China: Guangzhou’s 16,000 Africans hit by effects of China slowdown on home continent

With few customers at his wholesale jeans store in Guangzhou these days, Nigerian trader Brien Chuks busies himself looking next his three-month old baby.

“Last year I sold 12 shipping containers of jeans back to west Africa but this year I haven’t managed to fill a single one,” says Mr Chuks, who operates from the Canaan market in China’s third-biggest city, like a lot of other Africa-focused exporters. “The Nigerian economy depends on oil so with the crude price having fallen so low, business is very hard.”

In a sign of the circularity in the world economy, the Africa-focused traders who have long thrived in Guangzhou are suffering because of a commodities-driven slump in their home continent that from presently on originated in China.

At the same time as rapid Chinese increase pumped up prices of oil and metals, resource-rich parts of Africa thrived, buying additional consumer goods from Guangzhou. Presently the opposite has happened.

Sitting in the midst of China’s manufacturing heartland, Guangzhou has long been a centre for trade with Africa.

At least 16,000 Africans live in the sprawling city, according to the local government, and a lot of additional come here temporarily, or remain on illegally, so they can buy cheap clothes, shoes and electronics and sell them back home. Most stalls at the Canaan market sell apparel designed for Africa from colourful dresses and hip hop-inspired fashions to trousers and underwear in sizes far too large for most Chinese consumers.

Trade with Nigeria, Africa’s biggest economy, has suffered particularly badly because its government restricted access to foreign exchange in a bid to withstand the impact of the fall in oil prices. Last week it allowed its currency to float freely, prompting a slump in its price.

During the initial quarter of this year, Nigeria’s imports — a quarter of which came from China — dropped 16 % compared with 2015.

Razia Khan, an Africa economist at Standard Chartered in London, says the economic slowdown in Nigeria has affected consumption, while the foreign exchange restrictions made life difficult for small traders such as Mr Chuks, who has lived in China for 16 years and, like a lot of of his peers, married a Chinese woman.

Until it reversed course, the Nigerian government refused to devalue the official exchange rate and limited access to dollars at banks, forcing a lot of people to buy dollars on the black market at a 75 % premium.

That had made business unprofitable for a lot of small Nigerian businesses used to buying from the cavernous wholesale markets that are dotted throughout Guangzhou.

Alongside the Africans, a lot of Chinese wholesalers in Guangzhou are struggling.

Zheng Shaotien, who sells fake Manchester United and Barcelona football jerseys at the Canaan market, estimates that sales are down 50 % compared to last year.

“I’m struggling to survive,” he says.

Rents at the market, which reverberates to the sound of full-throated bargaining in broken English, are high, at Rmb10,000 ($1,500) for a stall inside and Rmb15,000 for one with street frontage.

Mr Zheng is doing everything he can to boost sales, from learning French so he can transaction better with customers from French-speaking Africa to developing his own brand of higher-quality sports clothing targeted at Chinese consumers.

Yu Xiamei, an extra clothing wholesaler at Canaan market, says that although she is concerned about the downturn, she still enjoys trading with her African customers who she thinks “can learn from the Chinese about negotiation”.

With a lot of Africans in Guangzhou living and working in the chaotic streets around the major train station, there are sometimes tensions with Chinese residents and the police launch habitual crackdowns on visa overstayers.

But Mr Chuks, who has official residency in China, says that despite some racial issues and the recent slump, life is good compared with Nigeria.

“I come from Imo national [in south-east Nigeria] and at the same time as I was living in Lagos, people treated me like I was an outsider,” he says. “But in China it’s not that bad. They as well have very good transport here, not like in Lagos where there’s not even a metro. Are you getting me?”