BY KENNETH OKPOMO
Imports of Chinese clothes into Nigeria has led to environmental pollution and poor health for Chinese factory workers who make these goods. It has also led to corruption amongst Nigerian customs officials, infringement of patents, and the domination of the trade by Igbo cloth traders in Lagos
For high-capacity local industries like the Dangote Group, owned by Forbe's magazine designated 'Africa's richest man' Aliko Dangote, the importance of the Lagos Island market as a meeting point for suppliers, distributors and retailers, cannot be overemphasized. A wide range of Dangote signature brands emanating from the stable of the conglomerate such as Dansa juice, pasta, spaghetti, macaroni, par-boiled rice, flour, iodized salt, granulated sugar, Davita, among others, are readily available at the Idumota and Ebute-ero end. So too are a wide array of made-in-China products, which have become even more readily available and at cheaper prices.
THE LAGOS ISLAND MARKET: AN OVERVIEW
Trade foisted on the heels of Chinese industries is becoming prominent on the Lagos island market. There is a booming proliferation of virtually all kinds of imported goods from China ranging from essential medicines, beverages, spirit and rum, refined vegetable oil, tomato paste, skin lightening cosmetics, beauty products, jewelries, sanitary wares and plastics, home appliances, building materials, phones, generators, cloth and clothing accessories, among others.
Whether wholesome or unwholesome, contraband or freely imported, made-in-China goods have become readily available almost everywhere in the market - either on the roadside where never-give-up street-traders in defiance to the Lagos state environmental laws exhibit them or in the stores and warehouses of retailers, distributors and importers who manage the complex supply chains.
With a growing population of over 170 million people (having consumption rates and patterns that supersede those of Benin Republic, Ghana and Togo put together in terms of disposable incomes and purchasing power parity), consumers in Nigeria constitute a ready market for these commodities. And the Lagos Island market has remained the meeting point for the distribution of many of these commodities within the Lagos metropolis and to other parts of the country.
Located within the Central Business District, in the very heart of Nigeria's banking and financial services industry, the market's vantage position in terms of access roads for the conveyance of goods and other logistical supplies, has added to its attraction as a foremost trading hub in Nigeria. In any case, its reputation has always been hinged on the indefatigable successes of Igbo traders who hail from the southeastern part of Nigeria.
At a time when local industries in Nigeria are packing up at an alarming rate, made moribund by the overbearing cost of doing business evidenced by infrastructural deficiencies, irregular power supply and untold vagaries in the business policy environment, many Chinese industries continue to make progress, even as Chinese state-owned enterprises and high-rise private firms scoop greenfield investment deals in oil and gas on the strength of a consolidated bilateral relations between both countries. The latest scoop is the Nigerian government-brokered partnership deal between LADOL (a Nigerian company) and the Chinese Offshore Oil Development Company Ltd (COODC) for joint planning and development of oil infrastructure in key parts of the country.
Even for Africa's foremost industrialist Aliko Dangote, Chinese empowerment has been inevitable. Dangote has a deal with the Sinoma International Engineering Company for the building of 10 cement plants across Africa at an estimated cost of US$3.9 billion over three years, among others. While Sino-Nigeria relations have grown by leaps and bounds, the reverse has been the case for local employees working in Chinese firms in Nigeria. For these ones Chinese empowerment has been a bitter pill.
Last year Rong Yansong, the Chinese Economic and Commercial Counselor to Nigeria, said about 50,000 Nigerians are employed in Chinese-owned businesses in Nigeria. Amidst optimum capacity utilization in many Chinese companies, workers' satisfaction has conversely been at the lowest ebb. The disproportion between man hours and earnings, together with the dehumanizing work conditions in Chinese enterprises, has often resulted in conflict between the workers and the management.
During October this year workers at Dura Pack vehemently protested against the continued casualization of employees, the arduous work condition and the concomitant gross under-pay. Many of the protesting workers said the company neither provided letters of employment nor identity cards and that their meager salaries were arbitrary surcharged on what the company perceived or interpreted as a breach of laid down regulations and procedures. One worker told this reporter that absence from work for one day, for example, could amount to a deduction of half of one's salary in penalty. Earlier, the local staff of the CWAY Foods & Beverages Companies, The West African Rubber Products Company, the China Civil Engineering Construction Company, among others, had downed tools on similar reasons.
