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Looking East: The New Gold Rush

Asian governments and companies are recognizing the opportunity in Africa's rise. One crisp morning in May 2006, I drove through the archway of "China Mart," a sprawling wholesale metropolis in Johannesburg. Gold was what first brought Europeans to Johannesburg during the gold rush of the 1800s. Now, in the Crown Mines section of the city, there is a new gold rush, centered around the consumer goods of China Mart. This wholesale mall contained 126 shops surrounded by a gate and heavy security sporting padded vests (as well as signs prohibiting firearms). They were not guarding gold. They were guarding stores filled with inexpensive clothing, luggage, shoes, and electronics from China, which drew retailers from South Africa and surrounding countries. In one store, Tom Fang offered flip-flops from a large box for just 2.90 rand (about 30 cents). They would retail on the shelves of stores in Zimbabwe, the Congo, or Angola for about 8 to 10 rand (just over $1). For many villagers, this will be their first pair of shoes. "They are very well made," he pointed out.

Chinese merchants and products are evident across Africa, from low-cost televisions and other appliances to generators to clothing and shoes. Astute Chinese peddlers and retailers are selling Ramadan lanterns and prayer carpets in Egypt. Egyptians shake their heads that they are buying these holy items from the Chinese, but the price is right. Jincheng motorcycles race across the roads of Nigeria. Indian and Pakistani traders in the Asian market area of Johannesburg sell leather, clothing, and other wares. The same scene is repeated at El Hamiz in Algiers, Moncef Bey in Tunisia, and many other parts of Africa I visited. Chinese stores can be found in the oldest and holiest places in Morocco, lining the Derb Ghalef and Derb Omar market areas in Casablanca. At night, hawkers are selling shoes, clothes, and toys in the street. In the Moroccan souks, you can buy inexpensive pirated goods from software to clothing. A knock-off pair of Ray-Ban sunglasses that I had seen for $120 in a formal market was on sale for just $5 by informal traders. Pirated movies were retailing for about $1.

China's trade with Africa has risen from about $10 billion in 2000 to more than $55 billion in 2006.14 (China's trade with India, by contrast, was less than half as large, at $25 billion in 2006.) Chinese Prime Minister Wen Jibao forecast that trade with Africa would rise to $100 billion by 2010.15 Although China has become second only to the United States as the largest importer of oil from Africa, nudging out Japan, it is far ahead of the United States in exports to Africa. Egypt expects China to replace the United States as its top trading partner by 2012.16 In a 2007 report, "Africa's Silk Road: China and India's New Economic Frontier," World Bank economist Harry Broadman called the growing African trade and investment by China and India, particularly in sub-Saharan countries, "one of the most significant features of recent developments in the global economy."17 With growing investments in Africa by India and China, will the West be left behind?

The African continent is looking east, as can be seen in the flight paths of Kenya Airways and other African carriers. Like neural pathways, the passenger and freight routes reflect the new thinking of Asia about Africa and vice versa. When I flew from Lagos to Nairobi on Kenya Airways in July 2006, I found out that half the passengers were continuing on to connecting flights to Asia and the Middle East. Traditional flight paths head into Europe, recognizing the continent's colonial past. But the future can be seen in the routes from Nairobi to Guangzhou, Mumbai, and Bangkok. Billboards and full-page ads from DHL in major African publications, discussing importing cell phones from China, proclaimed, "No one knows China like we do."

A Sino-African summit in 2006 brought representatives of almost every African country to Beijing, a demonstration of how important China and Africa have become to one another. China pledged $5 billion in loans and credits to Africa during the summit. And Chinese President Hu Jintao reciprocated with an eight-nation tour of Africa in January 2007 (visiting Cameroon, Sudan, Liberia, Zambia, Namibia, South Africa, Mozambique, and Seychelles). India also organized an India-Africa summit in New Delhi in April 2008. Major Indian companies such as Tata, Mahindra, Kirloskar, and Ranbaxy have set up operations in Africa and are achieving high levels of growth. In May 2008, Bharti Airtel, India's leading mobile operator, made a multibillion dollar bid for the control of South African mobile company MTN.

With so many opportunities at home, why are Indian and Chinese companies here in Africa? China and India can recognize the African opportunity because they have lived through it. In speaking with leaders of Indian companies who are active in Africa, I often heard the comment that this market seems familiar. Although some of the interest from Asia in Africa has been fueled by Africa's abundant natural resources—and there is even concern expressed about a new wave of colonialism—the Chinese, Indian, Japanese, and Korean companies in Africa also recognize the potential of the market. The demographics of Africa and challenges are not so different from those at home. They have seen the rise of their markets and expect the same in Africa.

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