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Firm histories

Northern Electrical Manufacturers Ltd (NEM)

NEM is a private company, owned by six indigenous entrepreneurs. The firm started its operations in Arusha in 1979 under the sister industry programme (SIP)3 managed by the Small Industry Development Organization (SIDO). Under the SIP, NEM (the junior sister) is linked to the Eldon Company of Sweden (the senior sister). Initially, like many other firms working under the SIP, NEM's office and factory were located in SlDO's Arusha Industrial Estate (AIE).4 At present NEM operates from two sites: the old factory in the AIE produces for the domestic market while the new site in the Themi Industrial Area (TIA) produces for the export market.

Initial capital funds for equipment and machinery were provided as a low-interest loan by SIDO through funds provided in turn by the Swedish International Development Authority (SIDA). SIDO also provided a highly subsidized industrial building to house NEM's operations and paid for related local infrastructural services. The senior sister, Eldon Company, provided the initial raw materials and technology support (i.e. design and specification of equipment needs, installation and commissioning) as well as initial and continued training.

NEM has a formal organization and dynamic leadership. At present the board of directors is composed of six directors, four of whom are shareholders who work within the company, while the other two are outsiders. The general manager is the chief executive with overall charge of operations in the company. He is assisted by three departmental directors for marketing and finance, production, and technical matters. The stability of the ownership structure has allowed the company to enjoy an atmosphere of continuity and stability and has given it time enough to build up experience.

NEM began by producing only fuse boards and later introduced other products. Today NEM produces over 25 products. Some of these are sold in the domestic market and others are destined for export markets. At present, NEM's major products include fuse boards, switch boxes, cable trunkings, wall lights, brackets, fluorescent fittings and ceiling lamps. The company also imports and carries out installations of industrial power distribution panels. The firm's basic production operations involve sheet metal fabrication (which includes shearing, punching and welding), spray painting and the assembly of parts.

NEM's operations have increased substantially since its inception (see Table 8.4, p. 213). Sales have expanded rapidly, especially during the 1980-86 period when NEM was the sole domestic producer of electrical goods and domestic demand was well in excess of NEM's capacity to supply. In practice, until the mid-1980s NEM received direct protection, in that importation of similar products was prohibited. It also enjoyed indirect protection from having access to foreign exchange through Swedish import support while potential local competitors' access to raw materials was limited by lack of foreign exchange. However, liberalization measures under the ERP have increased competition. Products from the Far East, in particular, are making it difficult for NEM to dispose of all its production. Employment has grown from 12 in 1979 to 120 in 1991.

NEM has experienced consistent growth in exports. The dollar value of its exports increased 2.7 times between 1986 and 1991, rising from 14.3 per cent of total sales in 1986 to 58.2 per cent in 1991. Despite the strategy of reducing the import content per unit of product, import content still averages 86 per cent of the total raw material costs. There is little diversification in terms of input sourcing: as late as 1991 over 90 per cent of the total raw materials were being provided by the Swedish company Eldon. There are now initiatives to find alternative sources of raw materials. About 97 per cent of NEM's total exports are sold to one market - IKEA, a chain of Swedish furnishing stores with outlets throughout Europe. There are quality problems and the level of rejects is considered to be high (about 35 per cent).

Themi Farm Implements Company (Them)

Themi is located in Arusha Town and was established in 1981. The project was capitalized by the Arusha Regional Government through a loan with USAID funds made available through the Arusha Planning and Village Development Project (AP/VDP). It was started mainly to supply the local market with ox-drawn tool bars and ox "carts and was designed to use simple fabrication technology. The factory equipment is simple and suited for most general engineering work.

The firm is privately owned. The management of the project was selected in competitive interviews as a partnership from among 62 other group applications. The group contracted to supervise the establishment of the industry and its production plan, and was responsible for machinery installation, tooling and other start-up processes. The seven partners contributed 15 per cent cash equity and after one year of grace began to repay the loan equity of the project.

The major activities of Themi include:

• the manufacture and sale of animal-drawn farm implements;

• fabrication and sale of hand-operated oil presses, decorticators and settling tanks;

• conducting short term training courses designed to provide practical training and know-how to village communities in the use and maintenance of agricultural implements;

• offering consultancy services and designing;

• casting and machining all kinds of shafting brackets, hockers, pulleys, etc.; and

• manufacturing all kinds of spares for ploughs and ox-carts.

Themi's most important products include ox-drawn tool bars, ox-carts, hand planters, maize and nut shellers, plough parts and spares, wheelbarrows, oil presses, hand pumps, storage tanks and brick-making machines.

The overall management of the company is directed by the board of directors under the chairmanship of the regional development director (RDD) for Arusha region. The day-to-day management of the company is in the hands of the managing director, who is assisted by six directors, heading the six departments of research and planning, finance and administration, production, maintenance and foundry, fabrication and assembling, and ox-cart production.