This reporter paid an unscheduled visit to the Chinese Industrial Complex at the Lagbasa axis of Lagos to ascertain the situation there. Work conditions were in no way different. In one of the building material fabrication sites, some local workers were seen operating the heavy-duty machines without any protective head-gear, glasses or appropriate work apparel. A local staff, on condition of anonymity, told this worker that he works from 8a.m to 6p.m daily (with an hour break in between) on a paltry wage of ₦16, 000 a month, roughly amounting to ₦666 per day (equivalent to ¥614.75 a month or ¥25.59 a day for up to 10 hours of work at the prevailing exchange rate). Workers here are neither entitled to medical care nor standard annual leave. And in case of occupational hazards or work-related accident, they are readily abandoned and dismissed without any compensation, this reporter has learnt.
Fang LAN, a reporter with the Beijing-based Caixin Media Group who is well conversant with labor issues in China, told this reporter that the minimum wage in mainland China varies from province to province. "Until September this year", she said, "the highest minimum wage in China stands at about ¥1620 Yuan per month in Shanghai, ¥15.2 Yuan per hour in Beijing and Xinjiang". Comparatively the gross shortfall in wage earnings for the same amount of work between an average Chinese worker in China and his Nigerian counterpart working in a Chinese firm in Nigeria (irrespective of the differential levels of access to the factors of production) are miles apart, something some labor experts say tantamount to Chinese economic predation.
But the Chinese management in the industrial complex will not entertain any question on wage. In fact upon suspecting that this reporter could be on a fact-finding mission, a Chinese man from the interior office asked him to leave. However a local staff in an adjoining office vociferously offered, "This is how this factory runs, take it or leave it!"
ENTER THE IGBO CLOTH TRADERS
For many of the Igbo cloth traders in the Lagos Island market, self-employment rather than salaried-wage s is a better alternative. And trading with China, as opposed to being ensnarled in perpetual casualization traps in Chinese companies, is preferred. The enigmatic traders, many of whom have little or no formal education, managerial or organizational skills have been able to transform the burgeoning jean and denim products market into a thriving multibillion naira business through sheer entrepreneurial prudence and hard work despite inherent bottlenecks in the importation process.
Mr. David Zhao of the BrightWay International Exhibition Ltd was quoted by the News Agency of Nigeria as saying, during the just concluded Lagos International Trade Fair that witnessed that participation of 101 Chinese companies and 200 delegates, that the trade volume between China and Nigeria grew steadily to US$10.57 billion in 2012 and reached US$16.02 billion in the first half of 2013. Apparently the phenomenal success of the Igbo casual cloth traders in a country that ranks 99th out of 133 countries on the Global Competitive Index and 125th out of 183 countries on the Ease of Doing Business Index has become a sterling example in decoupling the intricacies in the fast expanding China-Africa trade relations, with special emphasis on the informal aspect, which has often been bypassed by policymakers and mainstream media in framing Sino-Africa relations.
Culturally the success of an Igbo man is generally seen in the context of his "chi" and in the broader concept of the "ikenga". But t to understand the physiological and psychological attributes of the Igbo specie, authors like Hyacinth Ugwu Ezema, have dug deep.
In his controversial 'Origin of the Igbos' published by Great AP Express Publishers Ltd ( Nsukka) in 2011, the author through ecclesiastical and historical standpoints linked the genealogy of the ethnic Igbos to the Jewish race in Israel. He wrote, inter alia, "the overwhelming evidence of Igbo-Hebrew origin is no more in doubt, as this work has been able to highlight in terms of artifacts, culture, inherited traditions and norms of the people. It couldn't be farfetched, by extrapolation, to see that part of the Igbo civilization that came from the surmised Jewish ancestry, is an innate propensity to excel and dominate in a chosen field in or outside their homeland no matter the odds.
