From rawhide to leather in Ethiopia

Chinese factory exports $15m annually, half the total of local tanneries, earning valuable foreign reserves

More than an hour's drive from Addis Ababa, Ethiopia's capital, on a winding road through mountains and high plateaus, sits a modern leather-processing factory owned by Chinese investors.

China-Africa Overseas Leather Products opened in May 2010 in Sululta, a town in Oromia state, at a cost of $27 million. It was jointly financed by Xinxiang Heitianmingliang Leather Co Ltd in Henan province and the China-Africa Development Fund, which are sole owners of the factory.

It was among the top projects after China's leadership called on the country's investors to employ a market approach to help reinvigorate Africa's economy, coupled with increased aid and no-interest or low-interest loans.

Along the road to the factory are grasslands with herds of cows, goats and sheep, whose hides are the key raw material input supplied by Ethiopia, which still relies mainly on agriculture. The country also offers an abundance of cheap labor at about a tenth of the average cost of workers in China.

The tannery matches Ethiopia's advantages with those of China, which offers advanced, environmentally-friendly processing technologies and an export market where leather is used to produce shoes, clothes and gloves.

Areas for cutting, soaking, processing, drying, dyeing and packaging the hides dominate the tannery's production floor. About 500 local workers or team leaders work with about 26 Chinese technicians in the area.

Behind that, a wastewater treatment plant runs around the clock to make sure wastewater meets local environmental standards before it is discharged into a nearby river.

"We have put Ethiopia in the chain and created jobs and increased the value of their products, which are the hides of sheep and cows," says He Qiang, new executive general manager of the joint venture. He is the son of He Mingliang, president of Xinxiang Heitianmingliang Leather in China and the joint venture in Ethiopia, who has been working in the industry for 30 years.

Starting in 2007, He Mingliang became dedicated to preparations for and then the operation of the factory, flying frequently between China and Africa.

"My father has been working too hard on the project and our business in China, and I want to take on part of his heavy workload from now on," says the younger He in his office at the tannery.

He Qiang, 32, who recently quit his job as a public servant in Xinxiang in central China's Henan province, the city where the leather company is based, says he is aware of the size of the challenge he faces. He did not major in leather processing but in business management in school. And he is working in a business culture that differs from what he is used to in China.

But He says he is confident given his company's improved performance in recent years and a better management team consisting of Chinese and locals.

The factory covers 80,000 square meters. Since 2011, its average annual export value has reached $15 million.

"This amount accounted for nearly half the export value of Ethiopia's tannery industry, which is a great contribution to the pool of the country's foreign reserves," says Chen Junling, vice-president of the joint venture from its start. Chen says the company has already begun a second phase processing cowhide.

Leather processing and products is a top priority for Ethiopia's government, which, as part of its five-year growth and transformation plan, is focusing on adding value to local raw materials.

In recent decades, China became the world's workshop in such areas as leather processing and products, but many factories have started to shift to other countries due to rising labor costs and environmental requirements.

"Ethiopia has become an early receiver of China's industrial shift and, importantly, we have met the very strict environmental requirements of Ethiopia," Chen says.

Currently, due to the parent company's longstanding business ties in China, leather processed in Ethiopia is mainly exported to China, which has helped earn foreign reserves for Ethiopia. It is used for shoe factories in Sichuan province, glove-making in Henan and Hebei provinces, and leather clothing factories in Zhejiang province.

The factory has also made a difference in workers' lives.

Because working at a tannery involves frequent and close contact with chemicals, some of which are dangerous, Chen says, workers are all well-trained and instructed to protect themselves by wearing special clothes, gloves and other equipment.

Chen says her company offers free detergent powder for every worker to wash their protective uniform every day.

"And we even have a shower facility for them," Chen says. In Ethiopia, many people still bathe with cold water, since a hot shower is a luxury. But at the factory, hot showers are free for workers.

"Now, many locals have become used to bathing with hot water."

Demelash Belete, human resources manager and legal adviser for the business, says he appreciates China's contributions.

"Apart from this export-oriented company's earning foreign exchange, we locals have benefits on many fronts," says Belete, who has worked at the company for four months.

Belete, who says the company has given jobs to many locals, improving their standard of living, advises the company on abiding by Ethiopian labor and welfare laws.

The knowledge and skills learned at work and in training also bring lifelong benefits for many workers.

But Belete also offers suggestions for Chinese investors.

"Language and culture barriers sometimes could become a big problem for them, I believe. Only by putting their feet in other's shoes can such gaps be bridged."

Chinese workers are hardworking, which is very good, and they are accustomed to following instructions, Belete says. But Ethiopians, many of whom have Muslim and Christian religious backgrounds, have a stronger sense of individuality and equality, he says.

"We normally don't fear the boss, which is in contrast to Chinese office culture," Belete says. "So Chinese investors should become aware of these differences."

fujing@chinadaily.com.cn

(China Daily Africa Weekly 09/19/2014 page21)