ALL THE TEA IN MALI; A LOOK AT CHINESE ECONOMIC

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SIPDIS

SIPDIS

E.O. 12958: N/A
TAGS: ETRD ECON EAGR ML
SUBJECT: ALL THE TEA IN MALI; A LOOK AT CHINESE ECONOMIC
EXPANSION IN AFRICA

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1. Summary: Chinese tea imports have captured nearly the
entire Malian market in just one generation, replacing prior
sources and trade routes that existed for several centuries.
In a story line that reveals much about China's emerging
dominance in consumer goods in Africa, Chinese traders helped
identify a market niche by developing identifiable brands,
assuring consistent quality and supply, and providing various
packaging options; Malians distributed the product to
retailers throughout the country. Most Malians drink tea
several times a day. While competition among Malian
importers for market share is fierce, in the end all the tea
comes from China. End Summary.


2. Few rituals in Mali compare with the consumption of tea.
A tradition tracing its origins to the Tuareg and Arab nomads
of Northern Mali, the custom spread south in colonial times.
Now, nearly every Malian regardless of age and social class
participates in the thrice-daily ritual of preparing and
drinking a thick blend of green tea and sugar. Curiously,
Chinese agronomists helped spur the trend by establishing a
local tea-growing cooperative in the late 1960's, in
competition (at the time) with traditional caravans that
imported tea from the Middle East. As demand outstripped
local capacity, Chinese traders stepped in to help Malian
entrepreneurs supply the market with Chinese imports.


3. One such entrepreneur, Boubacar Tandia, who claims 15
percent of the multi-million dollar tea market, started
importing tea in 2002, after "customs reforms" initiated in
Ouagadougou eliminated his primary business of importing
electronic goods through Mali to Burkina Faso. Chinese
traders introduced him to an agent from a Chinese parastatal,
who suggested he break into the tea sector and invited him to
Beijing to develop a marketing plan. Tandia first visited
Malian customs as the only reliable (if strictly informal)
source of import data. Officials there told him they
estimated Chinese imports of tea that year at 7 billion CFA
(14 million dollars).


4. In Beijing, the parastatal and Tandia selected a specific
blend, developed a brand ("Elephant"),and decided on package
sizes appropriate for resale in small kiosks and market
stalls. Tandia says he put the money up front for the first
40 foot container to Mali, as credit was not provided by the
Chinese.


5. Tandia claims "Elephant" was a market leader until the
civil war in Cote d'Ivoire cut access between the port of
Abidjan and Mali for six months; by the time the roads
reopened, brands sold by others had taken over (one brand,
"Lobo," is named for Malian President Toure's wife). Tandia
went back to China and developed two additional brands, "Le
Nord" and "Tuareg," with labels and promotional materials
invoking images of Mali's nomadic north. Tandia claims the
blends were even selected for taste by a Tuareg friend to
assure authenticity. Tandia now claims he controls 15
percent of Mali's multi-million dollar tea market, which he
predicts will grow based on the quality of his product.


6. Comment: Tandia's experiences explain briefly how China
has come to dominate the market in consumer goods in West
Africa:

--Low Price: Chinese goods are immediately affordable, unlike
bargain-priced Western goods (or Chinese goods made to
Western specs),which are still beyond the price range of the
typical Malian consumer. Chinese motor bikes for instance,
with a price of around 500 dollars, have driven comparable
Japanese or French models (unavailable locally for less than
2000 dollars),out of the local market.

--Local distribution: Chinese traders sell directly to Malian
middlemen, who then distribute the goods through small shops
and street vendors. In contrast, Lebanese and French traders
frequently control the retail segment as well, leaving out
local wholesalers.

--"Value Added" takes place in China as much as possible
before shipment: Goods manufactured in China take advantage
of lower input costs and econoies of scale, allowing them to
enter the market t a lower price than locally manufactured
goods. Ironically, many of the local manufacturers are aso
Chinese-Malian Partnerships set up in previou decades.

--Local Chinese Facilitate commerce: The permanent and
significant presence of Chinese traders provides critical
contacts and opportunities for Malians previously closed out
by Lebanese or other business interests.

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--Quality still an issue: Chinese goods have a poor
reputation for quality and thus many are deliberately
manufactured to indicate another country of origin. Chinese
tea has a excellent reputation, however, and now has a
complete lock on the market for Mali's centuries old
tradition.
MCCULLEY