Home' Trinidad and Tobago Guardian : August 15th 2013 Contents In China recently, one of the country s
leading academics told me that a for-
mer Chinese ambassador to the
Caribbean said the region has "a two-
party system"---one party during the
day and another party at night.
What the academic was quoting the former
Chinese ambassador as saying is that Caribbean
workers prefer to "party" than to work. This
is a principal reason that Chinese companies
advance for importing labour from China for
construction projects in the Caribbean.
Another is that they are pressured by
Caribbean governments to deliver projects
quickly and they cannot do so without import-
ing Chinese workers to whom they do not
apply the labour laws and practices of
The former Chinese ambassador s remark
demonstrated a lack of appreciation of the
historical, political and cultural development
of Caribbean labour laws and industrial pro-
cedures. It showed little appreciation for the
history of slavery and indentured labour in
the region; the exploitation of workers; and
the rise of the trade union movement to estab-
lish and protect workers interests and their
conditions of work.
Yet, if the current practices continue in
which Caribbean workers are, for the most
part, spectators at projects employing Chinese
labour, there will eventually be resentment
and a backlash, particularly if the projects are
financed by loans to Caribbean governments
that taxpayers have to repay. Such a backlash
will harm relations between China and
Caribbean countries at a time when these
relations should be improved and deepened
at the economic level.
It has to be recognised, however, that
Caribbean workers will also have to improve
their performance if they are to compete in
a global market where costs and output are
crucial factors in production.
Chinese companies that secure contracts
for construction and other projects should
also be mindful of the importance of joint
ventures with Caribbean companies especially
as Caribbean firms cannot raise capital on the
advantageous terms given to Chinese com-
petitors by the China Development Bank and
the China Import-Export Bank.
If Caribbean businesses continue to be side-
lined by Chinese firms in bids for projects in
their own countries because of the comparative
high costs of borrowing and also because they
are required to adhere to Caribbean labour
laws, they too will build up resentment.
Culture and laws
Based on their experiences elsewhere---more
particularly in Africa---Chinese companies are
beginning to recognise the vital importance
of understanding the culture and laws of the
countries in which they operate. They know
that even if governments blink at their own
laws in order to secure Chinese financing, this
is a rope that has an end and the end could
have unhelpful consequences.
But, there needs to be a constructive dialogue
now between the government of China and
the governments of the Caribbean to set down
the terms of engagement including joint ven-
tures, public sector-private sector partnerships,
respect for labour laws and the requirement
to employ local labour on projects financed
by Caribbean governments borrowing.
Chinese officials state quite clearly that the
government of China would not be averse to
such a discussion with Caribbean governments.
It is, therefore, a discussion that should happen
For their part, Chinese officials are clear
about what China wants for its business people.
In a recent China-Latin America and Caribbean
Forum in which I participated in Beijing,
China s representatives proposed that gov-
ernments should give China s business people
"a stable and better investment environment,
in particular more facilities in such areas as
national treatment, tax, visa and residence".
While it is appropriate that China should
seek such conditions for its business people,
reciprocal arrangements from Caribbean coun-
tries---even if they were agreed---would hardly
be beneficial to the small states of the region.
In this connection, Caribbean governments
should be thinking through their own require-
ments from China including aid for trade, and
Chinese companies putting up capital for much
needed infrastructural projects on the basis
that they would build and operate such projects
until their investment is recovered, at which
time they would hand them over to the gov-
ernments, or sell them to the Caribbean private
Caribbean countries should be fully engaged
with China. The urgency of doing so stares
the region in the face compellingly. China is
the world s second largest economy, but more
importantly it has US$3.4 trillion in foreign
reserves. China needs to invest that money
so that it gets a regular and sustained return.
The portion of these reserves that are tied
up in US and European bonds is not earning
a great return. Thus, China is investing overseas
in owning real assets like: ports, utilities, natural
resources, technology and financial compa-
The British Guardian Newspaper reported
in May this year that, "since 2005, China has
provided loan commitments of more than
US$86 billion to Latin American countries.