In the US, for example, Jewish-rooted billionaires like Michael Bloomberg (founder & CEO, Bloomberg LP), Michael Dell (founder & chairman of Dell), Bill Ackman (CEO, Pershing Square Capital Management), Marcus Goldman (co-founder, Goldman Sachs), Samuel Sachs (co-founder, Goldman Sachs), Kenneth Cole (founder, Kenneth Cole Productions Inc.), Mark Zeckurberg (co-founder & CEO of the global social media Facebook), to mention a few, have carved unprecedented niches in virtually every sphere of the American economy. In the fashion and clothing industry, Jewish-rooted designers like Levi Strauss (founder, Levi Strauss & Co.), Calvin Klein (founder & CEO, Calvin Klein) and Ralph Lauren (founder, Polo Ralph Lauren) still hold the ace in designer trademarks with unmatchable super-brand quality.
There appears to be a distinct correlation between the circumstances of the Igbos and their supposed Jewish brothers. Emmanuel Opara of the Pan-Igbo socio-cultural group, Ndigbo Lagos, explained that "for while the Jews emerged from the holocaust much stronger in economic terms, the Igbos were able to rise from the shackles of the 1967-70 Biafra war, to become Nigeria's foremost enterprising people in personal and collective business terms". He added that if you remove Igbo business assets and interests from Lagos, the city could lose its attraction as Nigeria's foremost commercial nerve center.
TRAINING AND BUSINESS MODEL
However lucrative the jean and denim market is globally, investors in Nigeria will require more than strong conventional business acumen to succeed, far from the kind typically gained from an MBA program at a prestigious business school such as the Harvard Business School and the London School of Economics, as the business terrain remains a high-risk enterprise laden with unimaginable odds and uncertainties.
In the business configuration, this investigation can reveal that the only variable that is 'constant' at least for the time-being is the resolve of Chinese manufacturers to meet increasing demands no matter the odds. Until February this year, according to figures obtained from the National Bureau of Statistics in China by Fang LAN, the total number of textile and clothing industries in China stood at 14,736.
Although the data has not been categorized by products rather by ownership ( 52.6 percent of those factories are owned by private investors, only 0.67 percent owned by the state), intense competition among factory operators (especially in the South China province of Guangdong which is said to be the region responsible for half of the world's entire production of blue jeans according to the Clean Cloth Campaign) has kept prices in check, at fairly stable rates, as competing factories jostle to retain or improve their hold on market share.
Many of the manufacturing concerns, in a bid to cut down on cost to remain relevant in the hypercompetitive jean market, are still using the illicit-but-cheap production and finishing techniques which incorporate sandblasting, hand-sanding and chemical spraying to distress the denim fabric to achieve the pre-worn look, despite startling evidences of serious injury this method poses to the health of factory workers.
Taken to a number of warehouses or 'packing stores' as they are known in market parlance, this reporter was shown heaps of bales of assorted ready-made cloth brands which were lying in waste. "These are loads of 'unsellable' items which the importers hope to sell at rock-bottom prices during the approaching Xmas season to reduce their losses" my guide Vincent Chibuzor* told me in frightening sobriety. "They were not so well abreast; they made the wrong selection of designs and have thus incurred these untold liabilities."
A conservative valuation of the items spiraled into tens of millions of Naira. The reporter was able to catch up with one of such importers still aching from the idiosyncratic shock. "...how am I going to offset this huge debt hanging on my neck...? I borrowed money to do this business...Oh God, help me...!"He yelled in dementia.
This is the first hard lesson any start-up importer (even those already well entrenched in the business) hold dear to their heart - the thin line between failure and success. Therefore the one attribute that cannot be misplaced is strong IQ for good fashion. Knowing which designs and styles will readily appeal to the young population who constitute a high percentage of the users of jean and denim products is sacrosanct.
"You must understand that the fashion market is quite unpredictable. Today's top designs could easily become old fashioned at the dawn of tomorrow without any significant warning..." Chibuozor said. "So the more appealing your selections are to your target customers, the quicker they could be sold off for you to recoup your investments and replenish your stock"
Many of the importers, the reporter had learnt, didn't stumble into cloth business by chance. They were in fact groomed in it and for it. "I was gloomed for seven years" Okechukwu Njoku*, an importer whose business is domiciled at the Imam Plaza, told me. "During this time I served as an apprentice under a master-trader learning the whole gamut of the trade". On successfully completing the apprenticeship, he said his master set him by providing him a shop stocked to the brim with wares and some money to begin trade. But Njoku was quick to warn that training was not the only prerequisite, doggedness, creativity, strong will and an intuitive IQ were just as critical in juggling through the tough import terrain as well as in the sales and marketing of the commodities.
