Varied as cities on the African continent are, a new common feature has emerged over the last ten years: in every large or small African town, there is at least one shop owned by a Chinese migrant.Footnote 1 Chinese-owned shops are on the forefront of new south–south trade relations. Trade figures of Chinese goods into African countries are still small if compared to the exports of raw materials from Africa to China, but just like China's oil policy, Chinese shops are rapidly changing Africa's integration into the world economy. Contrary to primary commodity export, they bring a new wave of immigration into even the poorest African countries that seemed unimaginable only ten years ago. By providing cheaper goods to greater parts of the population than any other group of expatriate traders has ever done in Africa, Chinese migrants open up new commodity markets and change African consumption patterns.
Chinese shops are relevant not only to the outside observer but also to ordinary people all over Africa. While many macro-level changes take a long time to affect everyday life, the presence of Chinese traders has an immediate effect in a large number of African towns and villages. The small but growing body of literature on Chinese shops in Africa suggests a surprising uniformity of migration and business patterns all over the African continent, and it shows that Chinese shops are everywhere in the centre of intra-African debates on the costs and benefits of China's new role in Africa.Footnote 2 This debate and the resulting forms of African societies' engagement with Chinese traders have immediate repercussions on the migrants themselves. Because of their special legal and social status, migrant entrepreneurs are always vulnerable to changes in public opinion, and the majority society's view on their presence directly changes the conditions under which they are living and working in African countries.
This article draws on material on Chinese migrant shop owners in Oshikango, a boom town on the Namibian–Angolan border,Footnote 3 to describe how this negotiation of the traders' place in their host society turns businesspeople into “minority entrepreneurs.” In their interaction with a society that perceives them as uniform group, individual entrepreneurs with widely diverging backgrounds are transformed into “Chinese shop owners” subject to similar experiences in their host society. At the same time, the more established migrants form alliances with influential members of the host society in order to secure their status in an increasingly hostile environment; this turns them into middlemen for newer arrivals and leads to an increasing stratification of the emerging migrant community. Taking the interaction with the host society as its central theme, this article has three objectives: to present a study on Chinese entrepreneurs in Africa which is more than a snapshot of one moment in time; to link the discussion on Chinese traders in Africa to a general theoretical debate on migrant entrepreneurs; and finally to assess the potential of a spill-over of entrepreneurial potential into the host society.
The material on which this study is based was gathered during 15 months I spent in Oshikango over the course of four years, from April 2004 to February 2008. Four years is a rather large time span for a study on new Chinese migration to Africa, but it is still very short for the identification of even medium-term trends. Peter Kilby remarked for a similar topic that “if cross-section is the mode of analysis of youth, that of greater age is time-series.”Footnote 4 This might be true for the age of researchers; it certainly is for the age of the phenomena they study. Nevertheless, I think that we have reached a point at which an attempt at analysing developments over time is necessary. The literature on China and Africa has so far concentrated too much on situations and on the topical value of the issue rather than on deeper analysis. I am convinced that a closer look at emerging trends could eliminate some of the wilder speculations about the effects of China's presence, both within the political debate in Africa and global scholarly discussion. The real significance of China for Africa, however, will only be identifiable when the immediate social and economic disturbances, which always accompany the arrival of a new powerful actor, have settled.
As regards the second objective, the analysis of Chinese traders in Namibia can certainly contribute to the debate on minority entrepreneurs – but it can only do so from a somewhat eccentric perspective. Due to the specific conditions of Chinese entrepreneurs in Namibia (which are described in detail later), a large part of the scholarly theories on minority entrepreneurs is of limited value for an explanation of their economic role. Most of the existing studies have focused on the emergence of self-employment in existing migrant communities in industrialized countries.Footnote 5 Chinese traders in Oshikango typically do not start their business after having come to the country for different reasons; they migrate in order to become entrepreneurs. Their customers are exclusively non-Chinese, so that the “protected ethnic markets” or “ethnic enclaves”Footnote 6 do not play any role in business success. Instead of serving ethnic niche markets, they do business in the core of the most attractive market segment in Namibia. Contrary to many other minority entrepreneurs,Footnote 7 ethnic solidarity and local ethnic networks do not play a significant role for Chinese traders in Oshikango. The main asset for their businesses is their ability to bridge different markets, most of all to access Chinese markets and bring goods to Namibia more cheaply than Namibian competitors.
They share one important aspect with other groups of minority entrepreneurs, however: they are perceived as strangers in Namibian society. As a result of their precarious legal status, they are much more vulnerable to changes in societal perception and bureaucratic regulations than entrepreneurs from the host society. But contrary to an evaluation that frequently appears in the study of minority entrepreneurs,Footnote 8 this precarious status does not turn them into a weak group; they show an astonishing degree of adaptability to changes in social and legal attitudes towards them. In this adaptation process, I will argue, they develop into an integrated group with a distinct social structure.
By forging specific modes of integration between migrant and host societies, this adaptation also determines the economic role the migrants will play in their host society. In the article's conclusion, I come to a preliminary assessment of the chances that the presence of Chinese traders will have a beneficial effect on the Namibian economy by freeing entrepreneurial potential in the country. I see these chances as rather slim. There certainly is some degree of co-operation between migrants and hosts. The scarcest resource for Chinese entrepreneurs in Namibia is political and administrative protection. They look for this protection by forming alliances with well-connected individuals who then participate in the migrants' economic success. But this alliance merely creates an additional rent income for some Namibians without changing their economic behaviour, and it prevents economic development in the country rather than fostering it.