In the first four years of operation Themi performed very well. Output exceeded targets in both major categories of production and several minor ones. Sales increased six times between 1981 and 1985 while employment more than trebled (Table 8.4). During this time all output was sold locally. Between 1985 and 1991, however, the numbers employed have fallen to half while domestic sales have declined steeply from TSh30.8 million in 1985 to only TSh20 million in 1991. In real terms the decline was even more pronounced, falling from TSh4.3 million to 0.2 million. This negative performance was in spite of the firm's successful attempt to reduce the import content from 90 per cent in 1981 to 10 per cent in 1991.

Themi's officials attribute the decline in output to the liberalization measures introduced under the ERP in 1986. The major raw material used by Themi is mild steel. This is distributed by a local firm (the National Steel Corporation) which imports most of it. Devaluation raised the domestic price of steel from TSh7 000 in 1985 to TSh200 000 in 1990. The increase in steel prices has been compounded by increases in transport costs (resulting from increases in the domestic price of oil). As a result, Themi's price for a plough shot up from TSh1 800 in 1985 to TSh8 000 in 1991. Since farmers' incomes have not risen by as much, the demand for these products has fallen significantly. Sales have also dropped because under the 'Own Funds' imports scheme, large-scale importers have been importing and distributing ploughs at lower prices. The strategies adopted by Themi in response to these problems are discussed in detail in the section below on firm strategies (p. 217). These include product diversification, exploring export markets, improved product delivery systems and the rationalization of management and production.

Afrocooling Systems Ltd (Afrocooling)

Afrocooling is a local private firm specializing in the manufacture of car radiators. It was established in 1979. The firm has dynamic and efficient management under the overall direction of a board of directors. The managing director is the executive head in charge of day-to-day company business. There are three main departments: production, finance, and administration and marketing.

The overall performance of Afrocooling has been rather mixed. Sales have been rising consistently: turnover increased by 4.9 times in nominal terms and 2.1 times in real terms between 1979 and 1989. The corresponding figures for the period 1985-91 were 5 and 1.9 times (Table 8.4). Exports, however, have declined from US$256 000 in 1985 to US$137 000 in 1991. As a proportion of sales, exports peaked at 23.6 per cent in 1986, declined to 14.6 per cent in 1990 and rose to 16.7 per cent in 1991. Employment has increased consistently from 45 in 1979 to 130 in 1991, commensurate with the expansion in sales.

Afrocooling's success in the domestic market reflects high-quality, efficient and innovative management which has always emphasized strict quality control and competitive pricing. It also reflects the firm's success in reducing costs (e.g. by substituting domestic for imported inputs, increasing capacity utilization, etc.). However, the decline in exports highlights the need to have an effective institutional and infrastructural network (e.g. functioning export service institutions, efficient transportation and communications, etc.). It also underscores the limitations of small-scale, labour-intensive operations in producing high-quality products for the international market.

Matsushita Electric Company (EA) Ltd (Matsushita)

Matsushita was established in 1967 as a subsidiary of the Matsushita Electric Company of Japan. Between 1958 and 1964 Japan's share in the Tanzanian market for wireless sets had risen sharply from 1.4 per cent to 68 per cent, due to the relatively low prices of its products and the aggressive marketing strategies of Matsushita Electric Co. However, in 1964 Phillips of the Netherlands formed Phillips Electronics Ltd. and with 50 per cent tariff protection was able to take much of Matsushita's market. Matsushita Japan, having lost its radio market, decided to counter the threat indirectly by establishing a battery factory in Dar es Salaam in 1967 and a radio assembly unit a few years later.

Today Matsushita is a relatively large firm employing about 500 persons. It produces a wide range of products including dry cell batteries, radios, radio cassettes, torches and fans. Most of the work involves assembling Japanese components produced in CKD (completely knocked down) form. Almost all the equipment and machinery (e.g. rolling machines, furnaces, injection moulds and battery sealers) are supplied by the parent company. Parts for assembly are obtained from the company's headquarters or other subsidiaries such as the Asia Matsushita Electric Company. The bulk of the packaging materials (e.g. boards, paper, boxes, metal jackets, caps, etc.) is supplied locally, by Kibo Paper Industries and Tanzania Eyelets.

The company has an elaborate management organization headed by the managing director, who has always been a Japanese. The three directorates of planning and production, finance and administration, and marketing are also headed by Japanese. There are seven departments and 15 sections.

Matsushita's sales volume has been increasing consistently in both nominal and real terms since 1980. Between 1980 and 1991 sales increased by about 24 times in nominal terms and by almost four times in real terms. Export performance, which peaked in 1985 at US$3.4 million, has since been declining, reaching as little as US$0.3 million in 1990. The increase in domestic sales, even during the recent liberalization period, is mainly attributed to offering economical but high-quality products, aggressive marketing and a competitive price strategy. The decline in exports partly reflects a diversion of exports to the domestic market, where demand is greater. The decline is also to a limited extent due to the loss of market share in the major importing countries of Burundi and Rwanda, which in turn have opened up their economies to cheaper imports from Southeast Asia.

