News / Economy

Chinese Firms Find Troubles in Crisis-hit Sudan

Chinese vendors wait for customers inside their shop at a local market in Omdurman, Sudan, Jun. 6, 2013.
Chinese vendors wait for customers inside their shop at a local market in Omdurman, Sudan, Jun. 6, 2013.
TEXT SIZE - +
Reuters
— When Chinese clothing wholesaler Chan Cui Xiao signed a deal with a Sudanese businessman to export colorful bed sheets to the African country he was confident of making good money.
 
A few months later he is in serious financial trouble - he shipped his goods to Sudan but did got paid and has rushed to the country to try to track down his local business partner.
 
The Sudanese had sent him credit and bank financing letters, and as Chan had done business that way in Egypt and other Arab countries he thought it was safe to export his goods.
 
“I made a loss of $200,000 but have been unable to find the Sudanese guy. The phone number and address he gave me seem wrong,” said Chan, sitting in a stuffy clothing store run by a fellow Chinese in the town of Omdurman, north of Khartoum.
 
Chan is not alone in losing money. There are at least 10 Chinese clothing wholesalers in Omdurman's dusty fashion market who say they have not been paid by Sudanese partners. Some of them have come over from China to sell off their merchandise from stalls set up in front of the single-story white brick buildings that line the unpaved market street.
 
Others are busy filing legal suits, although a weak Sudanese legal system means they probably stand little chance of getting their money back, analysts say.
 
Sudan has been scrambling to contain an economic crisis since it lost the bulk of its oil production when South Sudan seceded in 2011. As oil revenues were the main source of budget income and of foreign exchange reserves needed to pay for imports, many Sudanese importers are now struggling to get their hands on dollars to pay foreign suppliers.
 
Financial losses cited by Chinese traders and businessmen raise concern about the African country's ability to revive its economy.
 
China is Sudan's main trading partner and its lifeline as Western firms have shunned the country since a U.S. trade embargo was introduced in 1997 over Sudan's human rights record. It bans firms operating in the United States from doing business with Sudan.
 
Chinese firms, undeterred by conflicts, corruption and galloping inflation in Sudan, are building transport and telecommunications infrastructure and supply the country with consumer staples from soap to power sockets to underwear and rice.
 
There is no sign yet that bigger Chinese companies are pulling out, but if financial problems continue to increase the risk of doing business, that could slow or even jeopardize Sudan's plan to attract more foreign investment to develop its mineral and agricultural resources and overcome international isolation.
 
Hotel Slump
 
At a high-level bilateral meeting in Beijing last month, state media from both countries praised the depth of ties.
 
But for many private Chinese entrepreneurs, most of whom came after the end of Sudan's civil war in 2005, Sudan's depleted finances are creating a difficult business environment.

“We hardly have any projects in Sudan anymore and are now moving staff to Kenya where business is much better,” said the head of a mid-sized private Chinese building company.

He asked not to be named as he fears problems with the Sudanese government, which still owes his company money for construction work for ministries in Khartoum over the past two years.
 
“We used to have 40 Chinese staff. Now we're just 10,” he said, sitting in his office in a large but mostly deserted building in southern Khartoum. “Sudan is no longer an important market for us.”
 
China, though, does have an interest in Sudan overcoming its economic crisis as it has investments in South Sudan's oil production, which has to be exported through Sudan.
 
Sudan resumed oil exports last month - after a 16-month shutdown due to a row with South Sudan over pipeline fees - with the sale of a cargo of oil produced by China National Petroleum Corp, which dominates the oil industry in both countries.
 
In January, China extended a $1.5 billion loan to Sudan via state-run China Development Bank to help shore up public finances and the Sudanese economy, which shrank 10 percent last year, according to World Bank data.
 
Chinese firms, especially state enterprises, still have a lot of business in Sudan, part of Beijing's strategic drive across Africa to secure resources for its vast economy. As well as oil, they have invested in farmland projects and are doing exploration work in the mining sector.
 
Sudan's state airport operator has just won a $700 million loan from China's state-run Export Import Bank to build a new airport in Khartoum - one of the largest industrial projects in the country in recent years.
 
Still, bilateral trade has been falling. China's exports and imports to and from Sudan, which totaled $11.5 billion in 2011, amounted to just $3.3 billion in the January-November period of 2012, according to official Chinese data.
 
The drop in oil trade accounted for much of that decline. But even while the oil industry has been shut down trade has continued to fall. In the first five months of this year, Chinese exports to Sudan fell eight percent from a year earlier to $1.7 billion, the data shows.
 
Hoteliers in Khartoum are feeling the impact from a drop in Chinese and other Asian business travelers.
 
Hotels were double- or even triple-booked from 2005 until 2011 when the economy was flush with oil revenues, sparking a building boom. Several new hotels have now opened but many are suffering in the downturn, exacerbated by the exit of most United Nations' staff and aid workers with southern secession.
 
