China’s Manufacturers Look To Africa For Cheap Labor

China’s Manufacturers Look To Africa For Cheap Labor

Labor-intensive Chinese businesses should move to Africa for its abundant young workforce, World Bank President Justin Yifu Lin said during the 17th China International Fair for Investment and Trade, according to a report in ChinaDaily.

Businesses that relied on China’s cheap workforce are being squeezed by rising labor costs, the report said. Many labor-intensive businesses have already moved to Vietnam, Cambodia, Myanmar and other South Asian nations, but their populations are relatively small and the wages will go up soon, according to the report.

Africa is the obvious choice, Lin said. “Africa has about 1 billion people and a very young labor force. It’s just like China in the 1980s. There is substantial room in Africa to accommodate China’s labor-intensive manufacturing.”

Some Chinese argue that coastal factories could move to inland China rather than moving overseas. Lin said the country’s central and western regions are already expensive.

By moving manufacturing to Africa, businesses can focus on the two ends of the “smiling curve,” which depicts value-added in the industrial value chain – in China, Lin said.

In 2012, trade between China and Africa totaled $198.49 billion, up 19.3 percent from 2011, the report said.