Could African factories ever compete fairly when China controls both large parts of the supply chain and significant access to the retail market?

My answer is: Yes — they could, but only under very specific conditions. Right now, in most cases, they face severe handicaps.

Below I unpack the structural dynamics, the barriers, some enabling conditions and what it would take to level the playing field.

1. Why the playing field is unfair today

There are several reasons African manufacturers face uphill competition when China dominates both upstream (supply chain) and downstream (retail/access) segments.

1.1 China’s dominance of the supply chain

China has built massive manufacturing capacity, integrated supply-chains, and global logistics advantages. According to one study:

• China supplies a large share of Africa’s manufactured imports: African countries import substantial quantities of Chinese manufactured goods which compete with local production. 

• Because Chinese firms manufacture at scale, amortise fixed costs across large outputs, enjoy well-developed logistics, and in many cases have favourable state support, their unit costs are very low compared with many African producers.

• In some African economies the imports from China of manufactured goods were 15 % of GDP in one case ( Ethiopia ) by 2015. 

• African economies remain largely exporters of raw materials and importers of finished goods from China. The African Development Bank notes: “these facts reveal that the imbalance between Africa’s exporting raw materials to China and China’s exporting manufacturing goods to Africa has to be rebalanced by Africa’s capturing more China’s value-added markets.” 

Because China controls key segments of the supply chain (production, export logistics, input sourcing), African manufacturers are at a disadvantage: their inputs may cost more, they may not have access to the same technologies or economies of scale, and they face competition from low-cost imported goods.

1.2 China’s access to retail markets and consumer reach

In addition to supply chain advantages, Chinese firms often have reach into African retail markets (and global markets) and can exploit cost advantages to undercut local producers.

• For example, Chinese products flooded African markets, including textiles, clothing and household goods, undermining domestic manufacturing industries. One report states: “a flood of cheaper Chinese products could set back Africa’s infant or domestic industries.” 

• When local consumers opt for cheaper Chinese-made goods, local factories lose market share, struggle to achieve scale, and their capacity utilisation declines.

• Moreover, retail chains or import channels dominated by Chinese goods may further tilt the advantage: local manufacturing doesn’t just compete on price, it competes on distribution, presence, branding, after-sales service — and often Chinese firms have stronger logistics networks or economies of scale for low-margin goods.

1.3 The challenge of value-addition, scale and efficiency

Competing fairly isn’t just about producing the same product — it’s about being efficient, being integrated, having strong supply chains and having access to markets. Many African factories suffer from:

• Higher input costs (because of poor infrastructure, higher energy costs, weaker supply chains)

• Smaller scale (meaning higher unit cost)

• Limited access to advanced technology, automation and management systems compared to global competitors

• Weaker distribution networks, weaker brand recognition and weaker export linkages

• Political, regulatory and infrastructural hindrances (e.g., power outages, transport bottlenecks, customs delay)

These weaknesses mean that when a Chinese company with global scale enters the (even domestic) market and competes, many African factories face a “cost disadvantage” even before strategic barriers are considered.

1.4 Structural lock-in and dependency

There is also a structural problem: when Africa’s manufacturing is weak, domestic producers face import competition but cannot easily pivot to higher-value sectors. This creates a vicious cycle:

• Weak manufacturing → low output → high costs → inability to invest in technology → losing market share → further weakening.

• When China dominates upstream supply (inputs and manufacturing) and downstream retail, local firms remain “second tier” — they supply local niche markets, perhaps certain value-added or high-margin goods, but struggle with mass-market finished goods.

• This means Africa remains locked in as consumer and raw-material exporter rather than becoming producer of finished goods that compete globally or regionally.

As the African Development Bank’s report warns, “the question is then why African countries do not export manufacturing or value‐added-commodities when China has a large market for it.” 

2. Conditions under which African factories could compete fairly

Despite the disadvantages, competition is possible — under the right conditions. Below are the key factors.

