ANALYSIS: Business feels Chinese pinch

The Chinese pinch

That frontal attack is not typical. Usually, the Chinese prefer a roundabout approach; opening small supermarkets that are an upgrade on the small Indian duuka but not exactly a hyper supermarket in a shopping mall.

And the Chinese approach appears to be working, according to Renson Mutundura, the marketing coordinator, of the Kenyan retail chain; Nakumatt Supermarket, who says he has felt the Chinese price pinch.

He explains: “if you have a supplier who buys from China and then sells to you, by the time the product hits the shelf, it won’t be the same price as the Chinese who gets directly from China.

He adds: “Chinese supermarkets have posed a challenge to the bigger supermarkets because on top of having cheaper rates and are spread out in the suburbs which means that, on top of cheap prices, they offer convenience to buyers.”

“Buyers are going to find it easy to buy from the store in their neighborhood rather than have to incur transport to buy from the big store, which is a distance away.”

As a result, big stores like the South African retail and food chain, Shoprite, have been forced to close some stores in Uganda. One of these, at Metroplex Mall in Nalya; a residential area looked like a weak elephant surrounded by hungry Chinese dragons nibbling at its flesh in smaller supermarkets all round; in Ntinda, Kiwatule, Naalya, Namugongo, Kyaliwajjala, Kisaasi, Najeera and beyond as far as Kireka and Bweyogerere, from which it had targeted customers.

The other big Kenyan supermarkets—Tuskys, Nakumatt and Uchumi, and locals like Quality Supermarket and Capital Shoppers are facing the same competition.

Ibrahim Kasirye, an economist with Economic Policy Research Centre (EPRC), told The Independent that the big supermarkets made a fatal error when they disregarded the smaller stores sprouting in almost every suburb with better location and prices.

“These smaller supermarkets make a tick in locating across the main road where pick and pay consumers can access,” he said after Shoprite’s Metroplex branch closed in 2015.

In some cases, the Chinese let the locals run the show on the floor while they keep an eye on thing in the background. That is the approach at Family Supermaket in Nalukolongo, another Kampala suburb.

Despite lying low, the Chinese supermarket owners have seen tension build between them and the local traders.

The Chinese have been accused of sometimes moving into trade without following the law. Occasionally, the migration department swoops on them. In July last year, for instance, 12 Chinese were arrested for violating immigration laws. Some of them were arrested from Kikuubo.

Last year, here in Kikuubo, there was a protest against the Chinese. This year, on April 20, traders under their umbrella group, Nakesero Traders Association, refused to open their shops protesting government’s failure to crackdown against the overflow of ‘Chinese and Indians’ in petty trade.

Evaristo Kayondo, the chairman, Kampala City Traders Association (KACITA) says local traders have no problem with Chinese traders per se. “The problem has been for these people to go into retail,” he said, “they should be going into manufacturing. They should be restricted to certain lines of operation.”

Kayondo is frustrated that the government does not seem interested in protecting locals from Chinese competition.

“We have met government several times,” he explained, “they have been making promises but they haven’t done anything,” says Katimbo.

When contacted, Julius Onen, the Permanent Secretary Ministry of Trade, said the governmnet has, in fact set up a cabinet committee to study the issues and make recommendations. It could be too late for the locals.

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