China: Beyond Borders
12:01 am
Tue June 21, 2011

Will Kenyan Superhighway Also Benefit China?

This month, NPR is examining the many ways China is expanding its reach in the world — through investment, infrastructure, military power and more.

Chinese companies are scouring Africa for resources to fuel a red-hot economy back home, but Beijing is interested in more than just what's underground.

In Kenya — which has few natural resources — the Chinese are building a massive highway and truck factory, and jockeying to construct a new port. Kenyans say it's all part of a broader Chinese strategy that is winning friends, opening markets and causing unease.

The highest profile project is the Thika Road superhighway. Three Chinese companies are building a 31-mile road from the Kenyan capital of Nairobi to the city of Thika. In some sections, it's 16 lanes across.

Peter Ngau, who teaches urban planning at the University of Nairobi, says East Africa has never seen anything like it.

"There's no comparison," he says. "It's a showpiece of the government."

Ngau says the highway will increase business and help expand the Kenyan economy. The road will help link Kenya to Ethiopia, a major regional economy with about 80 million people. Apartment buildings are already sprouting along the sides of the highway.

It's also expected to ease some of Nairobi's crippling traffic. It takes Ngau two hours to drive down the road to class each morning. When the highway is finished, he expects it will take him less than 40 minutes to get to work.

'A Gateway' For Goods

Why are Chinese companies building this superhighway?

Aside from profit, Ngau says, the project is a means to a greater end for China.

"I think Chinese are trying to buy favor," he says. "One of the biggest challenges in African countries has been poor infrastructure. African people are happy with them, because the roads are better with the Chinese."

Chinese roads are not only building good will — they're also helping Chinese businesses penetrate the continent.

"China is seeing Kenya as a gateway to the East Africa community," says Joseph Kieyah, an economist with the Kenya Institute for Public Research and Analysis, a government think tank.

Kieyah says East Africa's economy is about $75 billion. And, along with the economies of other countries on the continent, it's growing. The International Monetary Fund estimates that seven of the world's fastest-growing economies over the next five years will be in Africa.

China already does booming trade with Kenya. Between 2005 and 2009, Chinese exports here more than tripled to $860 million. They include furniture, textiles and machinery.

Chinese Counterfeits

Most of the Chinese products are genuine, but others are fake. Some end up in a storeroom in downtown Nairobi run by Kenya's anti-counterfeit agency. There are fake Yamaha electric guitars, fake Peavey drum sets and boxes of fake Staedtler pencils stacked nearly to the ceiling.

"The fakes from China are so rampant in Kenya," says Caspar Oluoch, an agency inspector. "Right now, if you walk through the streets of Nairobi, you will find so many fakes there."

As business ties between the two countries have grown, Chinese counterfeits have followed. Kenyan businesses estimate they lose more than half a billion dollars annually to fakes — mostly Chinese. A.G.N. Kamau, the chairman of the anti-counterfeit agency, says he's written to the Chinese Embassy twice about the problem.

"But we haven't received any response up until now," he says.

Favored Status?

Some businesses say Chinese companies get special treatment because China is so powerful. Steve Smith, the recently retired managing director of Eveready East Africa, says the Kenyan government gave a Chinese company a waiver several years ago. The waiver allowed the company to import batteries without paying a mandatory 35 percent duty.

Smith says he eventually persuaded the government to reverse the decision, but not before the Chinese company had taken a chunk of his market share.

"We were in the 70 to 80 percent share," Smith says. "Now, we're below 50 percent."

Smith says that for years, Eveready had resisted automation to maintain employment levels.

"But once this happened, we said, 'This has to change,'" Smith recalled. "So we have automated our packing line and a lot of Kenyans lost their jobs because of it."

Smith says his company laid off more than 300.

Wildlife Poaching

Like their products, the Chinese themselves are a growing presence in Kenya and much of Africa, and that's having an impact on the country's signature resource: wildlife. Every few months, police at Kenya's Jomo Kenyatta International Airport seize smuggled shipments of elephant ivory.

"Most of the arrests have been of Chinese origin," says Patrick Omondi, head of species conservation and management with the Kenya Wildlife Service.

Police caught a Chinese man in late April traveling through the airport with more than 200 pounds of ivory. Omondi says Kenya has been hesitant to raise the issue with the Chinese Embassy.

"It will be sensitive, because we are looking for help from China on so many things," Omondi says.