During my time in Oshikango, Chinese traders were not the primary focus of my research, which might explain some important blind spots in my material. The main method I used was friendly everyday interaction combined with open curiosity. I came to know many of the younger Chinese in Oshikango while playing football or pool on countless days after the shops closed; later, I was invited to many homes and shops and spent long evenings laughing and talking to the entire family, the younger generation often serving as interpreter between me and their parents. On these and other occasions I asked a lot of questions, and I was often surprised by the frankness of the answers. I hope that I do not betray the confidence granted to me by publishing this account – a path sometimes difficult to tread. The non-systematic character of my inquiry implies that I have no control over the representativeness of my data even for Oshikango traders. All figures given rely on information I was not able to control – but then, most statistics do, and I tried to cross-check both the figures and my interpretations with as many people as possible. All in all, I think that the material presented here is fairly reliable for the longer-established Chinese traders in Oshikango, although many facts about the newer arrivals will have evaded my attention.
The Context: Chinese Trade in Oshikango, Namibia
Namibia, situated between two powerful neighbours, its former colonizer South Africa in the south and Angola in the north, is one of the least populated countries in Africa. Just over two million people live on a surface of more than 820,000 sq km. Most of that population is concentrated in a few towns and in the central northern parts of the country, where a communal land regime and more abundant rainfall than in the very dry central and southern parts make it possible to live on subsistence farming. Overall living standards are very high for sub-Saharan Africa, and the country's infrastructure – especially the extensive road network – is in excellent shape. Since independence in 1990, the country has been governed by the Swapo party, the former liberation movement, in one of the most stable African democracies. The judiciary is independent and influential, the press relatively free from political intervention, and ethnic tensions have until recently been virtually nonexistent. On the negative side, the legacies of colonial land distribution and apartheid policies are still shaping the economic landscape, and the country is characterized by the highest degree of economic inequality worldwide. An HIV/AIDS prevalence of 17 per cent – much higher in some regions – poses crucial challenges both to society and to the economy, and poverty increased by high unemployment rates, most marked for young people, contrasts sharply with wealth, both the old wealth of many of the country's white inhabitants and the newly acquired riches of an emerging black middle class that profits from an unco-ordinated Black Economic Empowerment policy. But in spite of the problems, businesses in the country can rely on a stable economic and political situation and a good working environment.
Oshikango is a young border boom town on the Namibian side of the Angolan–Namibian border. It started to develop in around 1996, when a fragile peace in Angola facilitated reconstruction after a devastating phase in the decades-old Angolan war. As many parts of the country are more easily accessible from its southern borders than from Luanda, many Angolan wholesalers looked to northern Namibia for supplies. This created enormous market opportunities in Oshikango, where the main Namibian highway meets the Angolan border. Oshikango's warehouses combine a unique closeness to the wealthy Angolan marketsFootnote 9 with the much more stable and predictable economic and political conditions in Namibia. As a consequence, Oshikango has seen constant and rapid growth since the mid-1990s. Today, the town has around 10,000 inhabitants, while its warehouses turn over many hundreds of millions of US dollars per year.Footnote 10
A considerable – though not the largest – part of the trade through Oshikango is in the hands of migrant entrepreneurs. Used cars are brought from Japan by traders from Pakistan; a Lebanese family owns a majority share in the largest warehouse, selling, among many other things, furniture from Brazil and household appliances from South Africa, Korea and China; and a long-established Portuguese family owns the most important supermarket and a chain of warehouses. Only a small proportion of the goods traded through Oshikango is still produced in Western countries and traded through the old business channels rooted in colonial history.
In this variety of international business relations meeting in Oshikango, Chinese traders play an important role.Footnote 11 The first Chinese business was established in Oshikango in 1999. Its owner had come to Windhoek as one of the first Chinese traders in Namibia in 1993 and had already gained considerable wealth before opening a business in Oshikango. Since the early 2000s, an ever-growing number of Chinese shops have been established in Oshikango, mostly selling wholesale to Angolan customers. In 2004, 22 Chinese shops were in business in Oshikango; in late 2006 their number had increased to over 75 as a result of two new warehouse complexes. Each time I came back to Oshikango I thought the market to be saturated, but by mid-2008 the number of shops had further grown to over 100, all catering for the Angolan market.
All Chinese living in Oshikango are recent migrants from China. Some of them have been in other countries before coming to Namibia, but none has connections to the Chinese families who have been established in southern Africa for more than 20 years. They are part of the new entrepreneurial migration following Chinese reforms after 1978, especially emigration liberalization in 1985.Footnote 12 In 2004, I estimated their number at between 70 and 120; in mid-2008, due to the new shops, there were at least 400.
Most of the older shops in Oshikango are rented from local landlords who constructed the rather nondescript lines of concrete buildings along the main road. They were not specially designed to house Chinese shops and their layout varies considerably, but their spatial organization follows a well-known pattern that was taken up by the new warehouse complexes built by Chinese investors. In general, a Chinese shop in Oshikango consists of a small showroom and a large store. In the showroom, samples of the various goods are lined up in shelves or arranged on cardboard boxes. When he or she is present, the owner sits or stands behind a counter that usually bars the access to a back office where computer, fax machine and telephone are placed. In every shop there are several local aides who speak English and Portuguese and attend to the customers.
Most businesses are family-run. They often belong to a senior man or couple, while classificatory nephews or (less often) sons and daughters are initiated into the business and gradually take over more important functions. Families live in one or two often windowless rooms attached to the shop or the storeroom. Only a few richer traders (and some with larger families) have a separate house in the backyard or a second storey with a family apartment. The others eat, drink and sleep in the back rooms, spend the evenings sitting in front of the closed store chatting with neighbours, and generally make the shop their home. School children are usually living with relatives in China and attending Chinese schools; only a few attend a boarding school in Windhoek.
