African Entrepreneurship Records 2

Chapter 1453 National Economy
During the Fifth Five-Year Plan, the East African economy was extremely active, especially the imperial free market, or the so-called private economic market, which expanded wildly and disorderly. Coupled with the promotion of East African stock markets, private financial institutions and foreign capital, the entire imperial economy was booming.

This was vividly demonstrated in the city of Beira. In early 1927 alone, more than one hundred new large, medium and small enterprises were registered in the city.

Such a large number of enterprises has naturally led to an increase in the corresponding number of jobs and total urban consumption. The competition in the talent employment market is particularly fierce. Today, the market activity in East Africa is second only to North America.

Compared with the extremely relaxed market environment in the United States, although the intervention of East African governments in the market has gradually weakened in recent years, it is still impossible for them to just serve as "economic watchmen" like the US government.

Especially in the field of state-owned economy, the East African government remained committed to reforming the state-owned enterprise system during the Fifth Five-Year Plan, which had a great impact on the market.

Because the state-owned economy accounts for a large proportion in East Africa, at its peak, the proportion of state-owned economy even exceeded 80%, which is even more exaggerated than the proportion of public ownership economy in the Soviet Union today.

Because of the New Economic Policy, the Soviet Union allowed private economy to continue to exist over the years. In 1927, Soviet private business accounted for more than three-quarters of the country's retail commercial turnover, and there were nearly private stores nationwide.

In the industrial sector, Soviet private enterprises created about 20 percent of the value created, and in agriculture, although the land was nationalized, more than 90 percent of the arable land was operated by individual farmers. In other words, East Africa was even more Soviet in the past than the Soviet Union is today.

Even now, the state-owned economy still accounts for more than 30% of East Africa, which means that the East African government and the Rhine royal family directly control at least 30% of the country's market. This part of the market is obviously very different from the free market, and the indirect impact is obviously greater.

Of course, looking from another angle can also explain the rapid shrinkage of the state-owned economy in East Africa today, from more than 1910% to only 20%, which is almost the same as being cut in half. This process took less than years starting from .

In the eyes of the so-called international community and mainstream economics, this is undoubtedly a sign of "progress".

This is also an inevitable result, because at the end of the last century, East Africa was already a huge and attractive market, while other countries and capital groups could only look at but not eat this piece of fat meat in East Africa, so in the past the international community naturally had to grant East Africa a large number of special approvals.

Now that East Africa has opened up its market, they can take their money and enter the East African stock market and other investment markets, share the dividends of East Africa's economic development, and get a piece of the pie, so naturally the encouragement of East Africa must be increased.

However, they took it for granted that East Africa had "turned over a new leaf", "come to its senses" and "listened to advice". This was in fact completely wishful thinking. The fundamental purpose of the Rhine royal family and the East African government had never changed.

The “retreat” of the state-owned economy is actually a result of reducing fat and gaining muscle, making the current state-owned economy in East Africa more robust and getting rid of many burdens.

Take the employment issue for example. From the last century to the beginning of this century, there was no unemployment problem in East Africa at all. But now, East African state-owned enterprises are obviously no longer taking on too much responsibility. They are even selling off a large amount of non-performing assets and continuously laying off and streamlining staff.

And after digestion and private operation, at least some of these assets and personnel that flow into the free market can be revived and re-create value, thereby further expanding the size of the East African market.

Therefore, the market has expanded, and the proportion of state-owned economy in East Africa has shrunk, but its size has not changed much, and it has even become healthier and stronger, and it still plays a leading role in the national economy.

The focus of Friedrich's visit to Beira was to inspect the development of medium and large state-owned enterprises in East Africa.

Rosen Chemical Factory in the Riverside Industrial Zone of Beira City is a large state-owned factory located in Beira City. Its main business includes explosives, fertilizers and other products.

Manager Mathilson is introducing the current development status of the Rosen Chemical (Bella) Plant to Friedrich.

"Lawson Chemical is one of the top ten chemical companies in the country. Last year, it ranked sixth among the chemical companies in the country. The main products of our Beira factory include explosives, fertilizers, etc."

"Thereby promoting the development of important fields such as the empire's military, large-scale engineering, chemistry, and agriculture."

