Fair and Square? Chinese retail chain's expansion rankles Kenyan rivals

The Guardian

12-02-2025

On a cool Friday morning in an expansive mall in Nairobi, dozens of people thronged outside a retail store covered in colourful banners, balloons and flowers.
When the shutter doors finally rolled up a few hours later, fireworks were let off and music blared through speakers, the crowd now swollen to more than 100.
It was the official opening of the sixth Kenyan branch of China Square, a Chinese-owned retail chain that mainly sells Chinese-made products, at Two Rivers Mall in northern Nairobi.
Launched in Kenya two years ago, the chain has grown rapidly due to strong demand for its low-priced items. 'They're bringing us unique products and at very fair prices,' said Sheila Wangari, a 33-year-old product manager, at the Nairobi branch opening. 'It's a gamechanger.'
China is Africa's largest bilateral trading partner and a top creditor of many African countries, lending money to finance projects for its belt and road initiative. Private sector investment has also been rising in recent years, with funds flowing into sectors including retail.
The development poses a dilemma for African governments over how to balance consumers' love for bargains with the interests of local retailers, who said the Chinese incomers had created an uneven playing field.
'They're selling everything, and their prices are very different from ours,' said Jacob Musili, who sells hardware appliances in Nairobi. 'They're hurting us.'
China Square opened its first branch in 2023 at a mall on Nairobi's outskirts, and quickly sparked enthusiasm among shoppers. But opposition from local traders and the country's then-trade minister, Moses Kuria, soon followed. The criticism boiled over, with traders protesting and Kuria threatening China Square's proprietor Lei Cheng with deportation. China Square suspended its operations for a week but resumed them after talks between the Kenyan government and the local Chinese community.
At the Two Rivers Mall branch opening, 26-year-old Jane Mwangi pushed her trolley between rows of shelves filled with suitcases, stopping after a few steps to check some out and consult an attendant. It was the last item she wanted to take, her trolley already stuffed with a microwave, clothes hangers, an oven mitt, a pillowcase and other products.
Mwangi, a businesswoman, said she was keen to explore the new branch after she saw ads for it on TikTok. 'As soon as I heard it's at Two Rivers, I was wowed,' she said. She pointed to some eyelashes in the beauty section selling for Ksh 88 (£0.55). 'I usually buy them at Ksh 200 (£1.25) in town,' she said.
China Square's roots lie in South Africa, where the first branch was opened in 2017. The business has expanded over the years to Zambia, Ivory Coast, Ghana, Mali, Senegal, Gabon and Kenya.
Lei, who joined the business as a partner in 2019, said most of the products in the Kenyan operation were imported from China, but the chain also has items made in Kenya, Turkey and Egypt.
He said he credited the success of the Kenyan operation to its big sales discounts, huge variety and 'low' but 'good' margins.
Musili's hardware appliance shop sits on Nairobi's River Road, a hive of retailers selling everything from kitchenware to electronics. Musili, who took part in the 2023 protest against China Mall, said many of his would-be customers now chose China Square. 'It's like the Chinese have taken over our country,' he said. 'We businesspeople don't like hearing about China Square.'
About 500 metres from Musili's shop, Johnson Munga was working at Glass Craft, a 60-year-old business that sells kitchenware made in France, China and India. Aside from his concern about the loss of customers, he worried that the growth of China Square could cause job losses. 'This shop has employed us. If business goes down, it means they'll have to let go of some workers,' he said.
Many Kenyan retailers of Chinese-made products have typically bought them from Kenyan wholesalers who shipped them from China, marked them up and distributed them to retailers.
On the other hand, Chinese businesspeople have usually imported the items and sold them themselves directly to customers, or through middlemen within their own networks who negotiate low prices, said Eric Olander, the co-founder and editor-in-chief of the China Global South Project.
Olander said Chinese retailers gave people with limited disposable income unrivalled access to a range of products. 'Nobody can sell the pot cheaper than the Chinese,' he said. 'The Chinese control the whole supply chain.
'The people who consume it love it. The people who compete against it hate it,' he said, referring to Chinese products.
Some African countries have explored tax changes to address local retailers' concerns. In reaction to concerns about competition from Chinese online sellers Shein and Temu, South Africa's tax authority said last year it would impose VAT on imported low-value consignments.
Kenyan retailers said China Square's business model undercuts them, and that it should either operate as a wholesaler or as a retailer – not both. Lei rejected this argument.
'Businesses need competition and competition makes business healthy – and that's a good thing for the consumers,' he said at the opening of the Two Rivers Mall branch. 'We are in competition. But who's the end beneficiary? The consumers, right?'