Chinese business magnate Jack Ma has challenged international companies to play by the local rules if they want longer and better stay in foreign countries.
The e-commerce guru told international firms, including Chinese ones, to employ local workers, pay them well and remit their taxes if they want to have a healthy relationship in the countries where they operate.
The executive chairman of Alibaba Group was responding to a question by Chinese investor in Kenya who wanted to get tips on how to succeed in the country. “Most international companies in foreign countries are after short-term goals. They just want to make profits and then move out,” he said on Thursday during a public lecture at the University of Nairobi.
He regretted that most multinational companies are just after cheap materials and labour. “Cheap labour and materials can’t be better and local,” he said to a hall packed with students. The issue of using cheap labour has haunted Chinese companies in Kenya, with most being accused of paying local workers peanut salaries.
A recent report by management consulting firm McKinsey & Company found that, only 47 percent of the Chinese firms’ sourcing was from local African firms. This, the report said, represented a lost opportunity for local firms to benefit from Chinese investment.
Chinese e-commerce mogul Jack Ma tips Kenya’s budding entrepreneurs
The same was replicated at the management level with only 44 percent of local managers at the Chinese-owned companies surveyed being African. “There have been instances of major labour and environmental violations by Chinese owned businesses. These range from inhumane working conditions to illegal extraction of natural resources including timber and fish,” read part of the report.
Reports showed that about 72 per cent of the materials used in the construction of the just-concluded Phase One of the Standard Gauge Railway were imported, thus denying local contractors a huge chunk of income.
This raised a storm in the country as the law requires that at least 40 per cent of materials used in project should be sourced locally under the Government’s Buy Kenya, Build Kenya initiative. China Roads and Bridge Corporation (CRBC) had been contracted to construct the over Sh400 billion project from Mombasa to Nairobi.
Even President Uhuru Kenyatta questioned why local companies have not fully benefited from the provision of goods and services for the construction of the SGR. CRBC denied any wrongdoing saying that they only imported what they could not find locally.
Jack Ma who was on a two-day trip to Africa said that a 21st century company has to meet three objectives: It has to be inclusive, sustainable and be happy and healthy.
He also challenged Kenya, which has in recent times been on an industrialisation overdrive to come up with growth models that are unique to it rather than aping Chinese models that have made the Asian country be one of the most polluted in the world.
Jack Ma, Asia’s richest person to address Kenyans at University of Nairobi
He urged Kenya to choose a growth model that would not destroy its environment. “It is easy to build buildings, but it is difficult to call animals back,” he said.