"In the military field, the Bella Factory is an important supplier to the Empire's military industry. This year alone, our production has increased by about three percent."

This was actually also affected by the changes in the current domestic and international situation. In early 1927, East Africa resumed and stepped up its overseas expansion, especially for the consolidation and stability of various colonies. In 1927, the East African government was ready to "go to war."

Military operations were carried out against colonies including the North Gulf (Persian Gulf) region, the Horn of Africa, the South Pacific, North Africa, and West Africa to combat separatist forces and resistance forces and, incidentally, to expand the borders of the colonies.

At the same time, East Africa has also begun to pay attention to supporting pro-East African armed forces and forces in other countries, such as Venezuela, Colombia, Peru, Bolivia and other regions.

Because facts have proven that "fairness", "respect" and "friendship" alone cannot completely play a positive role in the relations between many countries and East Africa.

Therefore, in order to safeguard the interests of the empire and support the needs of its allies, East African military industrial enterprises have received many orders from the government.

Internationally, with the end of World War I, the focus of European and American powers shifted back from Europe to other parts of the world, further exacerbating the tension in the world situation.

Moreover, because World War I loosened the constraints on countries outside Europe, many countries and colonies made great progress in industry and economy, which further stimulated their national self-confidence.

The reason is very simple. Under the long-term suppression of imperialist countries, these backward regions and countries have found it difficult to make achievements in the economic field, especially at the industrial level.

The outbreak of World War I relaxed their constraints to a certain extent. Without the intervention of imperialism, the industrial and economic development of many countries and regions developed by leaps and bounds.

This has made many people realize that the reason they were poor and weak in the past was not because they were really inferior to others in terms of IQ or physical fitness, but because of the constraints and exploitation of imperialist powers.

Therefore, many countries and colonies naturally developed a sense of independence and resistance.

As a result, European and American powers tried to return to colonies and regions in Europe, Asia, and Africa, while colonies and backward countries intended to get rid of the control of imperialism. With everyone "running in both directions", the international arms market became hot. The difference is that the imperialist countries themselves are strong and industrially developed, while the backward countries and colonies are weak and do not have the strength to completely overthrow the imperialist countries. The latter also need to buy weapons and equipment to make up for the shortcomings.

For example, in 1926, the arms trade between East Africa and the Far Eastern Empire increased significantly. Now the warlord unrest within the Far Eastern Empire is actually influenced by various countries. Even the Soviet Union has been supporting its two "partner" agents in the south in the past two years.

Matilson went on to say: "In recent years, our share in the international market has also further increased, including a significant increase in order demand in Europe, Asia and South America."

"In Europe, the tense situation in Eastern Europe has led to an increase in orders from Austria-Hungary and German manufacturers this year. In Asia, including East Asia, West Asia, and even South Asia, our market share has improved. In South America, the demand for orders is mainly in the north and west."

"This also includes the market reputation and market channels we accumulated during the World War, which has contributed to the growth of orders today."

"In the agricultural sector, the fertilizers produced by our factory have played a huge role in increasing agricultural production and greatly improved the unit output level of agriculture."

During World War I, as European countries were deeply mired in the quagmire of war, a huge gap appeared in the international arms market, and countries such as East Africa and the United States took the opportunity to fill these markets.

In the field of weapons and equipment, once a choice is made, it is difficult to change it. For example, if a country that is used to using German weapons replaces their equipment with that of other countries, it involves changes in the entire supply system and also means huge waste.

During World War I, East Africa traded in large quantities of arms, which greatly increased the international market share of East African military industry.

Friedrich was naturally very familiar with the current international situation. He said to Matilson: "In recent years, the military industry market has indeed seen a recovery since the World War, but the challenges are also becoming increasingly fierce. You should increase your investment and innovation in technology, and at the same time, strengthen the expansion of market channels. Otherwise, it will be difficult to benefit from the competition with European and American companies."

It is true that the military market is recovering, but it is also true that major European military producers have recovered, not to mention the United States, a major North American military producer and also a strong competitor in East Africa.

