Written by Peter Wonacott | From The Wall Street Journal
Each sparkly green television motherboard that rolls off the Hisense Co. factory line here moves China a tiny step toward a new global manufacturing base.
The line’s eight South African technicians monitor the assembly process by computer and have incentives to work quickly. In less than a year of operation, they are producing at the same clip of 70 seconds per board as their Chinese counterparts.
But there’s a hitch: Hisense factories in China use half as many workers to make the same product. In South Africa, one technician monitors one machine. In China, the company’s technicians monitor two machines apiece.
“Step-by-step,” says Jerry Liu, general manager for the Middle East and Africa unit of the home-appliance maker. “We’ll get there.”
Faced with rising labor costs at home and negative perceptions about their employment practices in Africa, Chinese companies are setting up new factories on the continent and hiring more Africans. The companies efforts will test whether the masters of low-cost manufacturing can be as productive in Africa as they are in China. Many bet they can be.
“China is a resilient investor,” says Martyn Davies, chief executive of Frontier Advisory, a consulting firm that does business in China and Africa. “You see it in Ethiopia at the bottom end and in South Africa in the higher-end stuff.”
Auto maker China FAW Group Corp. is building a new factory in the South African industrial hub of Port Elizabeth to produce trucks and light commercial vehicles. Huajian Group, a Chinese shoemaker, plans to invest as much as $2 billion in Ethiopia over the next decade to make the country a base for exports to Europe and North America. Chinese factories also produce steel pipe and textiles in Uganda.
Read more at The Wall Street Journal