The storerooms are usually attached to the shop and stocked with high piles of large cardboard boxes. As a rule, they seem too small for the amount of goods stocked in them, but turnover is high and when a container is delayed on the way, traders can run out of stock quickly. As in all larger Oshikango businesses, both storerooms and shops are guarded round the clock, seven days a week by armed security guards, mostly young men employed by one of the five private security companies based in Oshikango.
China shops in Oshikango exclusively sell goods imported from China. Their stock is geared towards Angolan consumption and consists of all kinds of comparably inexpensive consumer goods. Most dealers do the bulk of their business with textiles, shoes, mattresses and electronics; additionally, they sell commodities ranging from motorcycles to chamber fountains, cooking equipment, or wall clocks indiscriminately depicting Lourdes Virgins or Mickey Mouse. All these goods are bought in China, by the traders themselves or through a family member in charge of the Chinese side of the business. As Oshikango traders sell large quantities, stable business contacts in China are essential; they ensure supply and make it possible to negotiate better terms. Contrary to many Chinese retail sellers in Africa, Oshikango traders do not usually buy their supplies at the huge public wholesale markets but conclude contracts with bulk suppliers. Larger quantities can be ordered directly from the factory, eliminating middlemen and increasing profits. The amount of goods ordered by traders in Oshikango is very high. One dealer specializing in electronics considered an order for 10,000 pocket calculators as a normal amount. “You can order them directly at the factory; if you only want a thousand, you have to pass through a merchant. But 10,000 is not so much; you can always sell them off without losing too much money.” Another dealer sold about 200,000 pairs of sports shoes in 2004 and had approximately 12,000 umbrellas left in his storeroom when he ordered a new batch.
Most orders have to be paid in advance before being dispatched from China. When ordered through a Chinese wholesale and export firm, the goods are shipped FOB (free on board ship) from Shanghai or CIF (including cost, insurance and freight to the destination harbour) to Durban or Walvis Bay in sealed containers; when bought at a factory or a wholesaler not specializing in export, the trader or his local agent has to organize the paperwork and the shipping himself.Footnote 13 The freight papers are faxed to the Oshikango trader and forwarded to the customs office. At least in theory and often in practice, an official has to be present when the seal is broken, and has to control the contents in order to prevent fraud.
Once the goods are in the storeroom and the customs formalities dealt with, the dealers sort through the new stock and unpack samples for display in the shop. Sometimes, these new commodities come as real innovations and draw a lot of comment. The import of the first Chinese motorcycles, for example (the only motorcycles to be bought in Oshikango), made the local news in 2002 and attracted crowds for some days. Most new commodities, however, are merely a variation of older ones and pass more or less unnoticed. In the shops, the dealers attach price tags to the samples. These often mention the unit price in Namibian dollars and the price of a box in US dollars. The customers are almost exclusively Angolan wholesalers, many from as far away as Lubango or Huambo; some shops also sell smaller amounts to a more local clientele.
By providing Chinese goods to Angolan wholesalers, China shops in Oshikango are linking two different trade networks. Here, Chinese trade networks end and Angolan networks begin. Retail trade of Chinese goods in Angola takes place outside Chinese shops; goods are sold alongside many other commodities in the mainstream retail trade, and the end users often do not know that they are buying Chinese commodities.
Except for Saturday afternoons and Sundays, shops open from eight o'clock in the morning to six or seven o'clock in the evening. As the border post opens and closes at the same times, sellers could not profit from longer opening hours. Customers choose from the samples, make a mental note of the desired quantities and ask for prices. They usually compare models and prices in a number of shops before deciding where to buy. Larger deals are negotiated with the owner, who types quantities and amounts in a pocket calculator. As many traders' Portuguese is limited, they usually show the resulting numbers to the customers. Most deals – especially the larger ones – are concluded quickly and professionally. After the goods are paid for and loaded, the seller takes charge of the export formalities and sends the papers to the border to be stamped.
Profit rates vary between 10 and 25 per cent (after transport costs, but before taxes and costs), very occasionally reaching up to 50 per cent. All goods are sold for cash. Some of the largest Namibian warehouses in Oshikango sell on credit to a chosen elite of Angolan customers – often army officers or well-connected international businesspeople – but I have never seen a Chinese trader accepting a credit transaction. No cheques, bank transfers or credit cards are used for payments, and all larger amounts are paid in US dollars. The money is collected in safes and transported to one of the two local bank branches once a week in the blinded van of a security service.
All in all, Chinese-owned shops in Oshikango are doing very well. Those I have been in close contact with were mostly well-established businesses whose owners spoke English and had been in the country for several years. All of them were able to transfer considerable profits to their Chinese accounts after deducting their expenses. It is not easy to come by any figures, though, and as Chinese in Oshikango were very reluctant to comment on other people's business success or failure, I was not able to obtain reliable information about the rate of failure. When I inquired after a friend or acquaintance on one of my returns to Oshikango, I often heard he or she had “gone back to China.” I know that some young men went back to start a family or to continue their apprenticeship in the business of a different relative; others had to leave the country after their work permit expired; but some traders certainly went bankrupt and sold their businesses. Since 2004, however, even if changes of management and ownership have not been unusual, no China shop in Oshikango has permanently closed its doors. I would suspect that about 20 to 30 per cent of the shops have at some time changed owners because of economic problems, but this is only an informed guess. In general, the pioneers had the best chances of survival and growth. They had less competition than the latecomers, and most of them had prior experience in southern Africa before moving on to Oshikango. In the numerous more recent shops in the new warehouse complexes, shopkeepers seem to change much more frequently, but as some of these shops belong to businessmen living in Windhoek and employing fellow Chinese as managers, this does not necessarily imply failure.
