Delocalization of Chinese companies in Africa and its implications on the“Everything But Arms”(EBA) initiative

Delocalization of Chinese companies in Africa and its implications on the“Everything But Arms”(EBA) initiative

Companies move part of their businesses or entirely relocate their activities to other places or regions of the world in search of better profit margins, which are often based on competitive costs of labour and production, growing markets (both in terms of the size of market and increased purchasing power among populations of a specific region of the world), access to natural resources available for production and human resources (skilled workers) with abilities to run industries. This process is known as delocalization.
Until recently, China has been home to the world’s multinational companies due to its competitive advantages in offering cheaper manpower and production costs, but today the scenario is different and reforms to improve workers’conditions and wages drive Chinese as well as foreign companies in China to relocate abroad. This relocation targets Southeast Asian and African countries which need to develop their manufacturing industries and offer opportunities to companies to produce at competitive prices and sell at the domestic and global levels. However, alongside those competitive advantages, trade policies like the African Growth and Opportunity Act (AGOA) and the Everything But Arms (EBA) policy, which aim at enabling African countries to boost their exports to the United States and Europe, are also push factors for emerging economies’enterprises, including Chinese enterprises to manufacture in Africa and target the American and European markets. More and more, Chinese Multinational Companies (MNCs) as well as private enterprises relocate their activities to Africa.
This paper explores the delocalization of Chinese companies in Africa in the context of growing Sino-African relations and analyses its impacts on the EBA initiative.