3 Sept 2019
Hong Kong Fashion Giant Set to Manage Ethiopian Industrial Park
Kowloon's Hop Lun is latest Chinese business to invest in production facilities in East African nation.
One of Hong Kong's leading manufacturers of swimwear and fashion lingerie is set to take over management responsibilities for the Bahir Dar Industrial Park (BIP) in northern Ethiopia. Last month, the company – Kowloon-headquartered Hop Lun – signed a Memorandum of Understanding with the Ethiopian Investment Commission (EIC), which will see it ultimately assume overall control of the facility, while also committing to invest US$50 million in further developing the site.
Set 552km to the north of Addis Ababa, the Ethiopian capital, BIP was originally developed by the China Civil Engineering Construction Corporation (CCECC), the Beijing-headquartered, state-owned, civil engineering giant. Once completed, it is expected to employ about 10,000 local workers.
Outlining the plans for the site, Hanna Arayaselassie, Deputy Commissioner of the EIC's industrial park division, said: "According to the agreements in place, Hop Lun will manufacture undergarments for the US and European markets here, while also looking to facilitate a greater level of technology transfer between Hong Kong and Ethiopia. As part of the first phase, we also expect 6,000 jobs for local workers to be created."
BIP is one of a dozen textile-and-garment-sector-focused industrial parks that Ethiopia is constructing as part of its ambitious manufacturing development programme. Ultimately, it hopes to have 30 such parks up-and-running by 2025, as it looks to make good on plans to establish a light-manufacturing hub as the country evolves into more of a lower-middle-income economy. At present, 15 such parks are either completed, under construction or at an advanced planning stage. Of these, the Ethiopia Industry Park Development Corporation (EIP) manages 12, seven of which are fully operational.
To date, mainland companies have been the most significant investors in the country's ambitious economic transformation, with China also now established as Ethiopia's largest bilateral trading partner. Following April's Beijing-hosted Belt and Road Forum – an event where Ethiopia was one of the 37 nations attending – Chinese companies pledged to invest $2.3 billion in the East African nation.
Unsurprisingly, mainland companies have also been the Ethiopian government's primary partners in the delivery of its national industrial park construction programme, as well as being key tenants of many of the completed facilities. Overall, for the 2017-18 financial year, Ethiopia approved 1,294 China-backed investment projects, accounting for about 25% of all foreign direct investment in the country.
China's investment has so far focused largely on export-oriented manufacturing facilities, with a particular emphasis on pulp, paper, pharmaceuticals, meat processing and textiles. Among the most high-profile of these is a large-scale bamboo and pulp-paper processing facility under development in Assosa, the capital of Ethiopia's western Benishangul-Gumuz region, as well as an integrated livestock and meat processing park in Addis Ababa and a pharmaceutical plant in the Kilinto Industrial Park (KIP), just south of the capital.
KIP extends across 270 hectares on the outskirts of Addis Ababa and is currently under construction by the Shenzhen-based Tiesiju Civil Engineering Group. With its $204 million cost met by the World Bank, the Ethiopian government claims to already have 10 international pharmaceutical companies lined up as potential tenants.
As another sign of China's growing ties to the country, Huajian, a Dongguan-based footwear manufacturer, has signed an agreement to manage and operate the country's Jimma Industrial Park (JIP), which was developed by the China Communications Construction Company and officially opened for business in December last year.
Huajian has already committed to investing up to $100 million in constructing on-site footwear manufacturing and coffee-processing facilities, while also undertaking to recruit additional overseas tenants. The company has been manufacturing in Ethiopia since 2011, largely via its proprietary industrial park on the outskirts of Addis Ababa. It currently has more than 7,000 local employees and, last year, exported about five million pairs of Ethiopian-manufactured shoes to the US and Europe.
Geoff de Freitas, Special Correspondent, Addis Ababa