Chinatowns and "Chocolate City": The Magic of Diasporas

Amidst a climate of widespread hostility towards immigrants in rich nations, The Economist points out the economic and other advantages diasporic populations bring to both host and home countries. Overseas Chinese, who taken together outweigh the native population of France, feature prominently.

… Networks of kinship and language make it easier to do business across borders (see article). They speed the flow of information: a Chinese trader in Indonesia who spots a gap in the market for cheap umbrellas will alert his cousin in Shenzhen who knows someone who runs an umbrella factory. Kinship ties foster trust, so they can seal the deal and get the umbrellas to Jakarta before the rainy season ends. Trust matters, especially in emerging markets where the rule of law is weak. So does a knowledge of the local culture. That is why so much foreign direct investment in China still passes through the Chinese diaspora. And modern communications make these networks an even more powerful tool of business ….

… Some 500,000 Chinese people have studied abroad and returned, mostly in the past decade; they dominate the think-tanks that advise the government, and are moving up the ranks of the Communist Party. Cheng Li of the Brookings Institution, an American think-tank, predicts that they will be 15-17% of its Central Committee next year, up from 6% in 2002. Few sea turtles call openly for democracy. But they have seen how it works in practice, and they know that many countries that practise it are richer, cleaner and more stable than China.

A second Economist article on the theme further highlights the advantages of diasporic connections in cases where legal systems cannot be trusted to resolve problems fairly, an issue which in China doesn’t so much frequently arise as remain constantly aloft.

Chike Obidigbo, for example, runs a factory in Enugu, Nigeria, making soap and other household goods. He needs machines to churn palm oil and chemicals into soap, stamp it into bars and package it in plastic. He buys Chinese equipment, he says, because although it is not as good as European stuff, it is much cheaper. But it is difficult for a Nigerian firm to do business in China. Mr Obidigbo does not speak Chinese, and he cannot fly halfway around the world every time he wants to buy a new soap machine. Worse, if something goes wrong neither the Chinese government nor the Nigerian one is likely to be much help.

Yet Mr Obidigbo’s firm, Hardis and Dromedas, manages quite well with the help of middlemen in the African diaspora. When he wants to inspect a machine he has seen on the internet, he asks an agent from his tribe, the Igbo, who lives in China to go and look at it. He has met several such people at trade fairs. “When you hear people speaking Igbo outside Nigeria, you must go and greet them,” he laughs ….

Thanks in part to Mr Obidigbo’s diaspora connections, Hardis and Dromedas is thriving. It employs 300 workers and sells about 300m naira-worth ($2m) of products each year. And it is just one of many African firms that use migrants as their eyes and ears in distant lands. The number of Africans living in China has exploded from hardly any two decades ago to tens of thousands today. One area of Guangzhou is now home to so many African traders that the locals call it Qiao-ke-li Cheng (Chocolate City).