2.1 Focus on local comparative advantages & niches

• African factories don’t have to compete head-on in every sector with China. They can identify segments where they have advantages: e.g., closer to local markets (lower transport costs), local tailoring / customization, faster adaptation to local tastes, local brands, shorter supply chains, or niche high-margin products.

• Some African countries have focused on regional manufacturing: leveraging the region’s proximity, using the regional market (within Africa) rather than competing globally immediately. Regional trade links (e.g., via African Continental Free Trade Area / AfCFTA) can help create viable scale and reduce dependency on competing against Chinese global scale.

2.2 Upgrading supply-chain integration, technology and scale

To compete with Chinese dominance, African factories need to:

• Secure inputs at competitive cost (either by local sourcing, import duty waivers, bulk purchasing)

• Improve manufacturing efficiency (automation, better processes, lean management)

• Increase scale (via industrial parks, special economic zones, clustering of manufacturers to share infrastructure)

• Improve logistics, energy supply, transport and customs procedures — these reduce costs and improve competitiveness

• Improve quality and brand value so that they are not competing purely on lowest cost but also on differentiated value.

2.3 Supportive policy environment

Governments and industrial policy play a major role. Supportive things include:

• Tariff or anti-dumping measures (where necessary) to protect domestic industry while it scales up

• Local-content rules, incentives for local manufacturing, subsidies or tax relief for export-oriented factories

• Investment in infrastructure (roads, ports, power, ICT) to reduce manufacturing costs

• Policies encouraging clustering, supply-chain linkages, industrial parks designed for manufacturing, as some Chinese–African industrial parks show. For instance, China supports industrial‐parks in Africa. 

• Training and skills development so that local labour can meet productivity expectations, and local management capacity can be raised.

2.4 Leveraging regional and domestic markets

• African factories may find less direct competition in regional markets where Chinese goods have to be transported over longer distances or where local preference may favour “Made-in-Africa” branding.

• African producers could exploit local responsive manufacturing: faster turns, adaptation to local market tastes, local service/back-end support, shorter delivery cycles than imported goods.

• By progressively earning competitiveness in local/regional markets, they can scale, invest and diversify to export.

2.5 Collaboration and strategic alignment

• Public–private partnerships, clustering, joint ventures with foreign firms (including Chinese firms) can help transfer technology, build management capacity and anchor factories in domestic economy.

• African states could negotiate with Chinese investors to ensure local manufacturing linkages: e.g., Chinese investment in Africa could be conditioned on local assembly, co-manufacturing, local content, technology transfer. This changes the dynamics from pure import competition to shared manufacturing.

3. Major barriers that still need to be overcome

While the enabling factors exist, several major barriers remain, which means that unless addressed, African factories will struggle to compete fairly.

3.1 Scale and cost disadvantage

Competing with China’s scale is extremely hard. A Chinese factory exporting at mass volumes benefits from global supply chains, cheap financing, mature infrastructure. A small African factory may have higher per-unit costs, and any gap in cost, margin or logistics can cause it to be wiped out by an imported competitor.

3.2 Input and infrastructure constraints

African manufacturers often face:

• Higher electricity costs and more frequent outages

• Poorer transport and logistics infrastructure

• Higher cost of capital, smaller firms, lower productivity

• Weak backward supply-chains (local inputs may not exist; so inputs must be imported) which adds cost and delays.

These mean African firms often start at a disadvantage purely in terms of cost‐structure.

3.3 Market access and trade rules

• Chinese goods often enter African markets under favourable conditions (subsidised, low cost, sometimes dumping).

• African manufacturers need access to export markets, but trade barriers, logistics, and lack of branding hamper it.

• Without regional integration or favorable trade agreements, local factories may lack market scale.

3.4 Technology, management and skills gap

• Many African factories lag in adopting advanced manufacturing, automation, Process Improvement, quality standards, logistics optimisation.

• Management practices, supply chain coordination and export capabilities may be weaker, which increases cost, reduces reliability and competitiveness.

