Explained: Why a cheap Chinese shop has drawn the ire of traders in Kenya

A Chinese-owned shop, at the centre of a row in Kenya, has reopened a week after it closed following a counterfeit complaint, as per reports. On Monday (6 January), the Kenya Chinese Chamber of Commerce (KCCC) welcomed the reopening of China Square in the wake of discussions with the government. “The Chamber looks forward to an equal and fair treatment of all businesses across [the] board to ensure a conducive business environment for all,” the KCCC said in a statement, as per BBC. Located at the Unicity mall near Kenyatta University on the outskirts of the capital Nairobi, China Square sells a variety of household items. After opening on 29 January, it soon became popular among consumers for its cheap retail goods. However, the shop has landed in a soup with Kenyan traders who say China Square undercut their businesses by selling goods at a discounted rate, as per South China Morning Post (SCMP). Let’s take a closer look at the controversy. Kenyan traders hold protest On 28 February, hundreds of Kenyan traders hit the streets in Nairobi, to protest against the Chinese-affiliated shop. Angry demonstrators – with some chanting “Chinese must go!” – marched to the office of deputy president Rigathi Gachagua and to parliament to submit a petition against the Chinese retailers. “The Chinese cannot be importers, retailers, wholesalers and hawkers,” one of the placards held by the protesters said, as per Reuters. “We want the Chinese out of Kenya. If the Chinese become the manufacturers, distributors, retailers and even hawkers, where will Kenyans go?” an unnamed trader said during the protest, as per BBC. [caption id=“attachment_12255142” align=“alignnone” width=“640”] Angry demonstrators – with some chanting “Chinese must go!” – marched to the office of the deputy president and to parliament. Reuters File Photo[/caption] Peter Sitati, who imports and sells beauty equipment in Nairobi, said that a plastic pedicure stool that he sells at $43, is available at China Square for about $21. Explaining why costs are high at his shop, Sitati told BBC that he was covering the taxes and the duty he had paid. Another reason behind smaller traders charging more money from customers may be their having to approach middlemen to buy the products and thus ending up paying more, noted BBC. Kenya has seen tensions many times in the past over China-linked investments and business dealings, as per Associated Press (AP).  The store in the eye of the storm China Square’s owner Lei Cheng had told a local newspaper that he decided to open the store after realising the prices at a Nairobi supermarket were “exorbitant”, as per Reuters. He also said that the retail store’s sales touched KSh20 million (about US$158,088) a day in the first two weeks of its opening, reported SCMP. Amid the uproar by local competitors over its cheap products, China Square said in February end it was closing “until further notice.” Though the exact reason behind its closure remains unclear, the Chinese-owned shop cited public safety and operational issues. The shop said it was “unable to handle the high volume of traffic, which has become a severe concern for the public safety of all our customers, we are arranging more security guards onsite”. “Long queues have given our customers bad shopping experiences, and we are doing our best to resolve these issues within the closing-down period,” Lei was quoted as saying by SCMP. The statement also said that the shop is closing to “re-evaluate and replan our company strategy” and was “considering the possibility of co-operating with local traders”, reported BBC.  Amid allegations of unfair business practices, the China Square founder maintained he had done nothing wrong. “My business is legal and is centred on healthy competition. We have cooperated with all government directives of opening a business in Kenya and we are here to break the monopoly,” Lei said, as per BBC.

“The people who are fighting us feel threatened because Kenyans now know we exist and we are not exploiting them in pricing.”

By the end of last week, Kenya’s Anti-Counterfeit Authority said it had probed a complaint that China Square was selling fake goods but found no such evidence. This week, the store finally reopened. But, the concerns of the local traders remain unaddressed. ALSO READ: Kenyan rights group suing Meta for allegedly escalating hate in Ethiopia Kenyan government divided Trade minister Moses Kuria spurred mixed reactions after offering to take over China Square’s lease from its Chinese owner and handing it to the competing small traders. “I have today given an offer to … Kenyatta University to buy out the lease for China Square, Unicity Mall and hand it over to the Gikomba, Nyamakima, Muthurwa and Eastleigh Traders Association [Kenyan small scale traders],” Kuria said in late February, as per SCMP. “We welcome Chinese investors to Kenya as manufacturers not traders.” However, Kenya’s foreign affairs permanent secretary, Korir Sing’oei, sang a different tune, tweeting that all investors are welcome, “no matter their nationality”. “No lawful investment actor should be apprehensive, irrespective of nationality, because the country’s investment regime is non-arbitrary and non-discriminatory,” Korir said, as per SCMP. Wu Peng, the top Africa official at China’s ministry of foreign affairs, was pleased with the reassurance and said that back home “international supermarkets, chain stores can be seen everywhere in China and we welcome more to come.” Voices in favour of the Chinese-owned store Not everyone in East Africa’s economic hub is opposing China Square. A Kenyan trader spoke in favour of the retail shop as it sells “affordable” items. “China Square should be allowed to operate. They’re selling quality goods at affordable prices,” Sharon Wanjiku told BBC.  “The cost of living is very high at the moment and these prices are exactly what we need.” Ahmednasir Abdullahi, a prominent lawyer in Kenya, also disagreed with the trade minister’s statements. “CS Moses Kuria is obviously wrong in his onslaught against Lei Cheng of China Square. ‘Kenya is open for business’ is Kuria’s mantra, yet he is at war with Cheng for succeeding in his business model (selling cheapest),” Abdullahi said in a tweet earlier.

Our policies should not have "a racist" undertone. CS @HonMoses_Kuria is obviously wrong in his onslaught against Mr. Lei Cheng of China Square. "Kenya is open for business" is Kuria's mantra, yet he is at war with Cheng for succeeding in his business model (selling cheapest). pic.twitter.com/2TYHinhiiO

— Ahmednasir Abdullahi SC (@ahmednasirlaw) February 26, 2023

China is Africa’s main trading partner. Moreover, it is estimated that more than one million Chinese live on the continent, reported Reuters.  Experts say Kenya has to find a balance by promoting local products as well as attracting foreign investment. “Stopping foreigners from doing legitimate business in Kenya is retrogressive. We need to see how to build the capacity of Kenyans to be able to produce competitive products,” Kenyan economist Gerrishon Ikiara told BBC.  With inputs from agencies Read all the  Latest News ,  Trending News ,  Cricket News ,  Bollywood News , India News  and  Entertainment News  here. Follow us on  Facebook,  Twitter and  Instagram.