NPR made repeated calls and sent texts to the embassy in Nairobi to discuss China's role in Kenya. Embassy officials never responded.

Esmond Bradley Martin, who studies the trade in elephant ivory and rhino horn, says both animals are increasingly in danger because prices and demand are growing as China's economy expands.

"Horns have been appearing in London at these natural history sales," says Martin, "and before, the price used to be quite low. And now, they're paying up to a $100,000 for a pair of black rhino horns."

Martin says Chinese buy rhino horn to use as a traditional medicine to lower fever.

With the Chinese economy "growing at 9 to 10 percent, now average Chinese can afford to buy rhino horn," he adds.

Chinese and Vietnamese demand for rhino horn is now so strong at least one private reserve in Kenya gave its remaining rhinos to the government. The owner said she could no longer afford to protect the animals from poachers.

Pros And Cons

From the grasslands to the highways, China casts a long shadow here, but what is China's ultimate impact?

"Overall, I think it's a positive influence," says Ngau, the urban planning professor.

Many Kenyans seem to agree. Chinese demand is helping to drive poaching and Chinese fake products are costing jobs. But people here say the Chinese are doing something Kenyans themselves never could: build a modern transport system. Kenyans hope the new roads will help lift up a country that's still relatively poor and improve ordinary lives

Copyright 2011 National Public Radio. To see more, visit http://www.npr.org/.

Transcript

RENEE MONTAGNE, host:

Let's get back to our ongoing series on China and its growing influence. More than ever, Chinese companies are focusing on Africa. They're scouring the continent for resources to fuel a red-hot economy back home, and they're interested in more than what's underground.

Kenya, for instance, doesn't have many natural resources. There, the Chinese are building a massive highway, plus a truck factory and they're financing a new port. Kenyans say it's part of a broader Chinese strategy aimed at winning friends and opening markets. But it's also causing some unease.

NPR's Frank Langfitt filed this report from Nairobi.

(Soundbite of construction equipment)

FRANK LANGFITT: This is Thika Road. It's a superhighway running from the Kenyan capital of Nairobi to the city of Thika, and it's being built by three Chinese companies. In some sections, it's 16 lanes across. These Africans never seen anything like it.

Professor PETER NGAU (University of Nairobi): There is no comparison. This road is a showpiece of the government.

LANGFITT: Peter Ngau teaches urban planning at the University of Nairobi. We're riding down the new highway, which will eventually connect Kenya to neighboring countries. Apartment buildings are already sprouting along the sides of the road.

Mr. NGAU: I think immediately, it will increase business activity. It will open a new market for the Kenyan economy. Kenya has not been linked to Ethiopia by a tarmaced road.

LANGFITT: Ethiopia is a major regional economy right next door with 80 million people. Ngau says the highway will also ease some of Nairobi's crippling traffic. The professor drives nine miles down the road each day for class.

Mr. NGAU: Right now, in the morning, you take two hours if you are lucky.

LANGFITT: And when the highway is completed...

Mr. NGAU: I will expect to take less than 40 minutes to come to work.

LANGFITT: Why are Chinese companies building this superhighway? Aside from profit, Ngau says the highway is a means to a greater end for China.

Mr. NGAU: I think Chinese are trying to buy favor. One of the biggest challenges in African countries has been poor infrastructure. They will provide the infrastructure. They buy favor with the African government. African people are happy with them because roads are better with the Chinese.

LANGFITT: Chinese roads are not only building good will, they're also helping Chinese businesses penetrate the continent.

Joseph Kieyah is an economist with the Kenya Institute for Public Research and Analysis, a government think tank.

Mr. JOSEPH KIEYAH (Economist, Kenya Institute for Public Research and Analysis): China is seeing Kenya as a gateway to the East Africa community. You talk about almost about $75 billion economy, 120 million, you know, people. So it's a huge market.

LANGFITT: And a growing one. The International Monetary Fund estimates that seven of the world's fastest-growing economies over the next five years will be in Africa. China already does booming trade with Kenya, shipping in furniture, textiles and machinery.

Most of the Chinese products are genuine...

(Soundbite of clicking)

LANGFITT: ...but others end up in this storeroom in downtown Nairobi.

(Soundbite of plastic crinkling)

LANGFITT: There are Staedtler pencils - 2.4 million of them.

(Soundbite of guitar playing)

LANGFITT: Yamaha electric guitars.

