Kenyan traders file a lawsuit to prevent Chinese “Hustlers”

One of the more than 40 trading firms involved in a lawsuit to stop foreign companies from operating and selling low-priced imported goods on the Kenyan market includes the Chinese-owned China Square Mall.

Concerned about the Chinese allegedly selling commonplace items like curtains imported from China on average 50% less expensively than those brought in by their local competitors, a group of Kenyan traders filed the lawsuit before the High Court.

The legal action comes one month after China Square, a business located near Nairobi at Kenyatta University, reopened after having a counterfeit complaint against it dismissed.

The traders have filed a lawsuit against the government in opposition to the influx of Chinese people, supported by a group called the Indigenous Capital Protection Association.

Chinese companies are charged with undercutting regional merchants with absurdly low prices and driving them out of business.

The traders want the Immigration Services division to stop issuing business and employment permits to Chinese nationals.

Analysts warned that the action might sour Kenya’s relationship with China, its largest bilateral creditor.

In the lawsuit, the traders’ attorney Kibe Mungai asserts that the influx of Chinese hawkers, including those selling goods in smaller towns, is endangering over two million jobs in Kenya.

Kenya has historically struggled to strike a balance between promoting free trade, luring in foreign investment, and shielding local vendors from unfair competition.

“In view of the increasing numbers of Chinese hawkers, shopkeepers, Route Eleven traders, small-scale retailers, wholesalers and distributors in Nairobi’s River Road, Kirinyaga Road, Kamukunji and Gikomba areas among others, the petitioners are convinced that the process of issuing permits to Chinese citizens has been so corrupted or otherwise compromised by the Kenya Chinese Chambers of Commerce and other Chinese nationals operating businesses in Kenya,” argues Mr Kibe.

According to him, Chinese nationals are increasingly engaging in hawking and micro-retail activities by setting up stalls, shops, and trading from their boots as they move around on foot.

“The proliferation is also a testament that the Kenya Investment Authority and the Kenya Citizens and Foreign Nationals Management Service are complicit in a grand scheme by the government of the Peoples Republic of China to foist upon Kenya the ‘Chinese Hustlers’ and economic migrants under the guise of investment and legitimate economic activities in Kenya,” says Mr Kibe.

In order to stop the influx of foreigners, he wants the court to order the Kenya Investment Authority to stop issuing investment certificates to Chinese nationals.

According to the Kenya Investment Promotion Act, which establishes requirements for foreign investors, an investment must be beneficial to the nation by creating new jobs, transferring knowledge or technology, or using local resources for goods or services.

Although there is no information on the number of Chinese businesspeople or residents in Kenya, there has been a rise in anti-Chinese sentiment in recent years.

This has been exacerbated in part by allegations of racist incidents involving specific Chinese citizens in Kenya and perceptions that Chinese traders are displacing locals in terms of employment and business.

China is Africa’s top trading partner, and there are likely more than a million Chinese living there.

The traders additionally ask the court to issue an order compelling the Competition Authority of Kenya to conduct an investigation and submit a report to the court regarding whether China Square is using predatory pricing to drive out rivals or to prevent entry into the market for the benefit of Chinese manufacturers, distributors, wholesalers, and retailers. This request is pending the outcome of the hearing.

Moses Kuria, the trade cabinet secretary, expressed concern last month that China Square, which sells imported goods directly to customers at low prices, was driving out Kenyan retailers.