African Entrepreneurship Record

Chapter 1418: Chapter 8: Balancing Epidemic Prevention and Economic Development (Part 2)

The ways to cope with this shock boil down to two points: either expand overseas markets or enhance domestic consumption capabilities.

However, expanding overseas markets is evidently unfeasible at this stage. With the end of World War I, the global order has returned to stability, and East Africa has lost the excellent external environment for expanding overseas markets; instead, it faces a new round of challenges from European and American countries.

Of course, European countries will require at least several more years to restore economic production. For now, East Africa’s main competitor remains the United States.

Yet, solely the United States is enough to cause East Africa headaches, as the industrial capacity of the United States is not much inferior to East Africa’s.

Previously, due to the European war, the United States had already pushed its domestic industrial production capacity to the limit, making its economic threat to East Africa quite substantial.

Of course, to counteract American industrial competition, East Africa has prepared, emphasizing economic transformation since the late four and five period to avoid American competition.

The industries in the United States are actually on par with East Africa’s, and European countries, having more mid-to-high-end industries, have yet to recover their strength.

Therefore, East Africa’s goal is to seize more mid-to-high-end industries, utilizing the technical reserves and machinery gained from the Allies and elite talent from Russia at this time.

However, industrial transformation for East Africa is merely a symptomatic treatment, not a fundamental solution, as the global market is always limited. The industrial brand effect of East Africa clearly cannot compare to Europe, and mid-to-high-end industries also require time to nurture.

The poor industrial brand benefits of East Africa mainly lie in light industrial products, particularly in aspects of clothing and diet, where the gap with other countries is largest.

After all, houses and automobiles, while valuable, houses are hard to export, and automobile transportation is not a necessity.

Textile and food industries are entirely different, with fast updates and being daily necessities for the populace, especially food, which can be considered the most fundamental industry.

Daily expenses for food are inevitable for the populace, and after consumption, they must purchase again; the cycle effect is best. Having a powerful food enterprise can be equated to owning an inexhaustible gold mine, as evidenced by the global spread of America’s cola, hamburgers, and fried chicken in the past life.

In summary, an important element of East Africa’s fifth five-year plan or strategy is improving the development quality in the light industrial sector.

Ernst stated, ”Light industry has always been our biggest weakness, especially compared to European and American countries. Even if we produce more products, if consumers don’t buy, then it’s futile production and merely resource waste.”

”Similarly in the textile industry, East Africa’s capacity has indeed caught up with European and American countries. Yet, when foreign nations mention East African textile products, the first impression is poor quality, cheap prices, and our existing textile enterprises have not grown into well-known quality enterprises internationally.”

The normal export volume of East African textile products isn’t high, and the extraordinary case was during the war, when large European orders significantly stimulated the development of East African textile industry. But the war has ended now.

This situation presents a new challenge to East Africa’s textile industry, while simultaneously addressing competition from the American textile enterprises.

Nonetheless, East African textile industry evidently has many deficiencies compared to the established powers like the United States.

Ernst remarked, ”Domestic textile enterprises have had short development spans, with weak technical accumulation, relatively backward equipment, and poorer product quality, severely impacting the Empire’s reputation and brand of exported consumer goods.”

To some extent, this is also influenced by East Africa’s long-term planned economy in the past. Although East Africa’s textile industry has now shifted to private ownership, their technical sources, machinery, and management model inevitably reflect the past East African economic system.

Certainly, this perspective must change. In the last century, East Africa was still an agricultural country, and it only transformed from a semi-industrial to a basic industrial power before the fifth five-year plan.

From this viewpoint, although a significant number of state-owned textile enterprises exited the historical stage, their contributions are indelible.

Currently, East Africa’s textile industry boasts a large number of professional workers, which is a historical contribution of East Africa’s state-owned economy.

Although state-owned enterprises are inefficient, they expanded rapidly based on administrative orders and plans, cultivating extensive industry sizes and thereby nurturing numerous expert workers and technicians.

If it weren’t for this, post-1910, East African textile industry—despite being privatized—would not possibly find numerous experienced workers for development.

Of course, these state assets have now been sold, and the East African government can’t possibly restart a batch of state-owned textile enterprises, especially since private efficiency and market sensitivity in the textile industry outweigh the East African government.

However, Ernst clearly will not let East African textile industry drift, particularly when facing competition from European and American countries, and even other regions.

Ernst stated, ”During the fifth five-year plan, the focus will be guiding national economic transformation, completing updates and iterations on equipment, technology, and management models, enhancing production efficiency and reducing production costs to address foreign enterprise competition.”

”The government must implement relevant policies to push enterprises to eliminate outdated equipment, while encouraging technological research and innovation.”

”For our enterprises to survive, they must outperform similar enterprises from Europe and America, and compared to those from other countries, our loss is rooted in technology and production efficiency.”

”Take the textile industry as an example. Our textile industry doesn’t lack raw materials, but our technology and publicity lag behind Europe and America, making it difficult to compete with other countries.”

East Africa is a major producer of cotton, silk, wool, and various hemp types, which explains Ernst’s claim that East African textile enterprises don’t lack raw materials.

Clearly, ample raw materials with relatively low prices are extremely important for textile enterprises, for wanting an able housewife without rice is impossible; countries without foundation materials like cotton lack any basis to develop the textile industry.

Among European and American textile-advanced countries, some, like the United States, can grow and produce locally, or, like England and France, acquire abundantly from colonies; otherwise, learning from Germany to import and meet national needs is the remaining option.

Germany’s import of cotton and other raw materials naturally faces price manipulation by other countries, not to mention supply cut-off risks, as evidenced during World War I.

The key reason for the rapid development of German textile enterprises is their advanced research and application of textile technology, enabling reduced costs via large-scale industrial production while enhancing product quality, aligning with East Africa’s current pursuits.

Countries lacking the above conditions face hardship developing the textile industry, exemplified by the former Soviet Union in the past life, which lacked natural cotton regions and spent vastly creating cotton areas in Central Asia by intercepting river water into deserts.

If not done, a Western ban on cotton exports to the Soviet Union could easily devastate its textile industry.

Clearly, the Soviet style, as an adversarial target of imperialist countries like the UK, France, Germany, Austria, and the East Coast of the United States, is unlikely to avoid sanctions.

Therefore, East Africa, having plentiful natural cotton regions for cultivation and production, is undoubtedly in a highly advantageous position.

Moreover, the cotton-producing areas in East Africa are evenly distributed from north to south, ensuring robust cotton strategic security for East Africa.

With abundant, relatively cheap raw materials, though not as affordable as cotton from colonies, especially India’s low labor cost-produced cotton, East Africa’s domestic cotton base price remains competitive internationally, with pre-war Germany’s large-scale imports being a typical testament.

Therefore, from the standpoint of raw materials types, quality, and price, East Africa’s cotton conditions are second only to those of the United Kingdom, constituting a natural advantage for East African textile enterprises.

However, East African textile enterprises must adopt better technology, equipment, and management models to capitalize on this fundamental advantage.