China Begins \u201cColonising\u201d Africa, New Era of Global Supply Chains\nBegins<\/p>\n
Jakarta, CNBC Indonesia - China\u2019s expansion in Africa is becoming\nincreasingly significant.<\/p>\n
A decade ago, the solar energy company Jua Power relied entirely on\nChina\u2019s domestic market, which was experiencing green energy\nexpansion.<\/p>\n
However, with the slowing economy in that country and declining\nprofits in the solar panel industry, the company\u2019s strategy has\nshifted.<\/p>\n
In March 2025, Jua Power decided to build a production facility in\nthe Tatu City Special Economic Zone (SEZ) in Kenya. This step marks the\ncompany\u2019s first direct foreign investment in its history.<\/p>\n
Jua Power\u2019s expansion represents a broader trend of Chinese\nmanufacturers moving their operations to Africa. According to FDI\nMarkets data, China\u2019s foreign direct investment (FDI) in Africa\u2019s\nmanufacturing sector reached US$12.3 billion in 2025.<\/p>\n
These funds were distributed across 64 new projects, the highest\nannual number in the past decade. Between 2023 and 2025, China\u2019s total\ninvestment in the region surpassed the combined investments from the\nUnited States and Europe.<\/p>\n
Africa\u2019s Manufacturing Dynamics<\/p>\n
In the early 2010s, many projected that Africa would become the new\nglobal manufacturing hub, replacing China, supported by low labour costs\nand free trade agreements with Western countries.<\/p>\n
However, the realisation of those projections has not met\nexpectations. In Ethiopia, the manufacturing sector\u2019s contribution to\nGDP declined from 6% in 2017 to 4.4% in 2024.<\/p>\n
Overall, the manufacturing share in Sub-Saharan Africa was recorded\nat 10% of GDP in 2024, down from 18% in 1981.<\/p>\n
Drivers of Expansion<\/p>\n
Although Africa\u2019s manufacturing growth has generally slowed, interest\nfrom Chinese corporations remains high. Currently, the managers of Tatu\nCity in Kenya are negotiating with more than 1,000 Chinese companies,\nranging from solar energy suppliers to glass manufacturers.<\/p>\n
The main factor driving this relocation is the domestic market\nconditions in China. China\u2019s manufacturing sector is facing low\nindustrial profit margins and intense price wars on various commodities,\nincluding cement, steel, electric vehicles, and solar panels.<\/p>\n
In addition to domestic challenges, Africa offers more competitive\ninvestment return prospects. Product selling prices in the African\nmarket can be three to four times higher than in China\u2019s domestic\nmarket.<\/p>\n
This encourages most Chinese manufacturers in Africa to focus on\nmeeting local and regional consumer needs, rather than orienting towards\nglobal exports. The economic potential of the region is also supported\nby projections that 12 of the 20 fastest-growing economies in the world\nin 2026 will be in Africa.<\/p>\n
Economic and Regional Trade Impacts<\/p>\n
The presence of large-scale foreign manufacturers has the potential\nto deepen regional economic integration in Africa. However, this\nsituation also raises concerns about potential pressure on local\nmanufacturing industries.<\/p>\n
Africa\u2019s trade deficit with China increased by 65% to a record US$102\nbillion last year. As a balancing measure, the Chinese government has\nset a policy to eliminate tariffs on nearly all African imports starting\n1 May, although this step is projected to benefit agricultural commodity\nexports more than manufactured products.<\/p>\n
2026 Analysis: Supply Chain Resilience and Paradigm Shift<\/p>\n
Entering mid-2026, the trend of Chinese manufacturing relocation to\nAfrica shows a strategic shift from mere market expansion to efforts to\nbuild supply chain resilience.<\/p>\n
Escalating geopolitical tensions, including armed conflicts in the\nMiddle East in early 2026, have created significant disruptions to\nglobal maritime logistics routes. These macroeconomic conditions are\nforcing multinational corporations from China to mitigate risks by\nbringing production facilities closer to end consumer markets.<\/p>\n
This production decentralisation strategy indicates that Africa\u2019s\nrole in the global supply chain is being redefined. Rather than\nreplacing China\u2019s position as a global export base to Western markets as\nprojected a decade ago, Africa is now transforming into an independent\nregional production centre.<\/p>\n
Chinese corporations are utilising this area as a new domestic market\nisolated from trade frictions between Western and Eastern blocs, while\nalso avoiding tariff barriers often imposed by the United States and the\nEuropean Union.<\/p>\n
The main challenge for African countries ahead is to formulate\nindustrial policies that can optimally respond to this wave of foreign\ncapital. The influx of large-scale FDI needs to be balanced with\nregulations requiring technology transfer and supply chain partnerships\nwith local business entities.<\/p>\n
Without a structured policy framework, this manufacturing investment\nrisks increasing the import burden for African countries, especially if\nraw materials and assembly components are still imported massively from\nmainland China.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/china-begins-colonising-africa-new-era-of-global-supply-chains-begins-1777873998", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }