Is USA upstaging China in the Kenyan market?
By XN Iraki | June 24th 2018
While USA and China are trading barbs over trade surplus that favours China, USA has a solid trade surplus in services. That is what she has leveraged on in Kenya starting with eateries like KFC, Pizza Hut, and Subway and Burger King.
Next time you are on the way to JKIA stop on the last roundabout just after security check. Look to the east inside the airport and admire Four Points Hotel by Sheraton.
Look north about a km or less and Crowne Plaza Hotel stares at you.
Look south west and a Hilton is visible, about a km away on Mombasa road. The plane about to land might be a Boeing. Never mind that you can walk to SGR main station from this roundabout.
As China and USA haggle over tariffs we could have a back of the envelope analysis of their competition for the Kenyan market and our mind.
For now the Kenyan mind is fully American, the seeds of airlift have continued to spout with USA replacing the traditional UK as the best place to study.
It is not clear to me why the pendulum is shifting back to Britain. More of my former students are asking for recommendation letters to UK and continental European universities than USA.
Is it the Trump effect or aggressive marketing by UK universities?
The popularity of USA as the place to school was buttressed by graduation of President Uhuru Kenyatta from an American university, Amherst.
Some keen observers might suggest there are traces of American influence in his policies like cash transfer to the vulnerable members of the society and economic stimulus programmes.
Our curriculum is still very American, we use case studies from Harvard, watch their movies and TV programs.
The high number of Kenyans living in USA adds to the capture of Kenyan mind by America. Add Obama and it will take a long time for Kenyan mind to shift elsewhere despite Chinese efforts with Confucius institutes and scholarships to China.
It will take a long time before talking Mandarin becomes “cool”. Around our cities and hamlets, there is enough evidence of American influence on our thinking, from attires imitating American flags to T-shirt’s written New York, Dallas, California etc.
And while we love American names like Johnson, Kennedy, Michelle or Nixon, we are yet to see Kenyans with Chinese names like Xi or Wen Wen.
I recently surprisingly came across a Kenyan student called Indira Gandhi. We are more likely to quote Martin Luther King, JF Kennedy or Shakespeare than Mao Zedong or Confucius himself.
The western grip of our mind is tightened by Christian religion which is shared among key western countries.
To make inroads into our minds, China may have to invent a religion or something close. Interestingly Japanese got into our market without gripping our minds.
Few Kenyans talk Japanese or are Buddhists or Shintoists. How did the Japanese and more recently Koreans do it? They focused on manufactured products which are “neutral” unlike services which evoke emotions.
A TV is a TV; it does not matter where it’s made as long as it’s good. But consulting, teaching, banking and other services are not that neutral, they are emotional laden. Such emotions are carried by language.
Enough on mental space. What of economic space. Can China succeed in business where she has not in mental space? To be fare to China, it takes time to capture the mind. Beyond colonialism, you can use the media or religion to capture the people’s mind.
Other communities use occult sciences. You can also use history like reminding Kenyans that Chinese admiral Zheng He visited East coast long before the Europeans.
The truth is that we know more of western brands than Chinese. It might be this realisation that sent China into big projects like roads, and railways, more noticeable and less competitive because of the big money involved.
Chinese are also into housing too. But Chinese are catching up with brands like Haier, Huawei and Tecno.
America has focused on her areas of strength, services. While USA and China are trading barbs over trade surplus that favours China, USA has a solid trade surplus in services.
That is what it has leveraged on in Kenya starting with eateries like KFC, Pizza Hut, and Subway and Burger King.
Hotels have also done well with Hilton having been in Kenyan for decades. Crowne Plaza and Raddison Blu have an American connection.
Number of patents
Americans are focusing on an area with low elasticity; we shall always eat and needs services.
The American services also go into intellectual arena including higher education, and consulting. USA has another advantage over China in services, language.
The upper and middle class in Kenya have their children talk English as the first language. Swahili is learnt because of exams. This leaves little space for other languages like Mandarin.
The Chinese advantage in manufacturing is easy to copy as countries like India and Vietnam have done. The trick to compete in manufacturing is to keep innovating on products.
The rising number of patents registered in China might indicate Chinese have learnt that lesson.
Services are personalised and emotion laden. Ever noted how we follow our barbers and stylists? Noted how we get attached to hotels and churches? How can you copy someone’s consulting or culinary skills? We rarely get that close to our cars or other objects.
To compete with USA, Chinese seems to have focused on either small or big things from electronic consumer goods to roads and Railways.
The Americans are in the middle, where there is more money and made continually. We eat every day; listen to music or movies all the time, which must be replaced all the time. Chinese have become so good that lots of manufactured goods in western markets have roots in China.
Who will finally win the contest? Or shall the rising Kenyan confidence replace both?
The contest is in space too with American dreaming of reaching Mars, the red planet as Chinese launch Tiangong-2 space lab, the five-hundred-meter aperture spherical telescope (FAST) Tianyan, dark matter probe satellite Wukong and the quantum science satellite Mozi.
Americans will not leave a lucrative market like Kenya to Chinese or other players. That is not Americans.
With stealth, they will gnaw on the Kenyan market focusing on low lying fruits like food and other services.
The Chinese will do government to government business but might work hard to shed off the image of low quality producer.
Seen how they are updating their phones? With more Kenyans visiting China, our image of China will keep changing.
One wild card in the Chinese -USA contest is Kenyans themselves. Will their tastes change to be pro eastern?
Medically, loads of Kenyans are trooping to India for medical services. But it’s unlikely that Harvard or Cambridge will be replaced by Tsinghua or Beijing University as the schools of choice for the Kenyan elite.
The same applies to cars, and other status symbols. We look for every opportunity to remind our friends and admirers of our recent visit to USA.
Do we feel the same with visits to China? How many tourists do we get from USA compared with China? What of trade?
How did the Japanese get into the Kenyan market? They probably benefited from the decline of British manufacturing.
Will China also benefit from the decline of American manufacturing which Trump has been complaining about?
South Africans failed
They also made reliable and affordable cars, commensurate with the Kenyan market. They understood the Kenyan mind. South Africans failed to understand us in their early attempts, seem to have learnt with their acquisitions in insurance industry.
The battle for the Kenyan market will not be won on the supermarket shelves but in our minds. Whoever can understand the Kenyan mind, or better influence it will take the Kenyan market.
Our lack of curiosity, avoiding deep analysis has made our market very lucrative. You can more easily sway the consumers to your tastes.
Noted how we avoid reading despite the popularity of graduate classes. Materialism makes the market more lucrative.
The fluidity of the Kenyan market started early with fading of the British influence despite their 68 years as colonial power. Now it seems to be a free for all.
The key new comers beyond China and USA include French and Turkish and young Kenyans who see entrepreneurship as “cool” and those who made their money through nepotism.
The contest among political powers which we witnessed during the cold war is now on the economic front, with countries and their big firms vying for the global market.
In China, state owned firms are leading the way. In other countries private firms lead but get encouragement from their governments which include subsidies. How much support do we give our firms as they enter foreign markets?
Without any dominant economic power, holding sway over the Kenyan market, we can only rejoice, as the contest for our minds and our money continues. What is likely to emerge out this contest is a more open country, hopefully more confident.
We fear that in addition, a layer of elites might continue to control the money and thought process. Some say in whispers that is one unintended consequence of handshake. What do you think?
—The writer teaches at the University of Nairobi.
Job search tips after your business fails
- No end in sight to high power bills
- Traditional vegetables gave me a fresh start in business
- Facebook to rebrand with new name
- Central Bank releases over Sh55b to rescue struggling local lenders
- Why cement makers shun local clinker for expensive imports