The ongoing dispute between Nigerian traders and Chinese manufacturers at the Lagos Trade Fair Complex has sparked a heated debate about the future of Nigeria's supply chain and local businesses. According to Dr. Ayokunle James Adeyemi, a supply chain expert and President of the Association of Supply Chain Professionals, Lagos Chapter, the issue goes beyond emotions and requires a closer look at the supply chain guardrails. He notes that the traditional supply chain structure, which involves a manufacturer, wholesaler, distributor, retailer, and final consumer, is changing.
Dr. Adeyemi explains that the Chinese manufacturers and wholesalers are now selling directly to final consumers, a phenomenon known as disintermediation. While this can reduce costs by removing unnecessary middlemen, it can also create a serious business problem when people who traditionally operate at different levels of the supply chain begin competing directly for the same customers. He believes that this is where the real conversation should begin.
One of the major concerns of Nigerian traders is that Chinese businesses can sell at prices that are difficult for them to compete with. Dr. Adeyemi attributes this to several factors, including economies of scale, direct access to the manufacturer, access to capital and supply-chain financing, and logistics. He notes that China has developed a strong manufacturing and export ecosystem, which enables production, warehousing, transportation, and distribution to be highly coordinated.
Dr. Adeyemi emphasizes that the issue is not necessarily about Chinese manufacturers doing something wrong, but rather about competition. He notes that if a company is operating legally and complying with Nigeria's laws, competition is part of business. However, if there are allegations that a business is operating outside the rules applicable to its category of trade, that is a matter for the regulatory authorities to investigate.
The removal of Nigerian wholesalers and retailers from the supply chain can have significant consequences for employment and local economic activity. Dr. Adeyemi notes that traders employ salespeople, drivers, warehouse workers, accountants, and other service providers, and also pay rent, transportation costs, taxes, and various operational expenses. If a large number of local businesses disappear, it can have a ripple effect on the economy.
To avoid similar conflicts in the future, Dr. Adeyemi advises Nigerian traders to move from simply being traders to becoming supply-chain entrepreneurs. He suggests that they can form purchasing cooperatives, engage in private-label manufacturing, local assembly, product distribution, warehousing, e-commerce, B2B distribution, logistics, after-sales service, and eventually manufacturing. He also encourages them to consider moving from being customers of Chinese factories to becoming owners of production capacity themselves.
Ultimately, Dr. Adeyemi believes that the goal should be to import less where Nigeria can produce competitively, manufacture more locally, export more, and create stronger Nigerian supply chains. He notes that the government has a crucial role to play in creating a level and predictable playing field, enforcing applicable laws consistently, improving infrastructure, reducing unnecessary logistics costs, and supporting local manufacturers.
Key points
- Nigerian traders must adapt to the changing supply chain landscape and move up the value chain to remain competitive.
