African Entrepreneurship Records 2

Chapter 1015 Market
Ernst said: "Light industry has begun to be valued at the current stage of our country's development, but industrialization is a complex and huge issue."

"For the past thirty years, the development focus of our East Africa has always been agriculture, infrastructure and heavy industry. Even if the First Five-Year Plan is completed, the problem of light industry in East Africa cannot be solved. Therefore, during the Second Five-Year Plan, the development of light industry will become one of the key tasks of the government."

Although East Africa is already a well-deserved world power in terms of size, its level of development is only slightly better than that of Japan and Tsarist Russia among the world's powers. Its capital, technology, and foundation are relatively inferior to those of relatively developed countries.

The advantages of East Africa as a colonial country have alleviated this problem appropriately. For example, East Africa's per capita consumption of agricultural products is much higher than that of Russia and Japan. However, due to insufficient productivity, it has not reached the level of the United States and can only be on par with many European countries. Otherwise, based on East Africa's territory, arable land, and resource volume, it should exceed that of most European countries.

After all, East Africa's current population is less than 100 million, while Europe has a population of more than 300 million. At the same time, the total area of ​​East Africa is more than 2 million square kilometers larger than that of Europe.

"If the Russo-Japanese War breaks out now, it will be a good opportunity for us in East Africa, mainly to expand the Russian market. Without considering the colonies, Russia has the second largest population in the world and the largest area, and its industrial and agricultural development level is above the world average."

"Russia has always been one of our important markets in the past, but we also face fierce competition in the Russian market, including Western European and American capital, which have first-mover advantages in Russia."

"So the Russo-Japanese War will be an important opportunity for my country to expand its market in Russia. Even if my country's market share in Russia is increased by one percentage point, it will be a huge improvement."

For a country with a population of over 100 million, one percentage point could mean a market of millions of people, which is very attractive to any country.

Ernst certainly did not want to support Russia's victory over Japan, but even if East Africa showed a little more goodwill to Russia than other countries in this war, it would facilitate East Africa's commercial trade in Russia.

Germany in the Russo-Japanese War in the previous life is a good example. While Britain and the United States clearly supported Japan, France, because of Britain and its own interests, did not support Russia's conflict with Japan in the Far East.

This is understandable. Although the relationship between France and Russia continued to warm up, the goal of the French government was to allow Russia to contain Germany rather than waste energy on the Far East and Japan. This led to France remaining neutral during the Russo-Japanese War, while Germany gave Russia the greatest support.

Of course, although Germany benefited from the Russo-Japanese War, due to the huge geopolitical and political differences between Germany and Russia, this short-term "friendship" was ultimately difficult to play a role.

But it is different in East Africa. There is almost no fundamental conflict of interest between East Africa and Russia. If East Africa supports Russia in the war, the relationship between the two countries can be further improved. Although the current Russian government is likely to have a lifespan of only a dozen years, East Africa needs this window period of more than ten years to boost its own development.

"We must seize every opportunity so that we can achieve rapid and healthy development of East African industry in a relatively short period of time. Therefore, in the middle and late stages of the First Five-Year Plan, we must quickly solve the problems of our industrial product market."

It is easy to expand East Africa's industrial scale in a short period of time, but the market is relatively fixed. If the market problem cannot be solved, East Africa can only achieve its goals by further squeezing the potential of its domestic citizens, which is only a bad option.

There are only a handful of countries in the world that have independent power. Apart from a few top powers, most of them are colonies or semi-colonies. Therefore, Russia is an important part of the foreign market for East African industry. It is large in scale and has strong consumption power, but it cannot form competitiveness with East African industries. Russia's industry is weak. Although East Africa and Russia seem to be in the same boat, East Africa has already left Russia behind in the field of heavy industry, and Russia does not have the advantage over East Africa in the field of light industry.

Take the textile industry as an example. Russia's domestic textile industry, like Germany, lacks supply of raw materials. In order to solve this problem, the Soviet Union built a large number of water conservancy projects in Central Asia to alleviate the problem. Although the current Russian government has similar ideas, it cannot do the same as the Soviet Union. It is powerless, and this is precisely the advantage of East Africa.

Among East Africa's foreign markets, the most important ones are the Central and Eastern European markets. Central Europe is undoubtedly the German regional market dominated by Germany and the Austro-Hungarian Empire. The Eastern European market can basically be summarized as Russia, followed by the Far East market, and finally the Middle East market. These are also the three major foreign markets in East Africa.

In addition to the three major foreign markets, the South American market has expanded rapidly, but it is ultimately unable to compete with the three major markets, and East Africa also lacks the opportunity to accelerate its entry into the South American market. The last time it did so was because of Spain’s defeat in the Spanish-American War, and East Africa gained a place in the South American market through its relationship with Spain.

Although Spain and Portugal are the main colonial powers in South America, the South American economy is now mainly controlled by Britain. If this were not the case, the increase in East Africa's trade in the Argentine market should have risen rapidly.

Many South American countries are economic colonies, and their politics and economy are greatly influenced by European countries. Therefore, if East Africa wants to achieve more outstanding results locally, Europe has no time to pay attention to South America.

In the previous life, this opportunity was World War I. When European countries were busy with other things, the United States took the opportunity to enter the South American market and replace the advantages of other countries in the local area. Therefore, before a large-scale war broke out in Europe, it would not be possible for East Africa to carry out infiltration work in South America very smoothly.

The situation is similar in the Far East market and the Middle East market. In the Far East market, the "economic alliance" of the United States, Britain, and Japan has an absolute advantage, while East Africa is at a disadvantage locally. Therefore, East Africa can only develop in economically weaker areas and focus on defense.

The size of the Middle East market can only barely meet the needs of East Africa, and there is not much room for further growth. After all, the Ottoman Empire is still the only dominant force in the Middle East. Moreover, due to climatic reasons, the Middle East has a small population and insufficient spending power. The Persian Gulf coast, which was the richest region in later generations, is now home to pirates.

Therefore, among many markets, the Russian market is the most important to East Africa at present. Even if the Soviet regime comes to power in the future, they will not be able to completely get rid of the influence of East Africa. After all, Russia's geographical location determines that Russia has a certain dependence on tropical products such as rubber.

Therefore, even if Russia's layout in East Africa is affected by the change of regime, it will not be too big. Moreover, as long as Ernst makes good use of his foresight, he can avoid some losses and maximize benefits.

Ernst said: "Industrialization cannot be done behind closed doors. East Africa is not as good as Russia in some aspects, so we cannot ignore the importance of the international market. However, East Africa has always been at a disadvantage in connecting with the international market, which places higher demands on our government departments and enterprises."

Even if East Africa develops a planned economy, it must have flexible means to alleviate some of the drawbacks of the planned economy. A planned economy also requires commercial trade, especially when East Africa's resource conditions are not yet as developed as Russia's.

Therefore, connecting with the international market is a long-term task for many state-owned enterprises in East Africa. Regardless of the United States or the Soviet Union in the past, although their economies went to two extremes, they both had their own forms of markets. It is also impossible for East Africa to set up a Council for Mutual Economic Assistance, so the connection between East Africa’s foreign trade and the country’s current planned economic system also requires long-term exploration.

(End of this chapter)