In the literature on migrant entrepreneurship, diasporic communities are often perceived as a dense network, as close-knit small-scale societies, bound together by origin, shared experiences and similar living conditions. The common background, high group control and an often unfriendly environment in the host society lead to high levels of inter-group trust and to successful co-operation. This situation facilitates business co-operation and gives minority entrepreneurs economic advantages over the less organized host societies.
This image is only partially true for Chinese traders in Oshikango. First, the families come from very different places. They do not form an organized group and many of them do not know each other, even if they live in the same town. So, for example, one family comes from the Russian border, one from the Mekong near Laos, another from Shanghai and a fourth from South China. They speak different dialects, sometimes different languages, and eat different foods; even the climates in their home towns differ. Snow falls heavily in the northern winters, while the southerners know tropical rainforests and the damp heat of the monsoon months. Their social backgrounds are as diverse as their origins. Some come from poor rural families, some used to be civil servants, and one young man from Shanghai who has an MBA from Beijing University Business School looks down on his neighbours as “uneducated peasants.”
In spite of these differences in background, chain migration is important. Most of the “core migrants” – those who came first, later inducing other family members to come and work in their shops – had heard about business opportunities in Namibia from friends or relatives or through official publications. After bilateral agreements between China and Namibia, Chinese authorities advertised business opportunities in Namibia in newspapers and magazines. The pioneers in the early 1990s all seem to have heard of Namibia in this way. As a consequence, Chinese chain migration to Namibia started in many different places, and migration chains were mostly restricted to family members. Ties that do exist between different families were a consequence of migration, not a reason for it.
This implies that Chinese shop owners came to Namibia as competitors, not as business partners or friends, a fact that surely limits intra-community business co-operation. Instead of an ethnic business network, there is a multitude of parallel threads linking Namibia and China, plus some small clusters of shop owners who are closely related to each other. Accordingly, access to credit, know-how or trade opportunities among Chinese traders within Namibia is primarily organized through kinship, not through nationality. Chinese traders are socially connected to each other and try to maintain good relations with everybody, but these social networks do not usually extend into business. Shop owners co-operate on a private level and sometimes at the margins of business, but they keep important business information to themselves. They lend tools to each other or share their opinion about a dubious customer, but nobody would reveal the details of a cheaper supplier, and nobody would ask. Everybody is blaming competition for falling prices, but (much to the dismay of the Beijing MBA) there are no price agreements between the different shops. Most of the traders feel they cannot talk to their competitors about price policy, supplier prices or profit rates, information that is kept strictly within the family. Similarly, good relations with an immigration officer can be shared, while contacts with customs officers are only used for the ends of one's own shop.
The core of both social and business networks is the family. It is very rare that a single person migrates to Namibia. A couple, often with children, may move without a family member as first contact, but then, once they have successfully established their shop and need help with the growing business, they employ family members from China. These assistants are usually young single men who want to establish a business later on and thus come to learn the trade in the shop of an older relative. In some cases, a brother or sister moves to Namibia with his or her own family and takes over a shop for the owner who is expanding into another town or a different branch; in other cases, different family members have closely related businesses of their own.
Most Chinese in Oshikango don't go out very often; only the young men sometimes go to bars, playing pool or losing money in gambling machines. More often, they spend the evenings sitting in front of their shops with the neighbours and chatting. The older traders play Mah Jongg, while their children prefer Counter Strike or Tomb Raider. Family businesses are organized along patriarchal lines, and working in and for the shop is central to the families' lives.
Contrary to what many Namibians think, the migration of Chinese traders to Oshikango was not organized by the Chinese state. I have heard neither of credits received from the state to encourage migration nor of logistical support by the Chinese administration. Traders came to Namibia on their own initiative to make money and to find better lives for themselves, not as an instrument of Chinese economic policy. Nevertheless, their businesses are a vital asset for the Chinese export industry. They expand markets in much the same way itinerant traders did in 18th-century Europe and colonial traders in early 20th-century Africa: by shortening commodity chains and finding niches for new and cheaper products, where margins for conventional traders would be too low. Chinese traders today provide more Africans with more goods than European – and probably any other expatriate – traders ever did, and they are instrumental in a rapid integration of new population segments into a consumer society. Their actions do not cost the Chinese state or the manufacturing industries anything. The risk of failure is entirely their own, whereas the spoils of success benefit the Chinese economy at large.
Anti-Chinese Resentment and Its Effects on the Social and Economic Integration of Chinese Migrants
The most important strategic advantage Chinese traders have in Namibia is their familiarity with the Chinese supply markets, and their ability to import goods at low prices without passing through intermediaries.Footnote 14 “The difficult thing is to bring the things here. Once they are in your warehouse, Angolans will buy everything,” one of the more successful traders told me. Quality seems to be less of an argument for the wholesale traders than price. This has led to a very ambivalent image of Chinese traders in Namibia. In a society in which consumption of Western goods is gradually moving into the centre of majority ambitions, Chinese goods are increasingly seen as cheap trinkets imported to cheat Namibians out of their scarce and hard-earned cash.Footnote 15 Together with other factors – most importantly the very active lobbying of the Namibian construction industry against Chinese competitors and the totally unexpected growth of Chinese businesses all over the country – this has led to increasing xenophobia and resentment against Chinese in general and Chinese shop owners in particular. Even though, unlike in neighbouring Zambia, Zimbabwe or Lesotho, this resentment has not yet found its outlet in violence against Chinese shops, it still creates serious business problems for Chinese minority entrepreneurs.
