Motley Moose – Archive

Since 2008 – Progress Through Politics

A Very Interesting Story About Cheap Chinese Goods

By: inoljt,

China has long enjoyed a reputation of producing cheap goods. This has generally been a negative reputation; cheap Chinese goods are accused of stealing the jobs of many otherwise happily employed workers.

More below.

Here is one city devastated by cheap Chinese imports:

…the city can ill afford to lose more commerce. For centuries it enjoyed high levels of literacy and a degree of architectural sophistication. But its main industries, cotton and leather, have collapsed, unable to compete with low-cost imports.

“The Chinese are choking small-scale businesses,” laments Sani Yusuf…

The story is by the Economist and can be found here.

There’s an interesting twist to this otherwise typical tale, however: it takes place in Kano, Nigeria.

In other words, cheap Chinese imports are outcompeting Nigeria goods. But Nigeria is a poorer country than China. The typical Nigerian makes less money than the typical Chinese person. Wages are almost certainly lower in Nigeria. It should be Nigerian goods that are cheaper than Chinese goods, not the other way around.

Of course, there are good reasons why Nigerian goods aren’t cheaper than Chinese goods. Productivity is lower in Nigeria. Nigeria doesn’t have a reliable electrical grid, for instance; China does. It’s hard to produce goods cheaply in a factory when the electricity goes out half the time.

Still, this is a fascinating story. We don’t normally think about Chinese goods being cheaper than those from a country poorer than China. And yet it happens.

A final note. Like many African countries, Nigeria is currently entering the second decade of an economic boom (fueled by Chinese demand for commodities). Nigerians live longer and are richer than they ever have before in history. So don’t feel too sorry for Nigeria; it’s doing better than it has for a long, long time.