Choking under yoke of substandard Chinese products, lopsided operations

• Nigeria Must Regulate ‘Cheap Products’– CAPDAN
• Multi-dimensional Approach Required To Tackle Menace, Says Aluko

When the Nigeria Customs Service (NCS) Wednesday, October 4, intercepted three container loads of fake drugs, electricity cables and other contraband goods from China, valued at over N356m in Lagos State, not many were shocked by the seizure, reason being that such encounters were becoming commonplace of late. The drugs, which include Acipep, Lemdafil and Ciprogyl, were seized by officers of Federal Operation Unit (FOU) Zone A, in Ikeja, Lagos.

Mohammed Garba, area controller of the unit, who disclosed that importers of the product were currently at large, said three of the seven seized containers were medicaments without import documents and certification. Two containers carried purported made-in-Nigeria cables, but were imported from China. He said the duty paid value (DPV) of the fake drugs is over N31 million, adding that the importer, who is currently at large, declared the item as electric distribution boards and ballast.

In March this year, the NCS also impounded 5, 056 cartons of imported fake drugs. The fake products were intercepted at Idiroko border, Sango-Otta axis and Lagos/Ibadan Expressway by operatives of Federal Operation Unit (FOU), Zone A Ikeja, Lagos.Customs Comptroller-General, Col. Hameed Ali (rtd), while addressing reporters at the Federal Government Warehouse in Lagos, said the items did not have National Agency for Food Drug Administration Control (NAFDAC) number.

The fake drugs, he said, had a DPV of N252.6m, and this excluded the drugs market value that runs into several millions of naira.Majority of the items, the Customs boss said, were brought in from China and India by some unscrupulous importers who are now at large.Rightly or wrongly, and because of the avalanche of consignments of substandard goods seized by the NCS, the average Nigerian points accusing finger at China for the proliferation of fake products in the country, be they building materials, electrical appliances, chewing gum, biscuits, shoes, shirts, baby formula, drugs just to mention a few.

But President, China-Nigeria Chamber of Commerce (CNCC), Ye Shuijin, in August, rose in stout defence of his country, saying most of the imported fake products found in various markets in the country were not imported from China.Shuijin, while commenting on the issue, however said CNCC and the Standards Organisation of Nigeria (SON) have reached an agreement to check the influx of substandard products into the country.

“Most of the substandard products that come into Nigeria are not from China because Chinese government has a well-structured standards in place for its products. China products are of high quality, nonetheless Chinese government is already cooperating with the Nigerian government to promote importation of quality products to Nigeria,” he said.Shuijin urged importers and consumers to be vigilant and reject outright, any noticed substandard product claimed to originate from China.

Last year, the SON raised the alarm claiming that 40 per cent of electrical and electronic appliances imported into the country from China “are substandard and have caused disasters with destruction to lives and property.” Over the years, China has been trying to build a robust relationship with Nigeria. And no doubt, the Asian country is contributing in no small measure to the country’s economic growth. The volume of Nigerian-Chinese trade, which has reportedly hit $6b in the past five years, attests to this.

In nearly every sector of the nation’s economy, ranging from manufacturing to agriculture and mining, China is deliberately working hard to get a big slice of the Nigerian commercial pie, and their impact is being felt. And fortunately for Beijing, many factors are enabling it realise this dream. For one, some western investors are reluctant to do business in the country owing to political and security reasons, while some foreign investors that were willing to do so are closing shop, and returning to their countries, or relocating elsewhere, due to what they describe as “unfriendly business environment.”

China is equally achieving this aim through serious funding of infrastructural development projects, such as roads and rail lines construction, building of airport terminals and power plants, among others, in the country, which run into billions of dollars.

So, more and more Chinese organisations are finding their way into the country, just like the Chinese community in Nigeria, which keeps expanding by the day.With Beijing’s keen interest and huge investment, it is only natural that Nigeria, Africa’s biggest economy, has become its largest overseas customer. The Nigerian market is thus not only flooded with Chinese products, but is also dominated by them. And they come in different grades and qualities.

In a way, this might be deemed advantageous, in the sense that majority of Nigerians, who have been financially incapacitated, are given a respite, as they are able to purchase low-cost Chinese goods. Indeed, the average Nigerian consumer is presently left with fewer options, as he is forced to patronise what the market has to offer, which in many cases are Chinese products.

However, Chinese operations in the country are not limited to the economy. Socially, there have also been concerted efforts at integrating Chinese culture into the Nigerian society.For instance, Chinese language is presently being taught in some schools in the country. And together with their cuisine, dances and martial arts, which are also being widely promoted, it is evident that to many Chinese residents in Nigeria, the country has become like a second home. And the number of Chinese nationals, who are undertaking one operation or the other in the country, is growing daily.

Indeed, there is an influx of the Asians, who are mainly found in cities like Lagos, Abuja and Kano, which play host to large numbers of Chinese nationals. The Chinese community in Nigeria, which is quite sizeable, makes donations to charities and partners with others to undertake developmental projects. The aim, obviously, is to make its impact felt in every area of the nation.