(Soundbite of drumming)

LANGFITT: Even Peavey drum sets - all fake.

The storeroom is run by Kenya's anti-counterfeit agency. Caspar Oluoch is one of the agency's inspectors.

Mr. CASPAR OLUOCH (Inspector, Kenyan Anti-Counterfeit Agency): The fakes from China are so rampant in Kenya. I can tell you that. Like, right now, if you take a walk through the streets of Nairobi, you'll find so many fakes there.

LANGFITT: As business ties between the two countries have grown, Chinese counterfeits have followed. Kenyan businesses estimate they lose more than half a billion dollars annually to fakes, mostly Chinese.

A.G.N. Kamau chairs the country's anti-counterfeit agency. He says he's written to the Chinese Embassy twice about the problem.

Mr. A.G.N. KAMAU (Chairman, Kenyan Anti-Counterfeit Agency): But we've never received any response up to now.

LANGFITT: Some businesses say Chinese companies get special treatment because China's so powerful. Steve Smith is the recently retired managing director of Eveready East Africa, an affiliate of the U.S. battery giant. Smith says several years ago, Kenya gave a Chinese company a waiver, allowing it to import batteries without paying a mandatory 35 percent duty. Smith says he eventually persuaded the government to reverse the decision, but not before the Chinese company had taken a chunk of his market share.

Mr. STEVE SMITH (Retired Managing Director, Eveready East Africa): If I look at Kenya, we were in the 75, 80 percent share. Today, we are below 50 percent.

LANGFITT: To offset losses, Eveready did something it had long resisted to cut costs.

Mr. SMITH: Our directors, for years, had worked with the government saying we needed to create jobs. Don't automate. But once this happened, we said we had to make this change. And so we have automated our packing line, you know, and a lot of Kenyans lost jobs because of it.

LANGFITT: How many jobs were lost because of this, would you say?

Mr. SMITH: In my business, at my factory, it's been in excess of 300 jobs.

LANGFITT: Like their products, the Chinese are a growing presence in Kenya and much of Africa, and that's having an impact on the country's signature resource: wildlife. Every few months, police at Kenya's international airport seize smuggled shipments of elephant ivory.

Mr. PATRICK OMONDI (Kenya Wildlife Service): Most of our arrests have been of Chinese origin.

LANGFITT: Patrick Omondi works for the Kenya Wildlife Service. In late April, police caught a Chinese man with more than 200 pounds of ivory traveling through the airport. Omondi says Kenya has been hesitant to raise the issue with the Chinese government.

Mr. OMONDI: It has to still be sensitive, because we are looking up to China to help us on other things.

LANGFITT: NPR made repeated calls and sent texts to the embassy in Nairobi to discuss China's role in Kenya. Embassy officials never responded.

Esmond Bradley Martin studies the trade in elephant ivory and rhino horn. He says both animals are increasingly in danger because prices and demand are growing as China's economy expands.

Mr. ESMOND BRADLEY MARTIN: Before, the prices were quite low. And now they're paying up to $100,000 for a pair of black rhino horns.

LANGFITT: Martin says Chinese buy rhino horn to use as a traditional medicine to lower fever.

Mr. MARTIN: The economy's been growing at 9, 10 percent for some years now. Now, the average Chinese can afford to buy the rhino horn.

LANGFITT: Chinese and Vietnamese demand for rhino horn is now so strong, at least one private reserve in Kenya gave its remaining rhinos to the government. The owner said she could no longer afford to protect the animals from poachers.

(Soundbite of traffic)

LANGFITT: From the grasslands to the highways, China casts a long shadow here. But what's China's ultimate impact? Back out on the Thika superhighway, I asked Professor Ngau.

Overall, do you see the Chinese as a positive influence or a negative influence here in Kenya?

Mr. NGAU: Overall, I think it's a positive influence.

LANGFITT: Why?

Mr. NGAU: Because they are providing an element which was very critical bottleneck for development of African countries: infrastructure.

LANGFITT: Many Kenyans seem to agree. Chinese are helping to drive poaching, and their fake products do cost jobs, but people here say the Chinese are doing something Kenyans themselves never could: build a modern transport system, one that Kenyans hope will help lift up a country that's still relatively poor, and improve ordinary lives.

Frank Langfitt, NPR News, Nairobi.

(Soundbite of music) Transcript provided by NPR, Copyright National Public Radio.