala City Traders Association, which counts 400,000 formal members.

"Because the Chinese are importing directly from home, they can also afford to bring in junk," he said, accusing them of importing inferior goods -- which the Chinese deny.

Local officials estimate there are thousands of these so-called briefcase investors in Uganda -- a pejorative term playing off the government's desire to bring in major international money.

The Chinese merchants' inexpensive products -- such as $1 plastic, slip-on shoes -- are finding a ready market in a city where most put affordability first.

Trader Leo Jian says he and his fellow merchants sell what the market wants.

"China has the best shoes but it also has the fake ones. But Uganda needs cheap, cheap things, and cheap things can also be seen as fake."

The traders are increasingly everywhere, in supermarkets, furniture shops, photo studios, and massage parlors, but mostly in run-down shopping centers in which Ugandan and Chinese operate side by side. They are also starting to bring in their own people for the manual labor that used to employ Ugandans, Sekitto said.

Ugandan trader Arafat Jalai buys much of the stock for his suitcase shop from the Chinese -- even as he competes with a Chinese-owned store across from his own.

"They should not be here trading. They should have factories. Otherwise they should be sent back home," he said.

Many other local merchants would like to see them deported or restricted to just large business ventures. In Zimbabwe, there was even a law in 2013 to reserve retail outlets for locals but it hasn't stopped the spread of Chinese merchants there either.

In 2011, riots broke out in Kampala that largely targeted the city's foreign merchants -- echoing the 1972 expulsion of the country's Indian middle class by dictator Idi Amin.

Frank Ssebowa of the Uganda Investment Authority maintains that there is room for both Chinese and Ugandan merchants. He dismisses complaints by some locals.

"If they didn't have what clients want, would the Chinese be in that business?" he said. "The Ugandans who are grumbling are lazy types. They don't want competition ... bitterness and envy will always be there."

Most of the Chinese merchants, like Kun and his shoe store, keep a low profile. They avoid involving police in any disputes with employees or rivals. Kun said that in the last four months since he set up his shoe store in one Kampala's many noisy, poorly-ventilated shopping centers, he has paid some $8,000 in fees and bribes to keep his place open.

Ugandan immigration officials routinely deport groups of Chinese citizens found operating without valid work permits -- which are often difficult to obtain.

Perspective traders must provide evidence of $100,000 in planned investment, language skills and obtain the necessary trade licenses -- or pay off the right people.

"To get anything done you need money," said Maya Fang, a Chinese woman who sells furniture in Kampala.