The gap between the military industries of major countries is not that big. In this case, if you want to survive in the market, you can only compete on quality and price, and both of these are obviously driven by technology. With technological advances, quality can be improved and costs can be reduced.

Matilson was quite confident about this. He said to Friedrich, "Your Highness, don't worry about this. Rosen Chemical's investment in technology has been growing over the years. At the same time, we have established a complete scientific research team and cooperated with many companies, universities, and scientific research institutions."

"Ten years ago, we at Rosen Chemical could only rely on Germany and import technology and personnel from Germany, but now we not only have a thorough understanding of German technology, but also have our own innovative achievements."

"Take the Bella factory for example. It was built in 1924. Its design, technology, personnel, etc. are all controlled by us. Now the production capacity and stability of the Bella factory are in no way inferior to those of its German counterparts. We even provide raw materials to Germany and sell our products to Germany."

Germany is undoubtedly a pioneer in the field of chemical industry and a half-teacher of East Africa's current chemical companies. However, East African chemical companies can now sell their products to Germany, which shows that East African chemical companies have achieved success.

Of course, an undeniable fact is that Germany is still ahead of East Africa in terms of core technology, while the issue for East African chemical companies exporting goods to Germany is cost.

For example, the energy prices in East Africa are very low, which is not available in Germany. East Africa has no shortage of oil, natural gas, coal and other fields, and its hydropower resources are also extremely rich. At the same time, it has convenient sea transportation conditions and many colonies, which also means that there is still room for the energy cost price in East Africa to fall.

The only countries that can compare with East Africa in terms of energy supply are the United States, Britain and the Soviet Union. The United States has no shortage of resources and abundant reserves, while Britain has vast colonies. As for the Soviet Union, it has almost no shortcomings and most of the mineral resources can be found.

However, the Soviet Union’s transportation costs are much higher than those of the other three countries. Maritime transportation is the Soviet Union’s biggest shortcoming. At the same time, the Soviet Union’s land transportation is also relatively poorly developed.

Friedrich said: "You just need to know that nowadays, when there is no war in the world, the competition is about talent and technology, and this is especially important for state-owned enterprises. Compared with private enterprises, you have to change your attitude towards talent."

State-owned enterprises are relatively stable, which is both an advantage and a disadvantage. For example, in their attitude towards talent, state-owned enterprises may be more arrogant. Therefore, the biggest problem encountered in the reform of state-owned enterprises in East Africa is the problem of people.

Regarding this point, it is difficult to solve the problem from the root, after all, the basic attributes of state-owned enterprises are there.

Of course, the free market may not necessarily make the best use of talents. Take the previous life, the competition between Edison and Tesla. Although Tesla's talent was unquestionable, he was still suppressed and excluded by capital. The East African government can obviously influence the application of talent in private enterprises.

But in the field of state-owned economy, this is the obligation and responsibility of the East African government, so Friedrich emphasized this point to the Rosen Chemical Plant.

Friedrich said: "Finally, there is the issue of worker treatment. For this, state-owned enterprises must strictly follow the minimum standards set by the state, especially pay attention to the basic living conditions of employees, so as to set an example for other enterprises in the empire."

This is not difficult for East African state-owned enterprises to achieve, because the state-owned enterprises that have "survived" in East Africa are basically large-scale monopoly technology enterprises.

In other words, after rounds of elimination, high-quality companies have been screened out. They have strong market competitiveness, strong technical accumulation, are engaged in relatively stable industries, and have good profits.

Just like the large state-owned enterprises in the Far Eastern Empire in the past, the lower limit when it comes to the treatment of regular employees is still very high.

The state-owned economy accounts for more than 30% of East Africa. As long as the relevant laws and regulations can be strictly enforced and the basic rights and interests of workers are protected, it will naturally be beneficial to social development.

This is also an important factor why the East African economy is not as active as that of the United States. Compared with East Africa, the United States is more favorable to enterprises. Therefore, when the basic conditions are not much different, capital from Europe and other regions prefers to invest in the United States.

The East African government can only make up for this disadvantage through other means, such as the energy, transportation, logistics, mechanization and other aspects mentioned earlier, to reduce East Africa's production costs and narrow the disadvantage compared with the labor costs in the United States.

(End of this chapter)