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Tuesday, April 29, 2008

Why is Kenyan labour costly vs Chinese labour?

China is growing in importance as a food exporter even with the recent 'food scares' in Japan and USA.

China has 1.2bn people but why is it that Kenya (a poor country with low 'cost' of living or low standards of living) can't compete with China?

Our flower, tea and horticulture exporters are crying over the strength of the KShs (vs the US$) while lamenting high costs of production,of which labour is a huge part, which makes them increasingly uncompetitive in world markets.

Why is Kenyan labour so expensive vis-a-vis China or India yet we have a (unofficial) 50% unemployment rate?


Anonymous said...

import/export ratio??

Anonymous said...

When you say labor costs are more do you have stats? Comparisons? I wonder if the "high labor costs" really mask the real high costs, poor infrastructure? If one can only export 3 roses a day, labor costs are big factor, but if you are able to export 3000 roses a day with the same labor force and even wage the costs are not high.

The reason I ask, is the strategy of rushing to the bottom with labor costs (price) is fraught with problems.

China and India business players (despite the recent press reports) are trying to climb up the value ladder. After interacting with them, there is really nothing special they are doing, but focused , strategic, hardwork that many in Kenya are capable of. We have the hardwork down, the focus and strategy ( as a group, not individually) is what we don't.

coldtusker said...

anon#2 - Kenya does not do stats but I compared what comparable manufacturing concerns in Kenya pay vs China & India.

Bottomline: The Kenyan outfit is in trouble coz they can't cut costs any further except labour costs. I fear they will become a import firm rather than a manufacturer. Strategy to survive.