3.5 Competition on price vs value

• If competition becomes purely about lowest price (which Chinese imports are often able to deliver), African factories lose unless they can match price or differentiate heavily on non-price (quality, service, branding).

• Many local factories currently cannot match the ultra‐low cost of Chinese goods, so unless they differentiate they are squeezed.

3.6 Structural dependence and dead ends

• If African economies remain locked into raw-materials export and import finished goods, manufacturing base remains weak. Without that base, local factories lack the ecosystem to compete.

• If investment goes to the extractive sector rather than manufacturing, then fewer factories start up or scale up in the first place. Some studies show that Chinese investment in Africa is still more extractives than manufacturing. 

4. Case-studies and examples

4.1 Textile and apparel

In textiles, African manufacturers have struggled significantly. For instance:

• A study noted that Chinese textile dominance is reshaping Africa’s fashion future. It pointed out that imports of cheap Chinese polyester and garments stifle local industries in countries like Nigeria, where Chinese textile imports are estimated at $6 billion annually. 

• Research on African manufacturing under the rise of China finds that while intermediate imports from China can boost manufacturing (by providing inputs), total manufacturing imports from China dampen the growth of local manufacturing. 

4.2 Industrial parks and manufacturing zones

There are positive examples of African countries attempting to build manufacturing with Chinese cooperation:

• For example, China and several African countries have collaborated on industrial zones, special economic zones, and capacity-cooperation: “industrial alignment and capacity cooperation” is one of the major modes of China-Africa industrial chain cooperation. 

• In Egypt, Chinese textile investment: “Lutai Group’s $385 m vertically integrated mill capable of spinning, weaving and sewing shirts for export” is one example. 

These zones offer a template for African factories to compete—but the question is whether they scale, local firms capture value, and whether they integrate into local value chains rather than being enclaves.

5. What success would look like

If African factories were competing fairly and succeeding, you’d expect to see:

• A growing share of manufacturing in African GDP and exports, not just raw-material exports.

• Local factories producing finished goods or high value parts, not just intermediate or low‐value items, and exporting regionally and globally.

• Input supply-chains primarily local or regional, reducing dependence on imports and improving margins.

• Labour productivity rising, competitive wages, and technological upgrading.

• Domestic and regional markets served by African factories, reducing import dependence and generating employment.

• Local firms—not just foreign (including Chinese) firms—growing, scaling, competing on innovation, branding and cost.

• Diverse manufacturing ecosystems, not just low‐value or labour‐intensive manufacturing, but also higher‐value, capital-intensive, and export-oriented manufacturing.

• Trade balances for manufactured goods improving (i.e., less net import of finished goods, more manufacturing exports).

When these metrics hold, we’d say African factories are competing fairly and successfully even in a world where China is heavily present.

6. My overall verdict

In short: it is extremely difficult for African factories to compete fairly under current structural dynamics—where China controls large parts of the supply chain and has scale, cost‐advantages and strong market access. The odds are stacked against many local manufacturers, especially in low‐value, mass‐market goods where Chinese competition is fiercest.

However: it’s not impossible. With strategic policy, investment, localisation, technology upgrade and niche positioning, African factories can compete—but they will generally compete in segments rather than replicating China’s entire manufacturing strength. That means they’ll need to:

• Avoid trying to compete only on cost against Chinese imports. Instead, differentiate (by local context, speed to market, local customization, regional logistics advantage).

• Move up the value chain: focus on manufacturing that adds value, uses local inputs, leverages regional advantages.

• Create scale and clusters to reduce cost disadvantage.

• Use supportive industrial policy, infrastructure, training and input supply-chain localisation.

• Leverage regional markets (via AfCFTA and intra-Africa trade) to build scale before competing globally.

• Negotiate manufacturing investment with foreign (including Chinese) partners in such a way that local ownership, local content, local skills and regional value chains are embedded.

If these steps are taken, then the presence of China need not preclude African factories from competing—but the presence of China does raise the bar. African manufacturing will need to be smarter, more strategic, and more selectively competitive rather than trying to simply mirror China’s model.