ESTIMATED TRADE VOLUME
In a country where records barely exist (and where they do, access to them are usually curtailed by Byzantine bureaucrats who fear that this records could expose the shortcomings and inherent corruption in their offices), this reporter had tried to put a tab on the volume of the cloth trade in the Lagos Island market. But again, as the investigation soon found out, many of the consignment of ready-made cloths (including jeans and denim, suits, packet-shirts, etc) entering the Nigerian market are mostly hidden in concealment and declared as other items (not on the Import Prohibition List) to reduce the dutiable amount to be charged.
However, in the space of the two months that this investigation lasted, occasioned by at least thrice-weekly visit to the market area, the reporter had witnessed the offloading (sometimes arrival and offloading as well) of no less than 70 containers (comprising 20" and 40" containers in no definite order) laden with ready-made clothes. There were also consignments that came in buses and trucks filled to the brim. An official at one of the plaza associations who spoke on strict condition of anonymity gave the rough estimate of arriving containers at not less than 100- 150 per month.
But as the Christmas season approaches (that time in the year when sales volumes expectedly punch up), the daily ship traffic report monitored through the Nigerian Port Authority's Shipping Position, shows accentuating arrivals and berthing of cargo-ships at various port terminals in Lagos even as the ports are getting increasingly congested.
With Nigeria's overall economy mostly import-dependent, trade imbalances are recorded in the balance of payment receipts. Since the last six months, according to revelations by Jan Thorthauge, managing director of Maersk Nig. Ltd (MNL), Nigeria's import and export ratio has remained at 92 percent import to 8 percent export, with the containerized import market estimated to have ended at about 159,000 FFE (forty foot equivalent) as against 155,000 FFE for 2012. China continues to leverage on increase in import volumes from countries like Nigeria (its second biggest trading partner in Africa) to achieve an average GDP growth rate of 10 percent over the past years - impressive growth rates that have seen over 500 million people lifted out of chronic poverty.
BUSINESS DYNAMICS
From investigative discoveries the average standard bulk order quotation for jeans and denim trousers, for example, from a professional jeans garment factory such as the GuangDong Zhonghan Textile and Garment Manufacturing Co. in Zengcheng city that owns heavy professional facilities and offers OEM service to overseas clients hover between FOB US$4 and US$ 8 apiece depending on size, quality and craftsmanship. CIF prices (incorporating cost, insurance and freight) will definitely costs more. Normally about 20,000 pcs of women's jeans could be loaded into a 20" container while for men's jeans and thin denim shirt it would be 18,000 and 22,000 pcs respectively. The cost of shipping, for instance, from Shenzhen to Lagos on MSK, according to figures provided by the Market Development Department, is about US$2200 + D + T + I for a 20" container and US$ 3600 + D + T + I for a 40" container. Standard time for shipment to reach destination is about 30 days.
Therefore to import a 20" container of men's jean to a Lagos port at US$4 apiece, for instance, it will cost a Lagos-based importer around US$72,000 to procure the merchandize, US$2,200 for shipping, customs duties at 20 percent of cost of goods + 5 percent VAT, undefined amount for clearing fees (to incorporate bribe monies for custom and port terminal officials to facilitate the quick release of the goods to avoid demurrage charges which start to accrue after five calendar days of discharge of cargo),among others.
Truck transport cost to move container from port to final destination in the Lagos Island market, settlement for CBD, KAI officials as well as for Omo-oniles (area boys), cost of offloading and carriage onto warehouse, plus other incidental expenses as well, will have to be factored into the calculations. It is clear, therefore, that breaking even or making profits at this incinerating rate is unimaginable for any importer. How then do these ingenious Igbo cloth traders do it?
To break even, from a constellation of information gathered from different importers, the calculations have to be petite. By all means, the importer has to strive to buy the jean commodity at about US$3 apiece (or less) and reach an all-encompassing landing costs of US$4 - US$4.50 apiece (at the most). He will then strive to sell at a wholesale rate of around US$9 apiece. The mark up of US$4 to US$4.50 apiece is the profit margin.
