Opinion | The everyday reality for China’s belt and road plan in Africa is labour issues, rather than foreign relations

When Chinese companies go to countries like Ethiopia, they find themselves having to deal with labour disputes and run up against legal and cultural complexities. These are the risks firms have to manage, away from the headlines

Reading Time:3 minutes

In Ethiopia, Chinese companies such as shoe manufacturer Huajian Group hire locals. When there are local employees, there are also more labour disputes. Photo: AP

Published: 3:00pm, 19 Apr 2019Updated: 6:30pm, 19 Apr 2019

Chinese foreign direct investment has been pouring into Africa in the course of the “Belt and Road Initiative” introduced by President Xi Jinping in 2013. Although much of the reporting on the belt and road plan has focused on the scale of Chinese investment and foreign reactions to it, what has defined the trade strategy on the ground is labour disputes.

Ethiopia has been at the forefront of Chinese investment in Africa. The country’s low labour costs and sizeable consumer market – Africa’s second largest, with over 100 million people – make it an attractive location for Chinese companies. In 2018, there were 400 active Chinese investment projects in the country worth a collective US$4 billion.

The majority of Chinese firms operating in Africa are privately owned. Both private companies such as footwear manufacturer Huajian Group and state-owned enterprises such as the China State Construction Engineering Corporation (CSCEC) hire Ethiopians.

When there are local employees, there are also more labour disputes. Since 2017, at least a dozen strikes have been staged across a range of industries, with some involving thousands of employees. Chinese managers have had to deal with labour disputes within the company and in court, within a juridical framework that has sometimes favoured local employees over foreign employers.

The World Bank surveyed 69 Chinese businesses in Ethiopia in 2012 about various aspects of foreign investment there, including infrastructure, sales and supplies, land, finance and human resources. Sixty-five per cent of respondents disagreed that “the court system is fair, impartial and uncorrupted”, and 74 per cent disagreed that “government officials’ interpretations of the laws and regulations affecting this company are consistent and predictable”.

Today, labour disputes involving amounts under 500,000 birr (US$17,000) are heard in the Federal First Instance Court, where judges have shown a tendency to favour employees. Chinese companies have become increasingly reluctant to contest small lawsuits.