While we were busy worrying ourselves grey with the Dubai World issues, I don’t know if any of you missed this small piece of news, (well I certainly did) ‘Chinese and Egyptian Premiers shake hands on North West Suez Gulf Development’. We've known of this Chinese Alchemy working very well in East and West Africa, but the fact that they were in our backwaters (well not really the GCC backwaters, but Egypt is nearly there, I can see the :) guys) is an interesting development.
In July 2009, TEDA (Tijuan Economic Development Authority), a Chinese SEZ Maker was shortlisted from 29 others, to develop a five sq.km special economic zone, about 120 Kms away from Cairo, with a port available stone’s throw away. As of Nov-09, when the Premiers shook hands, 1.07 sq km had been developed and18 Chinese companies with a Paid up Capital of USD 180 Mn had already set shop there (how conveniently located to export to the EU, no more long ship voyages for those Chinese 'Rebuke' Shoes and 'Mokia' mobile phones). There are a few hundred more companies readying themselves to set shop here, apart from the 800+ Chinese companies already operating in Egypt.
On the Egyptian Ministry of Investment website, it states that, this development will provide huge job opportunities yada yada yada..but I guess someone in Egypt who signed the dotted line does not know that, when the Chinese come, they come with their kitchen sink into the camp. Why do I say so..well here goes:
When the Dragon went to Panama
Someone once told me a story about the Chinese investing in Panama some time back. China bid for a site on Panama Canal to construct a cargo loading and unloading site. A no-brainer that they were obviously the lowest in their bid. Their plan was to use Chinese labour to get the job done. Turned out some smart aleck in Panama forgot to mention to the Chinese that there was a law requiring 90% local labour workforce, and on top of it there’s a minimum wage law in Panama. Last heard, the Chinese were sitting with this piece of land wondering if it was ok to grow poppy on it.
I am sure that after the Panama Debacle, the Egypt story would be different. Firstly this is an SEZ, so i'm presuming there will not be any local labour employment regulations applicable. So guess what, its going to be Chinese labourers, building the site for Chinese companies to manufacture and export Chinese goods using Chinese workers to everywhere except China. So now if you thought Mokia phones had only reached Africa, Europe and the Arab World are not too far away now.
And then again in Afghanistan
Here’s one more example for the road. China Metallurgical Corp (another state company) bid USD 4.3 bn (USD 1 Bn more than closest competition) and won hands down with the most extravagant quote for the development of copper mines in Afghanistan in 2009. Their quote involved development of villages (to house the Chinese), power plants (to run the copper mine), highways and a 580 km railroad (to transport the copper) and much much more. None of the American, European or Indian companies which bid came anywhere near the project bid.
So while the Americans and the rest were busy burning their govt exchequer fighting for the the Af-Pak strategy/cause, the Chinese without even firing a shot took away one of the richest known copper fields ever discovered in history!!!2010 will see the second mine site bid opening and there are 7 finalists in the same, no prizes for guessing, but yes the 7 finalists have only Chinese and Indian mining companies in the race.
I am not someone who is against free market, I fully support free market and capitalism;and I envy the Chinese for having capitalized on a loophole in capitalism, with this capital idea of 'new age altrusim mixed with business'.
Do we need to worry about the Chinese in our backyard now? I don't know, I’ll have to leave this blog post here, I’m getting late for my Chinese Language classes :)
(All views expressed in this blog post are purely p-e-r-s-o-n-a-l)
Disclosure: No Positions