Voluminous sales and high turnovers are therefore necessary to arrive at greater profit margins to cater for the ever increasing costs of renting warehouse and shop as well as the daily operational expenses, one of which is fuelling and servicing of generators to light up the showroom where an array of colorfully dress mannequins are displayed to reveal the structural beauty of the styles and designs as steady power supply remains a huge problem.
At the Euro Asia Plaza, a warehouse on the third floor, barely measuring 10 X10", costs ₦250, 0000 per annum to rent, in additional to a N50,000 service charge (being charges for issuance of trade permit, LAWMA, security and cleaning services for one year) and another N30,000 for the forms. Warehouse and shops in vintage positions in more strategic plazas such as Imam, Gbode, Kings, Great Favor, among others, attract higher rents, from N400, 000 to several millions per annum. In many instances, rents are collected in arrears of two or more years in flagrant negation of the new Lagos state tenancy law which, in principle, prohibits landlords from collecting rent in excess of six months for a sitting tenant or one year for a new tenant in respect of a business or residential premises.
WHY THEY PREFER TRADE WITH CHINESE INDUSTRIES
The main reason why the Igbo cloth traders prefer to trade with China, this investigation has learnt, is because Chinese manufacturers are flexible when it comes to meeting their diverse specification needs in addition to having comparative cost advantages and economies of scale in their favor.
"They thoroughly understand the importers budget, their local markets, and will work with them on quality structure from low cost to high-end stuff that suits the different price targets of their respective local markets" Simon Ugwu* explained to me. "At your request they can copy from an existing design to create your own".
Sani Tsoho Allasan, the secretary of the Nigerian Community in China, sums this up when he told the Weekly Trust that "The fact of the matter is that you get what you want. If you need American standard or British standard you will get it. If what you want is low quality, like many of our businessmen in Nigeria are asking just to maximize profit, you will get it." Buttressing his point further he continued "For instance, if the Chinese gives up a price quotation of $10, but what you can afford is $4, you cannot expect the quality to be the same."
This reporter saw a wide variety of super brand names such as GUCCI, New City Denim, ME&CITY, DSL JEANS, DHJ JEANS, DSQUARED, LEVI'S STRAUSS, LEE, SCOTCH&SOLO (AMSTERDAM COUTURE), Tommy Hilfiger, M29 LONDON, BANMON, MEXEM, K'2nd Jeans, among many others, at the market. It was not far-fetched to know that many of these brands were not the authentic ones from the relatively cheap prices they were sold for.
An article 'How Can Jeans Cost $300' posted in WSJ.com gives a clear picture of the actual costs of authentic jeans abroad: "The prices of 'premium jeans' -- industry jargon for luxury-priced denim-- appear to be edging slightly upward after a downturn following the financial crisis." it noted, "Right now, J Brand's Maria women's jeans can sell for $226. Men's Aidan jeans from Seven for All Mankind costs $225. Prices for Gucci jeans range from $495 to $665".
Furthermore, the article revealed that, it costs about $50 to make a pair of Super T jeans (True Religion's best-selling style with oversized white stitching) which carries a wholesale price of $152 and an average price of $335 in the retail market, according to Jeff Lubell, chairman/CEO of True Religion.
Many Chinese manufacturers will make replicas of these top-notch brands for as low as $US5 apiece if orders exceed 300 pieces. In fact any replica production can be produced if the client provides the sample from which the copy is to be based and makes voluminous orders. But the importer has the full responsibility of ensuring that their local customs will not be strict about replica productions when clearing the consignments at their port.
While Chinese manufacturers usually do not see any problems with making replicas of top brands even when it infringes on the patent and IP rights of the original label owners, in countries like the U.K for instance, cloth, footwear and fashion products (including imported jeans and denim) that breach the IP rights of other businesses will be confiscated and destroyed by the HM Revenues & Customs under the international trade regulations of the U.K Trade and Investment office.
But in Nigeria, at this moment, apparently there are no governmental agencies at the point of entry intercepting imported cloth consignments that breach the design, style and labels of the original patent and trademark holders. The Standard Organization of Nigeria (SON) whose primary duty it is to ensure that premium standards for products entering into and circulating within Nigeria (especially through the administration of the conformity assessment SONCAP certificate in respect of importation of Regulated Products) has been asked to leave the port (along with agencies like the NDLEA) unless when specifically called upon as an ad-hoc measure adopted by the Prof. Sylvester Monye-led Presidential Committee on Port Reforms and Decongestion to improve turnaround time in the persistently congested Lagos ports.