As in many situations of competition, the growing hostility does not affect all Chinese traders in the same way. Those who have been in the country for a longer time can use the resources they have – most notably their experience with the host society's system and their better connections to officials at all levels – to increase their competitive advantage over their less experienced colleagues. Instead of lessening the impact of Chinese migrants on the Namibian economy, the more restrictive conditions engendered by the growing resentment sharpen the role division and social stratification among migrant entrepreneurs. They affect the newcomers and the less well-off adversely, but they create new opportunities for the more established and more resourceful.
I will illustrate this process of differentiation by three examples of interaction between migrants on one side, and members and institutions of the host society on the other. All three situations are influenced by growing anti-Chinese resentment. The first example involves everyday interaction between traders and customs officials. It shows that even if they follow official regulations, customs officials have a lot of leeway to differentiate between businesspeople they like and those they do not. This makes officials' goodwill essential for successful business and opens up a space for patronage. The second example shows how successful Chinese migrant entrepreneurs react to the growing difficulties of obtaining work permits by adopting their hosts' development discourse, without necessarily changing their business practices. The third example deals with the sale of land as a prerequisite for investment, and with the symbiotic relationships between Namibian decision makers and Chinese investors that arise from the scarcity of land in Oshikango.
The examples will show how on all levels, from co-operation between traders and customs officials on an everyday basis to a decision on Chinese foreign investments, a more negative climate closes opportunities for many and opens up opportunities for some. I argue that the friction between hosts and migrants paradoxically increases the level of integration of the more successful migrants into the host economy. The ability to maintain links with key people in the host society increasingly turns into a precondition for migrants' economic success. This gives some members of the host society access to rents from patronage, and might in the future increase investment partnerships and joint ventures. If the migrants' economic success can spill over into the Namibian economy at all, this is most likely to happen in this sphere of forced co-operation between successful migrants and well-connected Namibians.
Good relations with customs officials
Most of the trade through Oshikango is done offshore. Goods are imported into the warehouses under bond; they are not subject to Namibian taxes and duties as long as they are re-exported. This implies tight control and a lot of paperwork. In theory, control mechanisms are bureaucratically regulated and apply to all businesspeople in the same manner. In practice, customs officials have a lot of leeway to further or hinder individual businesses even without openly contravening regulations, and most businesspeople strive hard to keep good relations with the officials.
When, for example, goods are exported through border posts other than Oshikango (which is often the case, as controls on the Angolan side are tighter here than elsewhere), the goods in transit are virtually transferred from the warehouse bond book to the road bond book. The road bond has to be covered by the trading company through a cash deposit or a bank guarantee. If that sum is reached, no further goods can be transferred to the road bond, which is only cleared once the stamped export papers come back from the other border post and are processed by the customs officials. By processing the return papers slightly more slowly than strictly necessary or by occasionally losing a paper, a customs official can severely hamper a business without ever appearing to neglect his duty. This is hard to prove and rarely leads to sanctions: while traders' complaints about lost papers and slow processing are common, I have only heard about one officer who was transferred because a number of warehouse owners jointly complained about his sloppy sense of duty.
Even more subtle are the power games involved in offloading bonded containers. The container cited in footnote 13, for example, was offloaded by seven local hands in about two hours, watched by the shop owner, his associate, one customs officer and one representative of the clearing agency. All types of boxes were inspected by the officer and compared to the packing list. When the warehouse was so full one could only just squeeze in between stacks of cardboard boxes and plastic bales labelled in Chinese, the officer started recounting the whole stock. He had to start all over again about five times; finally, he declared that taxes had to be levied on three boxes of belts and nine boxes of umbrellas which were missing from the papers.
The results of this count were openly unreliable and irreproducible. When 1,000 new boxes containing different quantities of a given commodity are added to the stock of a cramped warehouse and packed haphazardly in stacks that often collapse into each other, even the most sincere counting is error-prone. But in this case, far from being a defect, unreliability was the essence the count. It created a source of power for the customs officer who could officially stick to the rules while officiously bending them at his discretion.
This room for manoeuvre on the officials' side makes the ability to establish good working relations with customs officers a crucial resource for traders, and it leads to considerable investment of time and money. Small talk, shared packs of Chinese cigarettes, sometimes a game of pool are very important – as important as larger private payments may be at other times. Most Chinese traders are still relatively successful in this power game of cordial relations. By continuous friendliness and camaraderie – and quick and uncomplaining payment of occasional fines, which they see as necessary investment – they manage to have their papers processed quickly and generally to their satisfaction.
The attitude of customs officials towards Chinese entrepreneurs has changed over the last few years, however. While relations with established traders who speak English and have had ample opportunity to establish goodwill generally remain good, new arrivals have greater difficulties establishing a working relationship with the customs officers. When problems arise, they often pass through more established intermediaries, a move that increases power discrepancies among the migrants and further solidifies relations between officials and established migrants. In addition, the increasingly anti-Chinese public climate has made customs and police officials much more reluctant to turn a blind eye to blatantly illegal business practices. One field which is becoming increasingly problematic for Chinese traders is overpricing and currency regulation contraventions linked to it.
