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UNDERDEALING

Local traders decry ouster by rogue Chinese dealers

They are importing sub-standard selling them cheap

In Summary

•The price undercutting has made it difficult for locals to sell their goods, they say.

•According to the traders, there are four Chinese nationalities who are fueling the importation and sale of merchandise locally, at markets such as Gikomba , Kamukunji and Luthuli Avenue.

Guo Bai Qiang and Zhang Jinghui Chinese nationals when they were charged with being unlawfully in the country and engaging in business without a valid working permit /FILE
Guo Bai Qiang and Zhang Jinghui Chinese nationals when they were charged with being unlawfully in the country and engaging in business without a valid working permit /FILE

Local traders have raised concerns over a rise in Chinese nationalities who have ventured into retail trade at local markets, pushing them out of business.

The Chinese, according to the traders, are engaging in unfair business competition by importing sub-standard goods and imitations and selling the wares at throw away prices.

The price undercutting has made it difficult for locals to sell their goods, they say.

According to the traders, there are four Chinese nationalities who are fueling the importation and sale of merchandise locally, at markets such as Gikomba , Kamukunji and Luthuli Avenue.

The Chinese are the manufacturers of goods back in their country where we import from but they are now not manufacturing but also exporting them to Kenya and sell them here at a lower price below the market price,” explains Peter Kamanga, a local trader in Nairobi who deals in shoes, bags and apparels.

For instance, if my original and genuine shoe cost Sh4,000, the Chinese will import a sub-standard one and sell it at Sh2,000. How am I expected to sell my stock and make a profit,” Kamanga laments.

His frustrations reflect those of thousands of other traders who feel short-changed in the trade equation.

Philipine Cherop is another trader who has felt the wrath of the Chinese’s infiltration into small businesses in Kenya.

We are calling upon the relevant authorities to come to our aid, these Chinese are using their financial muscles and networks back at home to frustrate us here in Kenya,” he says.

They pull the strings of the supply chains of various goods, including second-hand clothes, from importation, wholesale, down to retail and we who import them from their country are at their mercy,” Cherop added.

 Earlier this year traders in Gikomba market, Kamukunji and Luthuli Avenue raised the red flag over the rise of Chinese traders whose entry has caused them pain as they suffer price undercutting.

The traders accused the Chinese of not only hurting their profit margins but also massively destabilizing them from the only business they have engaged in for years.

According to Francis Kimani a trader  who imports household goods from China, the foreigners are not only aggressive, but also drive locals out of business since they under price their products.

Kimani also reveals that the Chinese manipulate existing local designs, have them produced in masses in China, before importing them for sale locally.

Most of their products are not genuine and the trick they use is that they decide to engage in a propaganda war on a certain product or brand terming it as a fake even when it has been selling as a genuine brand over the years. By doing so, customers will fall for their products and we the locals have to withdraw our original and authentic products to avoid losing our loyal customers,” Kimani noted.

Kezia Wamui who trade in kitchen utensils and general goods said:“The price manipulation and product propaganda are hurting us. We end up with stocks which are not sold yet we have paid all the relevant taxes required,” Wamui said.

“They know that clothing wares are among the fast-moving goods and that’s where they target most,” she added.

The latest developments revive the sensitive debate on foreigners manipulating systems to work and run businesses in Kenya.

In June last year, Interior Cabinet Secretary Fred Matiang’i ordered for deportation of Chinese nationals engaging in local trading at Gikomba market in Nairobi.

It is illegal for foreigners to engage in local trading in Kenya. We do not have a classification of foreign traders coming to Kenya to do hawking or local trading,” the CS had said.

Under the Investment Promotion Act (2004), it requires foreigners to invest at least $100,000 (about Sh10.8million) to operate in Kenya.

The Act further articulates that the investment should be lawful and beneficial to the country through job creation, skills upgrade and technology transfer.

According to the Kenya Worldwide Importers and Traders Association (KWITA), approximations over 5,000 small businesses have closed due to unfair competition from foreign traders.

 KWITA Chairman Ben Mutahi in a recent media briefing said slack trade laws and failure to implement investment regulations are largely to blame for the rising number of foreigners doing ‘illegal’ business in Kenya.

As a country ,we don’t have a clear classification of foreign traders, creating confusion about who should and should not do business within its borders,” Mutahi said.

Victor Wachira, a trader within the Nairobi CBD says locals have consistently raised the issue of Chinese traders who engage in unfair competition but the State is slow in taking action.

“We are calling upon the relevant authorities to crack the whip on these Chinese foreign traders who are killing our only source of livelihood,” Wachira said, calling for the enactment of stronger legislation and reinforcing existing laws for protection of local businesses.

The Chinese have been further accused of tax evasion, where they use Kenyan agents to disguise themselves while directly dealing with end users via online platforms.