Apparently, to have each patent right protected, it is the responsibility of foreign manufacturers or their franchise holders and agents to have them registered them with the Trademarks, Patents and Designs Registry, Commercial Law Department of the Ministry of Trade and Investment. But as with other commodities, especially in the food and drug industry, regulatory enforcements are usually weak as fake versions of genuine products continue to find their venal ways into Nigerian markets.
When this reporter contacted the Consumer Complain Dept of SON, his enquiry regarding the role of the organization in ridding the Nigerian cloth market of substandard clothes was not attended to. But a few months back, the D-G Joseph Odumodu had told Channels Television Sunrise crew comprising Chamberlain Usoh, Maupe Ogun and Sulaimon Aledeh that the organization's immediate priority was in curbing the menace of fake and substandard IT products flooding into the computer village and then second-hand tyres would follow. For now, regulating imported ready-made cloth is not in SON's priority as a check at their website shows that ready-made clothes is not listed among Regulated Products and may not require the SONCAP certification in the import process.
Meanwhile US Trade and Commerce officials continue to lament Chinese manufacturers' gross violations of the patents of US companies in flagrant negation of the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) which introduced IP rules into the multilateral trading system negotiated during the 1986-94 Uruguay Rounds. Washington blames Beijing for the lax enforcement of intellectual property rights and patents and for its deliberate manipulation of the Yuan to give Chinese industries a competitive edge in the global market. As a matter of fact, while estimates at the time by William H. Lash III (then an assistant Secretary of Commerce) had put the cost of China's intellectual property violations at more than US$60 billion annually, many economic analysts want US companies to consider registering their trademarks and copyrights in key foreign markets, especially with the local customs and border agencies of these countries as a requisite step towards obtaining patent protection.
CUSTOMS, PORT CONDITION, POLICY SOMERSAULT AS MAIN OBSTACLES
Unstable policies often influenced by government's claims of protecting local industries and preventing the country from turning into a dumping ground have made cloth importers (including Jean and casual clothing importers) susceptible to the whimsical exploitations of regulatory officials particularly customs operatives in the enforcement unit and their valuation counterparts at the ports.
Although ready-made clothes neither require import license nor does it fall under the current Import Prohibition List (see www.customs.gov.ng), this reporter had encountered some importers who claimed customs officers reaped bountiful bribes from them during the lifespan of the last two administrations when the commodity was placed under ban."Those who could not submit to the huge bribe demands had their consignments seized and confiscated. Many of the seized goods went missing from the Customs warehouse, only to resurface in the Lagos market after being clandestinely sold behind closed doors to the cronies and protégés of the customs officials" Ben Anyanwu* had alleged.
During this period, even China town was not spared. In 2006 China town, which had become popular with the Nigerian masses as a hub for cheap ready-made cloths, was raided by customs officers and forced to close down temporarily on their claims of curbing Chinese long-held impunity over pirated products.
Under the current dispensation, however, clearing containers laden with ready-made clothes have been like the proverbial camel passing through the needle's eye for the importers. Demands for bribe are increasing with seemingly unstoppable impunity. In February this year a report by National Mirror report entitled 'Agents raise alarm over atrocities of valuation officers' (February 15, 2013. P.43) revealed how it had become fashionable for the current management of the Nigerian Customs headed by Adbullahi Dikko to place valuation officers above the Custom Area Controllers under whom they serve to which aggrieved agents made the argument that these valuation officers, who behave as thin gods, had practically suspended the HS Code as they freely imposed duty on imported goods based on their state of mind.
The report said, inter alia, "these officers, knowing the enormous powers given to them to determine the value of any consignment, sometimes mount imaginary roadblocks with which they extort money from importers and their agents because there is no authority superior to them at their command and most importers might not want to go to Abuja to complain while their consignments accrue demurrage".