That is more than the World Bank or the Inter-
American Development Bank has provided to
the region during the same period." The Chi-
nese investment and loans have contributed
significantly to the growth of Latin American
economies over the last eight years. For its
part, China expects that the money it has
invested in Latin American countries will give
it returns not only in political influence on
issues that are important to China in the inter-
national community, but also in financial ben-
Caribbean countries should be active in
securing investment and concessionary loan
financing from China but not to continue the
construction of vanity projects that do not
earn revenues and that will quickly deteriorate
unless they are maintained by draining national
Caribbean "cap in hand" diplomacy has
elicited some response from China in the past,
but it is not maintainable. The relationship
has to be put on a mutually beneficial footing.
In this connection, the Caribbean might focus
on offering China and Chinese businesses the
opportunity to invest in sustainable projects
from which they will earn a return. Such proj-
ects could include energy generation from
renewable sources; roads and bridges that can
be financed from tolls; region-wide maritime
transportation, including fast ferries; the con-
struction of modern sea ports; tourist resorts
(not necessarily for the Chinese market); agri-
culture and fisheries projects.
Urgent work is required by Caribbean coun-
tries to take full advantage of the considerable
resources that China has to invest in what the
Chinese call "win-win" situations.
The writer is a consultant, senior research
fellow at London University and former
AUGUST 2013 • WEEK THREE www.guardian.co.tt BUSINESS GUARDIAN
COMMENTARY | BG25
A new footing needed
China Resources Enterprise (CRE) is in talks with the United
Kingdom retailer Tesco about merging their hypermarkets and
supermarkets in China.
The venture would combine Tesco s 131 stores in China with
CRE s almost 3,000 stores, called Vanguard, to create what they
say would be the leading multi-format retailer in China.
State-run CRE would control 80 per cent of the new chain
while Tesco would have 20 per cent.
Tesco and CRE both confirmed the talks in stock market state-
They warned that there was no guarantee the deal would be
CRE said that the venture would bring together its "deep
understanding of local customers, established nationwide infra-
structure and proven track record as a partner with Tesco s global
retail expertise, international sourcing scale and supply chain
Tesco, the biggest supermarket chain in the UK, first started
operating in China in 2004 where it has hypermarkets and some
shopping malls containing Tesco stores.
Analysts said the joint venture would allow Tesco to reduce
the amount of capital it must commit to its China business, while
still having a presence there.
"Tesco has been struggling in China and has been losing money.
Similar to Carrefour, they had issues in their home market which
they had to resolve," one Hong Kong-based banker told the
Reuters news agency.
"This may look win-win, but in reality, Tesco is saying I can t
figure out China ," he said.
With an annual value of more than one trillion dollars, China
is the world s biggest market for food and groceries, according
to figures from research group IGD.
It also forecasts that China s market will grow by 50 per cent
over the next three years.
The current leader in Chinese hypermarkets is Sun Art, which
is a joint venture between the Taiwan conglomerate Ruentex
Group and the French retailer Groupe Auchan.
After a decade of international expansion Tesco faces chal-
lenges in some of its overseas markets.
In April, Tesco said it was abandoning its US chain of 199
Fresh & Easy shops, at the same time announcing its first
decline in annual profits in almost 20 years. It is still to be
decided whether it will sell the business or close it down.
It also announced that it would leave the Japanese market
Tarlok Teji, retail analyst at Manchester Business School,
said: "Tesco s chief executive is right to give more attention
to the UK operations but wrong to be pulling out of overseas
"There is no growth in UK retailing. Any growth is forecast
to come from international expansion or mobile retailing. Any
effort in the UK will cannibalise sales from their own store
network or from competitors.
"The only winners are the consumer with keener prices
and better customer service." (BBC)
Tesco in talks with China Resources Enterprise
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