Manufacturers demanded last Friday that government must consider asking its most powerful global ally to slow down shipments of polyethylene terephthalate (PET) plastic strappings into Harare where 60% of the market now falls under Chinese importers.
In a paper submitted to government, the Confederation of Zimbabwe Industries (CZI) felt that government had thrown fragile domestic enterprises to Chinese wolves.
Most of them were teetering on the brink of collapse, the CZI warned.
Thousands of jobs are under threat, while prospects of unlocking fresh employment opportunities have been undermined by a diminishing domestic market, the CZI said.
It raised a string of environmental concerns against big producers from China and other Asian economies that have increased PET plastic shipments into Harare and demanded immediate action before the crisis spirals out of control.
“Muruwe Company produces plastic strapping from 90% recycled material,” the CZI said in the paper that spelt out industry’s expectations for the 2021 national budget.
“The company is producing for the market at 25% of their capacity, which means they are able to increase production for the local market and even export markets. However, 60% of the market is taken up by local Chinese businesses who are importing PET plastic strapping for the local market from China yet the product is available locally.
Muruwe is able to supply PET plastic strapping for the whole market at competitive prices and allowing Muruwe to supply the market has (many) advantages. Import tariff for PET plastic strapping (finished product) should increase to curtail imports since the product can be produced locally.”
It said apart from tougher tariffs, government must introduce further restrictive measures to protect local companies.
Since stronger diplomatic ties were inked over a decade ago, China says it has extended US$2,5 billion in loans, investments and grants to Zimbabwe.
It has been one of the big powers globally to campaign against a global embargo placed on Zimbabwe about 20 years ago by Western powers.
Analysts say Harare is so grateful to Beijing’s interventions that it may not take radical actions against Chinese businesses operating in Zimbabwe.
In 2018, the Chinese completed the US$553 million Kariba South expansion project, which added 300 megawatts to the national grid.
Backed by grants and loans from China, several Chinese firms are at various stages of completing key infrastructure projects in Zimbabwe, including the US$1,5 billion Hwange Thermal Power Station expansion.
The Robert Mugabe International Airport rehabilitation project is ongoing, following the completion of another project at Victoria Falls International Airport in 2016 at a cost of US$150 million.
From the early 2000s, the derogatory term “ZhingZhong” emerged in Zimbabwe to describe low quality and cheap Chinese fabrics that have been blamed for the collapse of hundreds of domestic textile and clothing manufacturers, including the giant Cone Textiles.
In last week’s submission to government, the CZI said the threat to Zimbabwean manufacturers was also being felt by light-emitting diode (LED) lighting bulb manufacturers.
It also demanded immediate tax review on Chinese and Indian firms that are exporting the products to Zimbabwe.
“Muruwe also manufactures LED lighting bulbs,” the CZI said. “Import duty for finished products is 10% while import duty on components is 10%-20%. Imports mainly come from China and India. It is not competitive to manufacture LED lighting bulbs locally because of high duty on components. It is recommended that duty on components should be removed so that LED light bulbs are manufactured locally to create jobs and save foreign currency.
“There is a need for a review of duty tariffs on imported raw materials from outside Africa as the duty regime gives South Africa a monopoly, and factoring in the duty in local manufacturers’ pricing, makes local products expensive and uncompetitive on the regional and continental markets.
“For instance, imports from South Africa (supplied by Sasol Polymers) are duty free due to Sadc free trade agreements. However, imports from Asia, China, and Europe are attracting 10% duty. This makes procurement of PVC Resin from these destinations more expensive, thus rendering the end product price uncompetitive on the regional and continental markets.”