Virtually all export papers for Chinese goods that reach Namibia have the wrong prices. The invoice accompanying the shipment of shoes, belts, umbrellas and perfume mentioned earlier listed the factory price for a box of shoes (between 24 and 36 pairs) at US$5. This, of course, is much lower than the actual value. While under-invoicing does not directly cheat the Namibian state out of import duties and taxes as the goods are traded offshore, it allows the traders to under-invoice their Angolan counterparts as well, and minimize import duties or bribes in Angola. At the same time, the real price customers pay for the goods is much higher than the book price. As all transactions are done in US dollars, this leaves the traders with large amounts of unregistered and untaxed hard currency. The dollars are then either smuggled to China or sold locally to South African Chinese who earn money with large-scale currency transactions. (These transactions are probably connected to money laundering, but Chinese in Oshikango do not know much about the buyers.)
For years, Chinese businesspeople have illegally brought hard currency out of Namibia without ever being challenged. However, the growing resentment against Chinese investors has brought about a change. In November 2007, for example, a Chinese trader was arrested at the airport in Windhoek carrying more than US$500,000 in cash in his suitcase. When he was intercepted, he seems to have followed the usual routine by offering US$200 to the customs official. As the practice was common knowledge among Chinese in Oshikango, this first publicized arrest clearly shows a changing attitude on the part of the authorities. Over the next few weeks, over a dozen Chinese businesspeople from northern Namibia were arrested on charge of illegal currency deals and tax avoidance.Footnote 16
Work permits and faked compliance
The most important bottleneck for Chinese traders in Namibia, and the most important channel through which growing resentment is being felt, is the need to get a visa and a work permit. The Ministry of Home Affairs has a rather bad reputation among Namibians, and getting a new passport or a work permit can be very difficult and time-consuming. Before around 2005, immigration seems to have been much easier for Chinese businesspeople than for other foreigners. It was possible to get work permits quickly, even for people working in shops. Since then, public uneasiness about the growing number of Chinese and Chinese shops in Namibia has had repercussions on immigration policy. It has become very difficult to obtain the necessary papers, especially for new arrivals who are not familiar with the language or the administrative procedures. Now, almost all new Chinese arrivals use the services of a broker.
To obtain work permits and welcome packages several services are available. Perhaps the most common option today is to pay an established Chinese businessman in Namibia as an immigration broker. He takes charge of the necessary documents and provides both housing and a work place for the new arrival. His charge can amount to well over N$100,000 (or €12,000), most of which is gradually paid back by working in his business. The second option is simply to buy a work permit from a Chinese businessman who has the necessary knowledge and contacts to obtain the papers. Informants differed as to the price of this service, but the average mentioned was about N$20,000 (€2,500). All informants were convinced that a share of that sum went to senior Home Affairs officials, the rest to the broker. The migrants I talked to complained about the rising amounts, but they accepted them as the unavoidable entrance fee. For them, those were the rules of the game in the new country, rules that often fitted their experiences with Chinese authorities. Legality was not really an issue for them; the only problem some traders mentioned in relation to the illegality of corruption was that illegality makes brokers both necessary and expensive. One young man who had been in the country for about two years stated: “You know, people talk so much about corruption. You can't just go there and give money to an officer. If he doesn't know you, he will not take it, and maybe arrest you. So there are only very few people who know those in charge for a long time, they are friends, and they know, if I take money from this one, it will be okay.”
It is, of course, difficult to establish the amount of corruption linked to the issuing of work permits. What is fairly certain is that the circles of corruption are very exclusive and now closed. Both corruption and Chinese immigration have become hot topics in Namibia over the last five years, and all people involved are very conscious of the risks they are running. As a result, most established Chinese businesspeople are looking for other ways to gain access to work permits they can sell on to new arrivals. The most important of these is to adapt to Namibian development goals, and set up a “manufacturing business.” Whereas the authorities rarely issue work permits for foreign shopkeepers, foreign investment in the manufacturing sector is still a good reason to be allowed into the country. Almost every established Chinese trader in Oshikango now has his or her “manufacturing plant.” Some of them produce blankets, some mineral water, while others print windscreen stickers or assemble motorbikes.
Hence at a first glance, the changed immigration policy has been successful: it has channelled investment into productive sectors that benefit the Namibian economy as a whole. This spill-over into productive sectors, however, is no more than a Potemkin village. There is not one functional Chinese-owned manufacturing plant in Oshikango. “You know, it's easy,” one trader told me, “You just import some machinery from China. It need not even work. It costs you N$50,000 to get it here. Then, you can get 20 work permits and sell each of them for N$20,000. That's good business.”
Chinese in Oshikango call these “plants for papers.” Everybody knows that manufacturing is a necessary smokescreen, while the real money lies in wholesale trade. This does not mean that Chinese migrants would not want to invest in real manufacturing. Most would be glad to diversify and to contribute to development in Namibia, if only to obtain a more secure status. As yet, however, none of them has found a sector in which manufacturing in Namibia could compete with imports from China.
The more restrictive Namibian immigration policy has so far not reached its goals. Instead of limiting the number of Chinese nationals in Namibia and rendering their presence more useful to economic development, the new policy has simply served to make immigration more expensive to new arrivals while providing a new source of income for established traders. Its main effect has been an increased stratification among Chinese migrants. At the same time, the greater risk for officials has led to a closure of the circles of corruption and to a tightening of the bonds between a few Chinese businesspeople and some representatives of the Namibian authorities. This finds its expression in the sale of land to Chinese investors.
Land sales
In the booming town of Oshikango, closeness to the border and to the main road is very important for wholesale traders. As the goods offered by the various Chinese-owned shops do not differ substantially, customers tend to come to the more conveniently situated outlets. Good plots have, however, become very scarce. Before 2004, Oshikango was under the communal land regime common in northern Namibia: all land was the property of the state and could not be bought or sold. When the area became a town in 2004 (now called Helao Nafifi Town), the town land became freehold land: the town council can decide to sell it to private individuals or companies, who in turn can freely sell it on. Demand for land in Oshikango was high from the start, and market prices were much higher than the prices asked by the town council if buyers promised to invest in the land. Access to the town council and the town's administration which prepares the documents for the council has thus been very lucrative for many. Some pieces of land bought in the early phase of town establishment were re-sold after a few years for 20 times the amount originally paid to the town council.
