Chinese merchants set up shop in Morocco

02/05/2008

An increasing number of Chinese-owned kissarias (stores) are springing up in Casablanca, Morocco’s economic centre. While some Moroccan merchants decry what they consider unfair price competition and poor merchandise quality, the government is working to impose controls.

By Imrane Binoual for Magharebia in Casablanca – 02/05/08

[Getty Images] Chinese merchants have established themselves in Casablanca, managing considerable success despite language difficulties.

Traditional commercial centres in Morocco's economic hub are now playing host to increasing numbers of Chinese shopkeepers who are competing with local traders. Chinese merchants have established themselves in Derb Omar, Casablanca's largest commercial district which has long been seen as an unassailable stronghold for Berber traders.

Moroccan retailers from Derb Omar, Benjdia and Garage Allal began travelling to China to buy merchandise several years ago. Recognising the potential of this distant market, Chinese merchants decided to create a Chinatown in Morocco in 2004.

Asian products are now selling like hot cakes across Morocco.

"Four years ago, people were saying that you could find Chinese products more or less anywhere," one fabric seller in Derb Omar tells Magharebia. "Now they’re saying that you can find the Chinese themselves in the biggest Moroccan markets." He adds, "They’ve settled mainly in Derb Omar, Derb Benjdia and Derb Soultane, in shopping centres where a lot of merchandise comes in from other Moroccan souks."

"They’re even thinking about setting up in other cities like Marrakesh, Safi and Laayoune," says Khalid, a young English literature graduate who works for a Chinese merchant.

The Chinese kissarias, usually found in working-class districts, stock a wide variety of goods: sandals, toys, cooking utensils, domestic appliances, detergents, clothes and furniture. Nothing about the shops is unusual—except the price. Sandals which sell for more than 80 dirhams elsewhere cost less than 30 dirhams in the Chinese shops. Toys go for 15 dirhams and gadgets cost 10 dirhams. It’s hardly surprising that visitors never leave empty-handed.

"The Chinese traders didn’t settle in Derb Omar and Derb Soultane by chance," says Ismail Berrada, a dealer who sells goods imported from China and Turkey. "They studied the market carefully." Some 50 or so small shops are being rented by Chinese merchants in a new block in the Derb Omar business district collectively dubbed the "Chinese shopping centre". A number of other small Chinese shops can be found in the neighbouring streets.

The Chinese merchants have employed a number of effective sales techniques. First, they entered the market simultaneously and established operations in the same location. They gave priority to selling in bulk and some of their shops only sell to retailers and wholesalers.

They have also come up with a successful solution to the language problem. To communicate with their customers, the Chinese hire Moroccans – mostly fashion-conscious young women – as assistants. Dalal, an 18-year-old girl who works for a Chinese retailer, tells Magharebia that the Chinese prefer presentable young women who speak French, English, or both.

While these assistants may appear to be no more than go-betweens for the Chinese and their customers, they manage to make a bit of money by creating a spread between the prices the shop owners offer and the amount customers actually pay.

"That’s how we manage to get enough money coming in at the end of the month. The Chinese owners pay us 50 dirhams a day. Thanks to our clients, we manage to make between 100 and 300 dirhams a day", says Dalila.

The Moroccan shop assistants have forged their own network of favoured customers, whom they notify as soon as a new item is brought in from China.

The Chinese wholesalers in Derb Omar, too, have formed a network of their own, sharing information on prices, demand and the busiest sales locations.

[Getty Images] Chinese merchants have had enormous success in Morocco, where low prices attract customers in large numbers.

The business owners have had enormous success in Morocco, but local merchants hope consumers will find a downside to the tempting prices of Chinese goods.

Even as Moroccan sellers resent the rock-bottom prices offered by their Chinese competitors, they note that enthusiasm for "Made in China" merchandise is dropping off and customers complain about poor product quality.

"[Shoppers] come back with an item which is in pieces to demand reimbursement or a replacement," says one dealer who used to buy his stock from Chinese shops. "This is why most of the Chinese shops have signs saying 'items purchased cannot be exchanged,'" he says.

Chinese business owners benefit from the fact that their best clients re-sell their wares in rural souks.

Some Chinese merchants, however, are beginning to have difficulties with customs officers. According to forwarding agent Ahmed Khomssi, several consignments of goods have been seized.

Industry, Commerce and New Technologies Minister Ahmed Reda Chami confirms that his department "carries out inspections of imported goods in accordance with legal provisions and the mandatory criteria". He continues, "Goods which do not comply with these criteria are not allowed onto the Moroccan market." In 2007, he says, "more than 3,421 samples were inspected".

Toys imported from China have recently stirred controversy for being unsafe for children, but according to Chami, the ministry has stepped up inspections of these goods.

"Imports of items which do not meet the safety requirements are banned," he says. A new bill regarding the quality of imported goods and industrial services is also "currently under consideration by the government’s general secretariat", he adds.

[Getty Images] Shops owned by Chinese merchants rely on high volume sales with small profit margins to get by.

Even with the government's efforts to impose controls, the newest merchants in the Kingdom will likely continue to grow in number. "The Chinese still have a future in Morocco because they’re perseverant," says Mohamed Sadikki of the Faculty of Economics in Casablanca, "and put up with making very little profit on each item sold."

"This is what enables them to beat all their competitors."