Ships & Ports (Sept 27, 2013) aptly captured the comment by a licensed custom agent at the Tin Can Island port about customs corruption: "Initially the agents only give recharge cards to the custom officer on duty as a way of appreciation and gradually to N2, 000 and thereafter (they) mandated them to pay ₦10, 000 and ₦40,000, depending on how well you can negotiate to fast-track the re-routing of your containers" The shipping newspaper had also carried a report on the incessant failure of customs servers: " If you want to go and rate your charges, they will tell you there is no network, and that the problem is from Web Fountaine. Yet if you cannot rate your charges on a particular day, the shipping companies will continue to charge you for demurrage" Bright Nwosu, a customs licensed agent at the Tin Can Island port, was quoted as saying.
In an exclusive interview, a customs brokerage and international freight operator (name redacted) told this reporter that since the lifting of the ban on ready-made cloths by President Jonathan's regime, high import duties have been imposed as a deterrent and that customs officials prefer consignments to be concealed as auto-parts and other items that attract lesser custom charges so that a substantial sum can be paid out in bribe to them.
Said he: " The clearing of jeans, polo, shirts is costly now; for a 20" container it is not less than 3.5 million Naira, import duties and handling charges inclusive" He went on to reveal "... Your declaration should not be garment again; you will now declare, maybe, auto parts, printer or something suitable. You will now do it in the form of concealment... The Nigeria Customs (officers) prefer it in that form because the money will now enter into their pocket rather than the federal government's purse." If the method enunciated is diligently adhered to, the importer could save a million Naira or more, this reporter has learnt. The customs boss, Alhaji Abdullahi Dikko, seemingly aware of this trick, has threatened to mass sack or redeploy erring customs officials to remote commands following complaints that officers also now give out their passwords to agents to be used in clearing cargoes.
Port condition could best be described as comatose. "The Nigerian ports operate like a disorganized market, at a time one could not hide his frustrations that the business of the ports was conducted in the most disorganized manner" said Idris Umar, minister of transport, when he came to Lagos to declare open a one day stakeholders forum on the newly approved Integrated Port Community Information System (IPCIS) sometime this year.
The Presidential Committee on Port Reform and Decongestion whose aim it is to improve service delivery, port efficiency and increase revenue generation at the ports, has achieved little or success in these assignments. Ports access roads are presently in terrible condition of disrepair. Some steps taken by the committee to make the ports work include sacking the truck owners who had converted the various roads leading to the ports as their park, reducing the number of agencies at the ports from over fourteen to six, among others. Yet congestion has still not gone away. There is an overarching need for the ports to deploy a multi-level racking formats and satellite container positioning system in their operations as container volumes continue to increase with the ever persistent demand by the customs for physical inspection. At the moment, many of the inspections orchestrated by customs are merely formalities which entail just opening and closing the doors of the containers.
TRADE SECRETS OF THE IGBO CLOTH TRADERS
In the book 'The Business Culture of the Igbos: A Model for the Nigerian Economy' published by Silver Pen Publishing House (Lagos) in 2012, authors Seun Onanuga, Ekene Atuenyi, Henry Okonkwo and Chioma Nkemdilim solemnly attributed the success of Igbo businessmen to simple secrets such as the lack of fear, ability to adopt to foreign environment, shrewd savings and investment culture, monopoly of trade, aggressive marketing, diversification and cheap services. How true.
In respect of the cloth import market, this investigation found out that many Igbo importers, fully aware of the low purchasing power of the Nigerian masses, have partnered with Chinese manufacturers to produce the wares at lower prices which are within the means of the generality of customers while quality is reduced to maximize profits.
Although to an ethical businessman who places quality over and above profits this attitudinalism defies sound economic logic in terms of long-term prospects and customer loyalty. But the idea is in itself premised on higher quantities at lesser prices amounting to increased profitability and turnovers in the end. For the Chinese manufacturers, profit at their own end is always assured through large economies of scale.
In terms of quality, the generality of Nigerian customer don't mind pirated versions so long as they feel the cosmopolitan exuberance that wearing designer jeans confers on fashion lovers is not tampered. That aside, jeans and denim products are often fuzzily tailored, prewashed and acid-treated, so pirated versions will still look pretty nice even after several wash.
Another secret is that many importers are taking advantage of China's multidimensional high-tech industries to diversify their trade specialties as well. Why bring in ready-made clothes alone when you can add other dry commodities such as spare parts, mechanized equipment, home appliances, etc, to spread the risks and multiply the income stream?