New Chinese migrants usually lack the connections (and the timeliness) to buy land in Oshikango. Most of those who establish their own business prefer anyway to start by renting a space, which is more flexible and needs less initial investment. Before 2005, all China shops in Oshikango were in buildings rented from local businesspeople or investors. This changed with the opening of “China town” and “China village” in 2006. These complexes, with around 35 shops each, were built by successful Chinese businessmen from Windhoek, who rent out the individual shops to Chinese traders new in Oshikango. The surprising success of the complexes – all shops have been occupied almost since the inauguration for very high rentsFootnote 17 – has established a new form of Chinese investment in northern Namibia. The real estate market for Chinese shops is by now almost exclusively in the hand of Chinese investors. Two more complexes have been built, and a fifth is planned right opposite “China town.”
The massive sale of land to Chinese nationals that was a precondition for these investments engendered a vivid controversy in the area. The town council was accused of selling off prime land to foreigners. That accusation was not only xenophobic but also at least in part incorrect. Most of the land was not directly sold by the town council, but by individuals who had bought it from the council earlier – either members of the local elite with good connections to the town council or businesspeople who had been able to prove their willingness to invest in the land. In order to buy land, Chinese investors thus not only needed a lot of capital, but the local knowledge and dexterity to approach land owners (or the council) and convince them to sell. This often involved long preparation and goodwill work.
Two groups of Chinese investors were successful in these negotiations. The first investors are long-established businessmen who had earned a fortune in trade and had started to diversify their Namibian businesses by moving into real estate some years earlier. They are well-connected both at the local and the national level, have ample experience in dealing with the Namibian administration and the necessary contacts with Namibian businesspeople. After the success of these migrant entrepreneurs, investors living in China profited from connections established through political contacts. In 2006, Helao Nafifi Town and the Chinese city of Nantong signed a town twinning agreement – a rather surprising move given that Nantong, an industrial town in Jiangsu province, has about eight million inhabitants, four times the entire Namibian population. A delegation from Helao Nafifi Town was invited to Nantong in 2006 and came back suitably impressed by the professionalism and friendliness of their Chinese counterparts. Businesspeople and politicians from Nantong returned the visit in 2007. Among the investment contracts negotiated at this occasion was the establishment of “Dragon city,” a warehouse complex financed by businessmen from Nantong on land sold by the town council.
In both cases – connections through long experience or through political intervention – the necessary access to land in a climate of anti-Chinese mistrust has led to a closer co-operation between a few Chinese investors and local businessmen and politicians. No tangible joint venture has resulted from this closeness yet, and private Chinese investment outside trade has so far concentrated on real estate for yet more shops. But the networks established through closer contacts have already had the effect of reducing anti-Chinese prejudices and establishing some sort of working relationship between local and migrant businesspeople; they might turn into focal points for the development of real economic co-operation between migrants and members of the host society. Most of the Chinese migrant traders in Oshikango are excluded from these contacts. They need the more successful traders as middlemen into Namibian society and are thus, at least provisionally, relegated to the margins of both groups.
All these three examples of interaction between migrants and the host society show how growing public resentment against Chinese traders influences Namibia. While this has important consequences in the everyday business life of Chinese traders, the policy changes have so far not had the desired effect. The number of Chinese shops in the country has continued to grow, while investment in the manufacturing sector has remained negligible and purely cosmetic. The stiffer wind Chinese traders face has instead sharpened social stratification amongst the migrants. Growing difficulties with access to resources (from official's everyday friendliness to work permits and land titles) has increased the importance of middlemen for new traders. Those with the necessary know-how and the connections to profit from it gain an exclusiveness which they can convert into material profit and higher status. As a potentially positive side effect of this change, relations between key members of the host society and migrants are concentrated on fewer individuals and thus intensified, and higher mutual personal trust develops between the two sides.
Conclusion
Twenty years after the first Chinese nationals migrated to Namibia, and about ten years after their numbers started to grow substantially, the Chinese in Namibia do not yet form a close-knit migrant community. The only commonality between virtually all Chinese in Namibia is their dependence on trade for a living. Their social relations with each other and with the host society are rapidly changing, and a shortage of resources makes social stratification more and more pronounced. If it is not disrupted by restrictive immigration regulations, this process of social formation is likely to result in the establishment of a more stable expatriate society, a Chinese diaspora constantly living in Namibia and shaped by the conditions imposed on them by the host society. It is too early to predict the structure and economic role of this diasporic society. Some of its traits, however, are already visible.
A large number of the Chinese migrants in Namibia are only in marginal contact with Namibian society, or even with the Namibian economy. Most traders in Oshikango buy goods from China and sell them to Angolan customers; apart from the people working as store hands or security guards, and the electricity and water suppliers, they barely have any Namibian business contacts. As it has become more difficult to deal with Namibian authorities, they often use the services of middlemen. This again limits their local knowledge and prevents the establishment of closer contacts. Their investment in Namibia remains low and extremely mobile: they operate in rented shops, and most of their profits are transferred back to China. Once their stock is sold, they can quickly move on to other places, and many are indeed planning to find better business opportunities elsewhere. Apart from some job creation and popular access to cheaper goods, their presence is not likely to contribute much to the Namibian economy.
