Jinli Tea, a small company in the Hubei provincial city of Lichuan, has become the first Chinese company to operate a branch in the northern African nation of Morocco, as it takes advantage of the Chinese government’s Belt and Road Initiative (BRI) to expand offshore in search of growth opportunities.
Jinli now operates five packaging lines in Morocco with the annual capacity for 3,000 tonnes of tea, after investing US$8.2 million in the country since late 2015. The Moroccan branch contributed about 60 million yuan (US$9 million) of revenue last year, said Jinli’s chief executive Wang Qimao.
“Our main products are still for export, so we went to Morocco and thought we must open the western Africa market through the country,” Wang said in an interview with South China Morning Post in Lichuan.
With a population of 36 million people, Morocco is the gateway to northern and western Africa, importing 77,562 tonnes of Chinese tea last year, about one fifth of China’s total tea exports, according to the China Tea Marketing Association.
China shipped 364,742 tonnes of tea abroad last year. Most of the 20 largest export markets of Chinese tea – except the US in fourth place and Japan in 11th – lie along the BRI route, which mirrors the ancient Silk Road that links China with Europe and Africa.
“The biggest impact of the Belt and Road Initiative [for China’s tea industry] is that China can have a stable export market,” said Rabobank’s beverages analyst Stacie Wan.
Trade between the US and China accounted for 3 per cent (US$660 billion) of total global trade in 2017, according to World Trade Organisation figures. And the automotive industry was one of the biggest areas affected by the trade tensions after China increased the tariffs on US-made automobiles entering the country from 15 per cent to 40 per cent earlier last year.
The tea industry is also one of the few industries that have been left largely unaffected by the US-China trade war, with exports growing 21 per cent to 364,742 tonnes last year, from 2014, according to customs bureau data.
Even if the trade war were to crimp exports to the US, tea exports to the BRI-related countries in the past five years can offset the decline, Wan said.
“With extensive and continuously expanding geographical coverage, BRI can help rekindle the motivation of Chinese companies to invest overseas,” said Derek Lai, Vice Chair of Deloitte China, Deloitte Global Belt & Road Leader.
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