However, all this is coming at a price. There is a grave downside to this development, which is becoming hard to ignore. As Chinese and their businesses become more and more conspicuous in the country, so have issues of underhand dealings and sharp practices been dogging their steps. For instance, there is the problem of counterfeit and substandard products, which is not only wreaking havoc on the economy, but also on citizens’ lives. In addition, there have been reported cases of labour and environmental violations by Chinese-owned businesses, and they range from inhumane working conditions, to illegal extractions of natural resources.

Although practically every sector is affected by this phenomenon, it is more pronounced in pharmaceuticals, information communications technology (ICT) and electrical. In 2015, the Nigerian Communications Commission (NCC) disclosed that about 250 million substandard phones were being sold yearly in the country. Executive Vice Chairman of the commission, Prof. Umar Dantata, who gave the figure (in an acting capacity then), noted that the damaging impact of the products on the economy could not be quantified in socio-economic terms.

Specifically, he lamented the adverse effects of the products on the country’s national life, saying the ugly development poses grave danger to the environment, as well as health, safety and privacy of the buyers.He said: “Apart from the obvious negative economic impact of this ugly trend on the manufacturers of genuine products, there are other consequences for operators, government and authorised dealers, which include brand evaluation, loss of revenue, copyright and trademark infringement, unfair competition, loss of tax, cost of compliance with applicable national legislation, national security and loss of employment opportunities.

“This menace also poses danger to the health and safety of consumers, equally breaching the privacy of consumers. A collective effort is urgently needed to curtail counterfeiting in ICT.”Barely two months ago, Danbatta, during a tour of the Computer Village, Lagos, lamented the influx of substandard products, especially in the areas of mobile devices.

Danbatta said the menace of fake products, apart from impacting negatively on the economy, constitutes a major threat to the quality of service improvement.He expressed NCC resolve to partner CAPDAN in the fight to end the menace to counterfeit products in the market in particular, and in the country at large to a standstill.As the controversy surrounding the influx of sub-standard products, especially from China continues to gather momentum, experts including the President, Computer and Allied Products Dealers Association of Nigeria (CAPDAN), Ahmed Ojikutu, have called for regulation of supposed ‘cheap products’ in the country.

Ojikutu, who said that most of these low quality goods are found in electronics and telecommunications products among others, told The Guardian that the claim that fake and substandard products entering the country were from China is neither here nor there.

He explained that the challenge has lingered for this long because of three things, which are low regulatory oversight; low economic growth and poor orientation.Ojikutu, who said most Nigerians indulge in shady deals because they have no economic power, lamented that the purchasing power of the people has gone seriously down to the point that “some don’t even have that power… In this situation, people will demand for very low standard products. It is even worse because some of the countries producing these products ship to Nigeria, low quality products because the Per Capital Income of Nigerians is either low or non-existent. No money to spray about.”

Ojikutu said if the purchasing power of an average Nigerian is high, he or she would go for durable, original goods.“Let’s take China for example, most Chinese use iPhone. Even when the phone is still very exorbitant at about over $1,000, they still buy the phone. You needed to see queues of Chinese people who want to buy iPhones in shops. They can afford this because their purchasing power is very high. That is the reason I said that with improved purchasing power of Nigerians, they will go for the very best of products and services in town,” he stated.

In the area of regulations, the CAPDAN president was quick to call on government to regulate products adjudged to be cheap, stressing that standards must never be compromised. “If there are no standards, the country will continue to suffer and in the long run, it is the people that will be the first casualty,” he said

Speaking on orientation, Ojikutu queried that what exposure and knowledge do they have, those who imports product into the country.“This is where government also comes in. The Standard Organisation of Nigeria (SON), I really don’t know what they are doing that they have been denied spot at the ports. I mean both at the Sea and Airports. SON needs to be there. These said sub-standard low products enter the country from these two places. I think government should look seriously and urgently into that. It shouldn’t be left to the Customs alone if we must win this fight,” Ojikutu stated.

The CAPDAN chief noted that at Computer Village, the association does so many things to curb activities of low quality products peddlers.Ojikutu revealed that CAPDAN has forged a pact with Fonreg to introduce a platform, which operates with mobile phone’s International Mobile Equipment Identity (IMEI) number, in order to curb phone theft, which he described as a major threat to the operations of the Computer Village, in Lagos, which is adjudged the largest market for Information Communications Technology wares in West Africa.

A telecoms expert, Kehinde Aluko, who supports Ojikutu views regarding the regulation of cheap products into the country, said placing embargo on these products is a good starting point. Aluko posited that any Nigerian being caught for smuggling/importing substandard products should be seriously dealt with.

“Increasing tariff on imported products is another way of reducing importation of these products. This will discourage importation of goods generally and promote the growth of infant industries in the country.”According to him, putting in place these two policies will boost the country’s external reserve as it will export than import, increase the level of gross domestic products (GDP) and also boost the life expectancy of people in the country.Aluko, added that some substandard products were also produced in the country hence there is the need for government to send Nigerian youths abroad to learn how to make and brand products.

