China is the largest trade partner of Ethiopia. The trade volume between the two nations has accelerated after the establishment of the Forum on China-Africa Cooperation (FOCAC) in 2000.
FOCAC created an important platform for collective dialogue and the effective mechanism of practical cooperation between African states and China. Ethiopia exports various commodities to China including agricultural, industrial and mineral products such as coffee, oil seeds, sesame, leather, and tantalum while China’s exports to Ethiopia consists of industrial products including self-propelled railway coaches, apparatus for power transmission, engines and motors, mobile phones, and several other industrial products.
China, the world’s second-largest economy with manufacturing industrial sector as its economic basis, is far advanced than that of Ethiopia, whose economy is mostly concentrated on agricultural products. Their bilateral trade has been on the upswing where China has been exporting low cost manufactured consumer products in return for access to Ethiopia’s relatively large market and resources in the Horn of Africa.
A significant quantity of manufactured goods and machinery and transport equipment are utilized by much of the Chinese firms in Ethiopia for the various infrastructural projects. Ethiopia’s relationship with China has provided Ethiopia with economic development that it can own by itself based on the principle of mutual respect and noninterference.
The Ethiopian government has been encouraging imports, purchasing Chinese equipment and supplying it to local construction and manufacturing firms on a lease-to-buy basis. Both countries’ trade continues to grow rapidly. According to the Ministry of Foreign Affairs, more than 4 billion USD Chinese investments are operating in Ethiopia in 2018.
And there are about 400 Chinese investment projects with over a hundred thousand job opportunities of which 100 projects were established in a joint venture with Ethiopian partners. The longer-term benefit may be to stimulate improvements in efficiency and quality. Chinese investment in local infrastructure may assist in this outcome.
Various documents indicate that by 2015 bilateral trade had grown to 3.8 billion USD, with Ethiopian exports have been encouraged through special quota and tariff arrangements. China is already Ethiopia’s biggest trading partner, with Ethiopia exporting 144.5 million U.S. dollars of goods to China in the first six months of the Ethiopian Fiscal Year 2017/18, statistics showed.
Ethiopia’s exports to China have been observed to have steadily increased over time although not diversified. There is also a perception that Ethiopia has been benefiting from the tariff and quota-free preferential market access granted by China. China’s grant of preferential treatment through duty and quota-free preferential market access has progressively grown by evolving policy to boost China-Africa partnership by way of increasing the number of export items.
China is poised to exploit opportunities in Ethiopia by investing in various economic sectors. Notable among others are road construction, electric power generation, and telecommunication. To strengthen, expand and promote trade, both countries use various mechanisms. China Trade Week (CTW) is one way to develop direct trading links with the local business community.
CTW in Ethiopia is supported by the Chinese Chamber of Commerce (CCC) and China Council for the Promotion of International Trade. Established in 2013, China Trade Week had its first event in Ethiopia in 2017. During its first event, 50 exhibitors had participated in getting an experience of the market and to see what the local business community needs.
Again, during the second China Trade Week held in Addis Ababa in 2018, around 50 Chinese firms have showcased their wares to eager Ethiopian customers. The three-day event had drawn Chinese companies engaged in construction materials and machinery, electronics, food and beverage, furniture, packaging and plastics, print, daily necessities, and animal healthcare.
The third China Trade Week Ethiopia will take place at the Millennium Hall starting from May the second 2019. It is expected to bring together more than 200 Chinese manufacturers who will be exhibiting their products from different industries.
Trade shows offer a great platform for the companies to introduce their new goods to the market, especially those for which they are still establishing sales potential. Generally, the business week has several opportunities for local business communities in developing direct trade links with Chinese producers and solution providers, said David Wang, Executive Chairman and Managing Director of MIE Group, an exhibition and event consulting company. Small and medium-sized enterprises (SME) can enjoy full support from the CCC concerning CTW.
Attending the event, enterprises can apply for overseas exhibition subsidy from the government if they meet the requirements, he said. Exhibitors from sectors including construction materials and machinery, lighting and energy, clothing and textiles, electrical goods and electronics, automotive parts and accessories, health and beauty, print, packaging and plastic, baby and infant products and food and beverage will participate in the event.
The Ethiopian Herald April 11, 2019
BY TSEGAYE TILAHUN