Some of the older Chinese traders, however, are developing closer links with their host society. As conditions become more restrictive, those who already have access to Namibian networks are in a much better position than newcomers, and can use their access as an exclusive resource. This leads to an increasing interchange between Namibian businesspeople and politicians on the one hand and Chinese businesspeople on the other. In an optimistic view, that closer association could be the seed for a spill-over of Chinese business success into the Namibian economy much in the way Deborah Bräutigam has described for Mauritius.Footnote 18 She found that Chinese economic success in the country contributed to the development of entrepreneurial potential in the host society in a “flying geese” pattern: successful traders move into manufacturing, while their successful businesses are taken over by new entrepreneurs who follow the lead of the pioneers and, as it were, fly in their wind shade. No “flying geese” pattern of economic development is visible today in Namibia – but this might simply be because of the short history of Chinese direct investments in the country: the consolidation of the migrant community and its links to Namibian businesspeople might in the future lead to a more sustainable Chinese presence with a more constructive role for the Namibian economy.
At present, however, Chinese private investments remain poorly integrated into the Namibian economy. The co-operation between Chinese businesspeople and some Namibians might be to their mutual benefit, but it is not necessarily to the benefit of the Namibian economy as a whole. It creates rents for some members of the Namibian administration and for other well-connected Namibians, and engenders profits for Chinese migrant entrepreneurs, but it prevents rather than generates economic change. Kate Meagher, when commenting on an earlier draft of this article, has called this “the sitting duck model” of co-operation: African markets become the target of Chinese economic activity, but can neither profit from it nor offer real competition.
It is too early to tell whether Chinese investment in Namibia will, in the medium and long term, follow the model of “flying geese” or simply remain in pursuit of “sitting ducks.” But at the moment there is virtually no manufacturing by Chinese companies outside the construction sector, and joint ventures between Chinese and local firms are very rare. Most of the profits from Chinese-owned shops in Namibia continue to leave the country, and the efforts of the Namibian state to channel Chinese investments into other sectors than trade have so far utterly failed.
The two main reasons for this question economists' conventional wisdom that, when properly regulated, Chinese investment in Africa can lead to a win-win situation from which both sides benefit. First, even the Namibian state – one of the most efficient states in Africa – does not seem to have the proper resources to regulate Chinese (or any other) businesses effectively. Customs officials can increase or decrease the leeway for businesses on their own initiative; a lack of control allows traders to establish dysfunctional manufacturing sites as a way to obtain work permits; and insufficient knowledge of Chinese markets by the authorities makes large-scale under-invoicing possible. As a result of this lack of state capacity, some Chinese traders have found ways to use every new regulation meant to concentrate their investment in more productive sectors to their advantage.
Even more important than the lack of state capacity are the conditions of global competition under which every economy operates. As long as nobody has yet worked out how, say, a Namibian textile company should compete with Chinese or Malaysian production sites, it seems unfair to blame Chinese investors for a failure to invest in manufacturing. No regulatory measures will direct international investments into uncompetitive manufacturing sectors. This problem is not new, of course, but as the growing Chinese presence breaks up existing structures it emerges with new urgency. As the focal points of such changes, the Chinese in Namibia today unfairly take the blame for inequalities that have been in existence for many decades.
In this article, I have tried to describe the first outlines of a Chinese expatriate community as it is emerging in Namibia, to sketch migrants' relations to their host society and to discuss the economic opportunities and dangers evolving from these relations. I have tried to take account of changes and to identify trends, but my perspective could not but be short-term. Many caveats apply therefore. Those traders who do not succeed have only appeared in the margins of the picture; I could only surmise medium-term consequences for the host economy; and my perspective on a new phenomenon has isolated it from its wider context. China's presence in Africa is not just the exceptional re-emergence of a powerful economic and political player, it is part of a wider re-centring of the global economic and political system in which the old colonial and post-colonial world order centred on Europe and the United States will be thoroughly questioned by southern countries.
Forecasts about the consequences of this re-alignment are difficult to make, even if we isolate one factor in a case study, as I have done here. We have no very good idea yet about the unintended consequences of the presence of Chinese traders in African countries. We might be able to integrate them into an economic model, discuss whether or not they will become part of a flying geese pattern of development – but we do not really know much about how their presence will change the economies of which they have become a part. There will be enormous secondary effects that cannot be understood by looking at Chinese traders alone. What will the political reactions to their presence be, and what consequences will they have for foreign investment in general? Will local entrepreneurs react to the presence of Chinese traders by developing new energy and greater creativity, or will the competition stifle local initiative? How will the Namibian view of the West, of Africa and of the economy change as a result of the presence of Chinese traders in Namibia – and how will such changes in turn affect how Namibians act in a globalized economy? Will Beijing emerge as a cultural point of reference for Africans, just as Paris or London did a century ago? Will religious thinking in Africa engage with Chinese thoughts?
We do not yet have any answers to these questions. I do not see many attempts even to ask them, and this article is no exception. I have looked at the interaction of host and migrant community, and tried to break up easy categorizations by providing a more nuanced picture of the consequences the interaction has for both sides. But I have only treated the most obvious changes, those that can be traced to immediate economic, political and legal reactions to the role of Chinese migrant entrepreneurs. I suspect that, in some years, we are going to realize that a description of these, albeit sometimes radical, changes only scratches the surface of the issue. China's return to Africa will, in all probability, change African societies to a lesser degree than Western colonialism did; but just as the influence of colonialism was not limited to the economic and political spheres, the growing Chinese presence in Africa will have consequences far beyond its immediate effects in the economic sector.
