China expands footprint in Ethiopian textile sector
Mark Lane | 5th January 2018
ADDIS ABABA – One of China’s largest textile manufacturers, Wuxi Cotton Mill, has become the latest inward investor to head into Ethiopia’s textile industry. Wuxi’s entry into the rapidly growing African market offers further confirmation that China is now comfortably most significant investor in Ethiopia’s textile industry, which is seeking to expand rapidly over the next decade.
As part of the investment, the Wuxi No. 1 Cotton Mill, which is part of the Guolian Development Group, will invest in a large scale, integrated fabric mill and spinning plant in Dire Dawa. The operation is targeting the export market and will use local raw materials sources – including cotton – where possible. Dire Dawa, the second largest city in Ethiopia, is 446 km east of the country’s capital Addis Ababa.
Wuxi has established a reputation as a significant exporter to Western apparel brands from China, with three quarters of its products said to be exported to Europe, America, Japan, and Southeast Asia.
Abebe Abebayehu, deputy commissioner of the Ethiopian Investment Commission, said the arrival of Wuxi and similar investors will help Ethiopia meet its ambitious export targets.
“This investment would contribute immensely to our government’s vision to build a sustainable, vertically integrated and export-oriented, apparel and textile manufacturing hub in Ethiopia. Indeed, our vision is to make Ethiopia the leading manufacturing hub in Africa,” he said.
The EIC says Chinese companies, with almost 400 projects worth US$ billions that were either operational or under implementation in the 2012-2017 period, are comfortably the leading investors in Ethiopia.
In terms of textiles, China’s textile industry has been consolidating in recent years. There are suggestions that moving forwards, the country will look to place more focus on high added value areas of textile manufacture, such as technical textiles. The move by Chinese mills to Ethiopia is also very much about wages. Salaries in China’s textile industry have risen rapidly in recent years in tandem with the country’s economic development. Ethiopia’s textile industry, by contrast, offers some of the lowest wages in the world which is one of the reasons – some would say main reason – why the country is such a boon for investors.
The most significant textile development in Ethiopia last year became operational. The Hawassa Industrial Park was completed with assistance from China. Sitting on 1.378 million square metres, the park hosts 37 factories that boast cutting-edge infrastructure and equipment.
The park is also claimed to be Africa’s first textile and clothing facility to feature sustainable development. The facility is said to comply with internationally recognised zero-emission standards, resulting in 90 per cent of water being recycled.
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