Another surprise that the investigation has uncovered is that the quest to get rich quick has forced many retailers and distributors within the supply chain networks to plough into the import market. The Lagos Island market is beginning to experience a decentralization of imports as the monopoly of the well entrenched importers is being broken. Nowadays almost everyone will tell you he is an importer. Visit five shops in any of the bustling plazas and you will find, without much ado, at least one importer who frequently goes to China to replenish stock. You do not have to have the money to import a container load; you can import several bales or batches containing a few thousand pieces as there are shipping companies like the Analog Shipping Line who will ship your small quantities of goods for between ₦80,000 to ₦100,000 per C.B.M.
"When you get to Guangzhou market, make sure you buy more chinos than jeans" an importer admonished during the business tutorials I received in the course of this assignment. "Chinos sell faster than jeans since it's for multipurpose use, for office and casual outings. Shorts too sell fast... but do not bring in mass produced clothes as they have lower quality and are not meant for the big guys. Buy stock clothes not mass-produced items "he explained.
Another importer will give you a handful of different reasons why you should go for the mass produced clothes. Yet another will say it is 'order' that is the toast of customers. Whichever is the more profitable this reporter cannot readily ascertain as it is all within the realm of speculation. But what is imperative however is that with each cloth trader comes a personal initiative and module to the conduct of the business task. What works well for one may not necessarily work for the other...and you will find each of them keeping the business discoveries that have apparently worked well for them close to their chest for therein lie the real salient trade secrets.
Asked about the language barrier, this reporter was assured that in Guangzhou, which is the store-front for many garment manufacturers in the Guangdong province, it is not hard to find fully integrated Igbo people who speak the Chinese dialect fluently to help with the translations. For a warning, the reporter was told to be diligent and watchful, lest Chinese merchants pack the expired cloth items they have not been able to sell among the purchases.
THE IMPLICATION
At present, just as Fang Lan confirmed, air pollution in China is becoming entrenched and widespread. Research from the Global Carbon Budget estimated that last year China contributed a whopping 27% of the world's CO2 emissions even as the country (according to the country's top climate negotiator Xie Zhenhua) pledges to cut down its carbon intensity by 40-45% by 2020 from 2005 levels.
Already the report by the Clean Cloth Campaign and the IHLO (the Hong Kong Liaison Office of the international trade union movement) have drawn public attention to the high incidences of silicosis (the deadly disease caused from inhaling silicon dust) among jean garment workers arising from the use of sandblasting, hand-blasting and other toxic chemical techniques in the factories.
Fang LAN had told this reporter that "China has very high standard of worker protection...But the cost to implement these standards is very high. The local labor departments don't have so many employees to supervise the implementation, nor have the motivation to supervise, because the most important thing to them is not the health of workers, but the tax those enterprises contribute to local development".
From the foregoing, it is now clearly evident that while garment manufacturers in China will reap bountifully from the voluminous import transactions in the short term, in the long run China will have to pay a huge price for the environmental pollution arising from production processes that put profits over Good Manufacturing Practice (GMP).
At the Nigerian end, while tough times will continue to plaque the effort of Igbo jean traders, it is the men of the Nigeria Customs, especially the valuation and enforcement officers at the port of entry, who will reap bountifully from their sweat through corrupt enrichments.
Therefore for every single jeans that is imported from China that successfully reaches the Nigerian market, it is highly probable that patents and IP rights have been infringed upon, the health of Chinese factory workers have been compromised and big bribes and settlements have been doled out to Custom officials, and of course terminal operators, who benefit from illicit demurrage payments. It is the end-user who ultimately will bears the full costs of the transaction.
"This is not a territory of morality" one of the importers sounded in my ears once the reporter raised questions on business ethics and IP violations. "It is a zone of survival of the fittest" he fiercely said. In an oil-rich nation where, over time, economic mismanagement and misappropriations by Byzantine politicians and public-sector bureaucrats have fleeced the common wealth resulting in massive impoverishment, it is hard not to see reason. This reporter is inclined to agree less but, of course, he is definitely not in a position to judge.
* This article was supported by Forum for African Investigative Reporters and WITS China-Africa
