Ugandan Retailers Claim Foreign Competitors Skirt Trade Regulation; Say the Chinese Undercut Them

The Washington Times (Washington, DC), April 25, 2011 | Go to article overview

Ugandan Retailers Claim Foreign Competitors Skirt Trade Regulation; Say the Chinese Undercut Them


Byline: Ioannis Gatsiounis, SPECIAL TO THE WASHINGTON TIMES

KAMPALA, Uganda -- Ugandan retailers are pressing the government to crack down on foreign competitors, especially the Chinese, who illegally supply local markets and undercut their fledgling businesses.

The situation touches on the tender issues of free trade, protectionism and immigration in one of East Africa's largest economies and highlights Ugandans' ambivalence toward Chinese merchants, a growing presence in local markets.

Late last month, four retailers from Kampala with signed endorsements from nearly 1,000 other Ugandan traders filed a lawsuit seeking damages from the government for failing to enforce laws governing foreign businesses.

Under the country's Investment Code Act, a foreign merchant is required to deposit $100,000 in the Bank of Uganda, which then releases the funds for buying trade goods. The lawsuit accuses the Immigration Department and the City Council of Kampala of allowing foreign traders to do business without meeting the investment requirement.

Let this serve as a wake-up call to the government, said attorney Fred Muwema, who is representing the local traders. The first hearing in the case is scheduled for April 20.

Chinese wholesalers and retailers have become more conspicuous in the main business district of this overcrowded capital, plagued by high unemployment.

Jeff Lim, vice chairman of the Uganda Overseas Chinese Association, estimates that the number of Chinese merchants in the country has grown from 200 to 2,000 over the last decade.

An owner of one of the companies represented in the suit, Edison Mubangiza said some Chinese traders have bribed customs officials and leveraged insular networks to access lines of credit that are unavailable to most Ugandans.

Mr. Mubangiza said he makes about five trips a year to China to buy fabrics but still fails to import them as cheaply as his Chinese competitors.

It's not about money. It's not about protectionism. It's about leveling the playing field, he said of the lawsuit.

We're not against foreigners. We just want them to do what is legal, he added.

Ugandan traders have begun to question Chinese competitors' contributions to the local economy beyond paying rent, accusing them of employing fellow Chinese, avoiding taxes and not banking locally, thereby stunting the country's ailing manufacturing sector.

Chen Xiao Lu, 25, defies that depiction. She followed her husband to Kampala from Zhejoang, China, four years ago.

Without depositing $100,000, the couple set up a suitcase factory and have since opened a downtown supermarket. …

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