“I think that a multi-dimensional approach would be necessary to tackle the problem of substandard goods into the country. The government should set up a task force specially to monitor the activities of the Nigeria Customs Service and the borders as well. I also believe that if the Federal Government solves the problem of power supply, more manufacturing companies would thrive because it would provide ample opportunity for indigenous brands to showcase quality goods. I know that Nigerians can produce just about anything if the enabling environment is provided,” Aluko stated.

The telecoms expert, who recommended stiff penalties for importers and companies that bring in substandard products into the country, added, “All in all, I think the greatest solution would be improved power supply. With improved power supply, manufacturing companies would not need to waste funds on diesel or other means of power generation. Instead, they will channel their funds into improving production of goods because if we cannot produce, we will end up importing cheap things from abroad, and that is why Nigeria has become a dumping ground of sorts, where simple things that can be produced are imported,” he stated.

Bede Obayi, Director of Compliance, SON told The Guardian that his organisation has been unrelenting in its efforts to sanitise the ICT market, as well as other affected markets. He noted that the task could be made easier, when collaborations are struck and information shared among government agencies, operators and other stakeholders. Obayi regretted that these imported products come through the seaports and land borders undetected.

“All these are sources through which they come into the country, and you must be aware that SON is not inside the port. But we use the opportunity in the Nigeria Integrated Custom Information System to see the importation of products from the seaports. But the point is that what you are made to see can change from one point to another at the point of clearing, because you are not physically there,” he said.It was learnt that most of these products come mostly from Asia, especially Vietnam, Thailand, Taiwan and China.

Similarly in the healthcare sector, fake, adulterated and substandard drugs have not only led to the death and suffering of many, but have also stalled the growth of pharmaceutical industries in the country. Without doubt, this development is depriving the country quite much in terms of income, as well as the fact that the healthcare sector is badly affected by it.But if reports and researches are anything to go by, the Nigerian market is not the only one suffering from this malaise, as such is said to be the case in nearly all African and developing countries, where Chinese businessmen operate.

The relationship between Beijing and these countries is quite multi-faceted and lopsided, in that it appears to favour China more than the host nations. This is brought about by the fact that these countries not only have to fight low commodity prices, but China’s highly competitive manufacturing sector has also upset many of their small-scale industries.Recently, a global consulting firm, Mckinsey, said more than an estimated 60 per cent of Chinese companies operating in Nigeria are not documented by the Chinese Ministry of Commerce.

Specifically, the firm had put the total number of Chinese companies in Nigeria at 930, out of which it said only 317 are documented back in China.In a recent research conducted by Mckinsey, it was discovered that there are over 10, 000 operational Chinese firms in the manufacturing, construction, trade services and real estate sectors across Africa. But despite the high Chinese presence in Nigeria, the institute said only Ethiopia and South Africa have a high level of engagement.

These three governments (Nigeria, Kenya and Tanzania) recognise China’s importance, but they have yet to translate this recognition into an explicit China strategy. Each has several hundreds of Chinese firms across diverse sectors, but this presence has largely been the result of a passive posture, relying on large markets ties; much more is possible with true strategic engagement,” the report said.

The firm went further to explain that only 47 per cent of raw materials used by Chinese firms were of African origin and only 44 per cent of the local managers at Chinese-owned companies were Africans, representing a loss for the continent.

“On balance, we believe that China’s growing involvement is strongly positive for Africa’s economies, governments and workers,” the firm concluded.Back home in Nigeria, whenever appropriate Chinese authorities are confronted with some of these accusations, they have always attributed the problem to a general misconception on the part of the people.

In their explanations, they point to the fact that production of fake and substandard products is not limited to China, as other countries equally engage in it. And since Nigeria imports goods from other countries, the searchlight should also be beamed on those countries. They find it baffling why accusing fingers are always pointed only at China, when other countries are to blame for such.

And while some of them acknowledge that there are substandard Chinese products in the country, they, however, believe the rate is so low that it shouldn’t overshadow the goodwill and positive contributions of the majority to the country’s economic growth and wellbeing.

To this category, condemning all Chinese business activities in the country would tantamount to throwing away the baby with the bath water.Indeed, it is only natural and to be expected that Beijing would do all in its power to protect its various interests in the country, as well as ensure that set economic and social targets are met. After all, as they say, “all is fair in love and in war.”

The onus is, therefore, on Nigeria to equally protect its economic and environmental interests, as well as that of its citizens, by ensuring that relevant agencies apply due diligence, through promulgation and strict implementation of appropriate laws.

Analysts are of the view that if the country is not to become a dumping ground for inferior and counterfeited products from across the globe, it is government, through relevant agencies that can set the standards and maintain same. They insist that nobody else will do it, and the sooner this is grasped in all its ramifications and acted upon, the better for the country and its citizens.