“We used to have an occupancy rate of much more than 50 percent,” said Liu Sui Qin, owner of a hotel near the former U.N. headquarters in Khartoum. “Now it's 20 or 30 percent and prices for a single room have halved to around $40.”
 
Liu came to Sudan 13 years ago from Beijing with her husband who opened a Chinese orthopedic clinic, but she is now pessimistic about business prospects here.
 
“Maybe we'll wait one or two years. If things don't improve we'll go back to Beijing,” she said, playing with her daughter in the hotel lobby.
 
At least the hotel is still turning a small profit, in sharp contrast to the fashion traders trying to sell off shirts, trousers and bed sheets in Omdurman market.
 
“It was my biggest mistake coming to Sudan,” said Li Kong Kai, who is trying to sell bed sheets in the sweltering heat after her Sudanese partner failed to pay for an order she had already shipped to Khartoum. “I paid $95,000 for my wares and hope to recoup some losses and then go back home.”

You May Like

Algerians Vote in Presidential Election

There were few media reports of protests and clashes around the country, but so far no significant violence More

Sharks More Evolved than Previously Thought

The discovery could “profoundly affect our understanding of evolutionary history” More

Pakistan Military Asked to Protect Polio Workers

Request comes as authorities say a Taliban ban on vaccinations in 2012 and deadly attacks on anti-polio teams have prevented thousands of children from getting inoculated More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Google Buys Drone Companyi
|| 0:00:00
...
 
🔇
X
George Putic
April 15, 2014
In its latest purchase of high-tech companies, Google has acquired a manufacturer of solar-powered drones that can stay in the air almost indefinitely, relaying broadband Internet connection to remote areas. It is seen as yet another step in the U.S. based Web giant’s bid to bring Internet to the whole world. VOA’s George Putic reports.
Video

Video Google Buys Drone Company

In its latest purchase of high-tech companies, Google has acquired a manufacturer of solar-powered drones that can stay in the air almost indefinitely, relaying broadband Internet connection to remote areas. It is seen as yet another step in the U.S. based Web giant’s bid to bring Internet to the whole world. VOA’s George Putic reports.
Video

Video Ray Bonneville Sings the Blues and More on New CD

Singer/songwriter Ray Bonneville has released a new CD called “Easy Gone” with music that reflects his musical and personal journey from French-speaking Canada to his current home in Austin,Texas. The eclectic artist’s fan base extends from Texas to various parts of North America and Europe. VOA’s Greg Flakus reports from Austin.
Video

Video Millions Labor in Pakistan's Informal Economy

The World Bank says that in Pakistan, roughly 70 percent work in the so-called informal sector, a part of the economy that is unregulated and untaxed. VOA's Sharon Behn reports from Islamabad on how the informal sector impact's the Pakistani economy.
Video

Video Passover Celebrates Liberation from Bondage

Jewish people around the world are celebrating Passover, a commemoration of their liberation from slavery in Egypt more than 3,300 years ago. According to scripture, God helped the Jews, led by Moses, escape bondage in Egypt and cross the Red Sea into the desert. Zlatica Hoke reports that the story of the Jewish Exodus resonates with other people trying to escape slave-like conditions.
Video

Video Police Pursue Hate Crime Charges Against Kansas Shooting Suspect

Prosecutors are sifting through the evidence in the wake of Sunday’s shootings in a suburb of Kansas City, Missouri that left three people dead. A suspect in the shootings taken into custody is a white supremacist. As VOA’s Kane Farabaugh reports, he was well-known to law enforcement agencies and human rights groups alike.
Video

Video In Eastern Ukraine, Pro-unity Activists Emerge from Shadows

Amid the pro-Russian uprisings in eastern Ukraine, there is a large body of activists who support Ukrainian unity and reject Russian intervention. Their activities have remained largely underground, but they are preparing to take on their pro-Moscow opponents, as Henry Ridgwell reports from the eastern city of Donetsk.
Video

Video Basket Maker’s Skills Have World Reach

A prestigious craft show in the U.S. capital offers one-of-a-kind creations by more than 120 artists working in a variety of media. As VOA’s Julie Taboh reports from Washington, one artist lucky enough to be selected says sharing her skills with women overseas is just as significant.
Video

Video UN Report Urges Speedier Action to Avoid Climate Disaster

A new United Nations report says the world must switch from fossil fuels to cleaner energy sources to control the effects of climate change. The Intergovernmental Panel on Climate Change released the report (Sunday) following a meeting of scientists and government representatives in Berlin. The comprehensive review follows two recent IPCC reports that detail the certainty of climate change, its impacts and in this most recent report what to do about it. VOA’s Rosanne Skirble has the details.
AppleAndroid

World Currencies

EUR
USD
0.7217
JPY
USD
102.17
GBP
USD
0.5949
CAD
USD
1.1009
INR
USD
60.326

Rates may not be current.