How the Chinese are taking over

How the Chinese are taking over

MASERU – THEY started with a few shops in villages around urban areas but were soon in every corner of every town in the country. Then slowly they moved to remote areas, conquering the market with cheap prices, drastic cost-cutting measures and bulk-buying through deep-pocketed syndicates.
Now the Chinese retailers are all over the country, selling anything from bread to alcohol.

The mom and pop businesses that used to dominate the villages are crashing out of business in droves, leaving their owners in poverty.
The owners are squirming as the Chinese are marauding into markets locals thought were their preserve.
Across the country there are sad stories of business people who shut their shops as soon as Chinese retailers landed in their area.

Their bitterness is palpable. And so is their anger, not only at the newcomers but also at the government.
Call them grumpy crybabies or failed businessmen if you like but the reality is that their livelihoods have been shattered by the entrance of foreign businesses who, under normal circumstances, should be tussling out in bigger and capital intensive industries.

The law that reserves business ventures like small shops, bars and cafes for locals has not stopped the Chinese from making forays into the retail sector.
The government seems unwilling to enforce compliance with the law it enacted supposedly to protect locals from foreign competition. It’s now a free-for-all stampede in a market that was reserved for the ‘small’ men and women whose drive was subsistence rather that profit. All in the name of the much vaunted foreign direct investment (FDI).
In other countries FDI means millions pouring in through machinery, raw materials and expertise. Jobs are created as industry booms on the back of new money sustained by expertise and innovation.

New markets are found for the products and the country earns foreign currency. In Lesotho the definition of FDI seems to have been so watered down that it now includes corner shops selling trinkets and village shops peddling tomatoes, bread, cigarettes, paraffin and candles.
Under incessant pressure, some locals have surrendered their shops to the Chinese in exchange for rentals.

The few that remain are only getting by on half-empty shops or on meagre stock cobbled out of pittances. Everywhere in the country you find this juxtaposition of a miserable local shop and a flourishing Chinese shop.

Tiisetso Molemo, 61, from Mafeteng, opened his shop in the early 1990s and immediately struck gold. Because he was on the outskirts of Mafeteng he did not worry much about the Chinese shops in town. That however quickly changed when the Chinese started making inroads into the villages. Molemo says he was stunned because he never thought the government would allow that to happen.

“Some of them have taken over buildings that do not have facilities such as electricity,” Molemo says.
They came to his village too and opened a shop a few metres from his. The impact on his business was instant: sales tumbled together with the profits. His customers deserted him, preferring to go for what they thought were bargains at the Chinese shop.

“Their coming into villages spells a danger to us as the local business people,” Molemo says.
He says there was no way he could compete because his prices were double those at the Chinese shops.
He says the Ministry of Trade and Industry should intervene by confining Chinese retailers to towns or bigger businesses.
What baffles Molemo is that some Chinese would operate with a license belonging to a Mosotho so that it should appear as though the business is locally owned.
Molemo alleges that the Chinese would slash prices on products about to expire.

Senoko Khetha, a 72-year-old businessman, says he understood the futility of trying to fend off competition from the Chinese. Khetha used to run a big supermarket in Ts’akholo in Mafeteng district.
The business started as a small café in 1971.
“Business was good at that time because most people had purchasing power,” he recalls, adding that “there were not many shops around and remittances from Basotho working in the mines were flowing in”.

Khetha later opened bar and restaurant. He says trouble began after the 1998 political upheavals that led to the destruction of Maseru, Mafeteng and Maputsoe.
The Mafeteng wholesales that used to supply Khetha went up in smoke and most never reopened.
So Khetha started travelling across the districts to get stock. His fleet of cars soon broke down and the business began to fall apart. Meanwhile, the new Chinese retailers were swallowing his market.

Out of options Khetha asked a Chinese man to rent his supermarket.
“I had no option but to accept what he offered,” he says.
It did not take long for the new owner to revive the business. Khetha says with time he learned that the Chinese retailers were buying products in bulk to keep the prices low.
‘Malineo Mathe, a businesswoman from Likhoele, says it is unfair for the government to expect locals to compete with the Chinese who have the financial resources.
She says she has heard that the Chinese have syndicates through which they get stock from wholesalers at huge discounts.
“This is another strategy that the Chinese have used to push us out of business,” Mathe says.

She says Basotho have failed to replicate their model because they don’t want to collaborate.
She says the Indians in the district have also been pushed out of the supermarkets by the Chinese.

Mathe says the Indians have resorted to hardwares and furniture shops but the Chinese are also eyeing those businesses. She says not unless the government through the Ministry of Trade and Industry could come up with comprehensive strategies to save Basotho from the Chinese, “there is a potential danger on our doorstep.”
Mathe argues that the government has thrown them under the bus to let the Chinese run their businesses.

She says they were hoping that the Chinese would focus on big investments, not the small businesses that Basotho could run.
But Minister of Trade and Industry, Tefo Mapesela, says Basotho should not complain because they are the ones who have invited the Chinese to get into their own businesses.
“The Chinese do not have buildings in Lesotho and it is the Basotho who invited them to use their buildings,” Mapesela says.
He says if Basotho now want to come back into the business they should approach his ministry so that they draw sustainable policies “that could take them further”.
He says some Chinese operate with the licences of Basotho.

“These people should stop lying to you that the Chinese have squeezed them out of business, they are to blame themselves,” Mapesela says.
Selibe Mochoboroane, the Movement for Economic Change leader, says he is alarmed at the influx of Chinese.
He says it should not come as a surprise to see the Chinese being found herding cattle far in the mountains.

Mochoboroane says he believes that Lesotho is now firmly under Chinese control. He says there is a group of Chinese who think they can rule Lesotho.

Majara Molupe

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