Will Made in Africa replace Made in China?

The Next World Factory May Be Africa

Made in Africa

Made in China has been the center of global manufacturing since the 21st century. China has become the world's factory for many years, has the most mature and developed supply chain system, and has sufficient productivity and market development potential. Whether it is American high-tech products or European luxury goods, without exception, they choose to set up factories in China for OEM.

In recent years, more and more voices have called for China's manufacturing industry to go upstream, gain competitiveness in high-end technology products, and develop toward smart manufacturing. Why does China's manufacturing industry rethink its direction? Because with China's development, labor costs and raw material prices are rising, some Chinese companies and multinational companies have moved factories to countries where labor is cheaper. Some people predict that Africa will be the next world factory, and perhaps in a few years, "Made in Africa" ​​will become the new manufacturing center.

Made in Africa
In this region of Africa, you can hardly think of being connected with manufacturing. Many people first think of poverty, backwardness, and disease. African products are relatively niche, like coffee from Kenya, a red wine from South Africa, and diamonds from Lion Rock. But this is Africa before, and now products made in Africa are beginning to appear in our lives.

Today's African manufacturing industry is gradually growing. More and more investors and manufacturers are entering Africa to set up factories. Its industries include fast fashion brands and apparel, as well as some aerospace and automobile manufacturers. Entered Africa to establish a production center.

Why did you choose to set up a factory in Africa?

The first reason: cheaper labor costs. The basis of cheapness lies in a large number of laborers in Africa and the sufficient supply of the labor market. It is estimated that in 2035 Africa will add 100 million new working-age workers, which is more than other regions and countries in the world combined.

This trend is exactly the opposite of Asia. Many countries in Asia have entered an aging population, with more and more elderly people and fewer young people, and societies have become an inverted pyramid structure. Africa has a positive pyramid structure and the labor force is very young. The demographic dividend is the first advantage.

Policy promotion
The second reason is the change in policy organization. This is also one of the reasons for the rise of China that year. The government formulated new policies to organize production factors more efficiently. Opening to the outside world is to match China's productivity with the needs of the world market.

(African Continental Free Trade Agreement, AfCFTA)
Africa is also going through this stage. In 2018, the African Continental Free Trade Area was established. This trade zone is the free trade zone with the largest number of participating countries since the establishment of the WTO, including 44 African countries in total. The main purpose of the free trade zone is to abolish 90% of the tariffs between member countries, in this way, to stimulate intra-regional trade on the African continent. Such a policy has turned the whole of Africa into regional integration and opened up a huge market. The size of this market, in terms of population, reaches 1.2 billion, which is equivalent to one China. From the perspective of the consumer market, there are 2.5 trillion US dollars. Such a large demand will bring about a series of follow-up actions, such as stimulating local governments to simplify customs clearance procedures, build infrastructure, and further accelerate the industrialization of Africa.

"Agenda 2063"
This is the 50-year development plan for the African continent, formulated by more than 50 African countries. Several goals listed in this plan include: building an integrated high-speed rail network, issuing African unified passports, building an African electronic university, and unifying the African air transportation market. If these things can be accomplished, then the entire African market will be further innovated.

But there is market demand, but can Africa's production capacity keep up?

At this stage, manufacturers in Africa are facing several problems, that is, the quality of work of Africans is relatively poor because they have no disciplined work habits and no time concept. The attendance system and assessment standards cannot be followed either. African manpower needs to be trained and cultivated before they can gradually learn and increase productivity.

Skills Training
Africans are also constantly learning and improving. There are now many professional skills training schools in Africa. Learn health care, climate change, environmental protection, etc. and various professional skills in the school curriculum. Or some companies set up programming education for the capabilities required by the company, allowing more African programmers to receive programming training from American companies. With good vocational education, slowly solve the problems of labor skills and labor quality.

Africa has a long way to go to become a manufacturing center. The potential of "Made in Africa" ​​is not only a demographic dividend, but the greater potential lies in the fact that the entire market on the African continent is opened up, and more and more companies are willing to provide young people with Skills Training. The future of "Made in Africa" ​​is a direction that deserves continuous attention.

Reference: kknews