The firm has already developed two new models of radio sets for export and has recently penetrated the Malawian market. The company has plans to move from radio assembly to manufacturing. Matsushita has already embarked on research into the product demand in Kenya, Zaire and Zimbabwe.

The Friendship Textile Mill (Friendship)

The civil works for this public firm were undertaken by the Chinese and were completed in 1966 at a cost of TSh50 million. The firm was commissioned in 1968 as a public company, with an installed capacity of 35 million square metres of cloth per annum. Rates of capacity utilization have declined from up to 92 per cent in 1980 to about 60 per cent currently. Though this firm was originally intended to produce canvas products for the local market, the firm managed to change its product mix and penetrate the export market in 1979. Today the mill exports about 40 per cent of its total production, mainly yarn and grey cloth, with a profit margin of 10 per cent. The exports achieved momentum after the firm installed a new machine (from Japan) for export products only.

Table 8.3 Illustrative of technological capabilities

Degree of capability Pre-investment Project execution Process engineering Product engineering Industrial engineering within economy
Basic: Simple routine (experience based) Pre-feasibility and feasibility studies; site selection, scheduling of investment Civil engineering, associated services, equipment installation, commissioning Debugging, balancing, quality control, preventive maintenance, assimilation of process technology Assimilation of product design, minor adaptation to market needs Workflow scheduling, time-motion studies, inventory control Local procurement of goods and services, information exchange with supplier
Intermediate: Adaptive, Duplicative (search based) Search for technology source, negotiation of contracts, bargaining for suitable terms, info systems Equipment procurement, detailed engineering, training and recruitment of skilled personnel Equipment stretching, process adaptation and cost saving, licensing new technology Product/quality improvement, licensing and assimilating new imported product technology Monitoring productivity, improved coordination Technology transfer to local suppliers, coordinated design; S&T links
Advanced: Innovative, risky (research based)   Basic process design, equipment design and supply In-house process innovation, basic research In-house product innovation, basic research   Turn-key capability cooperative R&D, licensing own technology to others

Source: Adapted from Lall et al., (1991), Table 1 p. 21.

Table 8.4 Size and performance indicators of non-textile sample firms over time

  First year of operations 1980 1985 1986 1989 1990 1991
NEM (1979)            
Employment 12 12 30 78 114 120 120
Sales (TSh x 1 000) 1 500 3 911 30 000 56 000 152 800 160 000 180 500
Real sales (1976 prices) 1 095 2 573 9 345 13 025 24 255 20 515 21 235
Exports (US$ x 1 000) - - - 155 164 311.0 420
Exports as % of sales - - - 14.3 20.6 38.2 58.2
Import content %) 100.0 88.0 86.0 n.a. 86.0 86.0 86.0
Themi: (1981)            
Employment 10 - 38 30 28 25 15
Sales (TSh x 1 000) 5 000 - 30 770 6 280 15 000 30 850 20 000
Real sales (1976 prices) 2 645   9 585 1 460 2 380 3 953 2 350
Exports (US$ x 1 000) - - - - - 1.2 0.9
Exports as % of sales - - - - - 29.5 11.2
Import content %) 90.0 - 80 - - 20.0 10.0
Afrocooling: (1979)            
Employment 45 85 120 125 129 128 130
Sales (TSh x 1 000) 8 500 16 900 41 600 52 500 197 000 189 900 206 200
Real sales (1976 prices) 6 205 11 118 12 960 12 209 31 285 24 345 24 260
Exports (US$ x 1 000) - - 256 240 216 142 137
Exports as % of sales - - 10.2 23.6 21.1 14.6 16.7
Import content (%) 95.0 85.0 75.0 75.0 70.0 60.0 50.0
Matsushita: (1967)            
Employment - 866 625 618 540 424 458
Sales (TSh x 1 000) 5 130 210 317 265 743 360 500 772 232 1 420 376 2 000 500
Real sales (1976 prices) - 138 365 82 785 83 837 122576 182 099 235 353
Exports (US$ x 1 000) - 2 798 3 469 1 045 50 31 107
Exports as % of sales - 10.6 21.5 15.0 1.2 0.4 1.3
Import content (%) 100.0 25.0 20.2 20.0 20.0 20.0 20.0

Source: Interview data

Friendship's textile mill is the most labour-intensive in the industry, with 4 000 employees. Its organizational structure is by business functions (production, finance, engineering, personnel sales, purchasing). The basic input, cotton, accounts for about 23 per cent of production costs and salaries and wages account for about 26 per cent. One interesting development in the costs is the declining share of imported dyes and chemicals, from about 12 per cent in 1980 to about 7 per cent at present, partly due to the shift in emphasis from producing mainly finished textiles to semi-processed grey cloth and yarn. There has been no change in ownership structure (100 per cent government ownership). There are however, plans to sell some of the shares to the private sector.

JV Textiles

The JV Textiles mill, established in 1971, is part of the JV conglomerate (in textiles, beverages, etc). It is 100 per cent privately owned, with 900 employees, about 600 of whom are on a permanent basis. The management is mainly expatriate. There are two types of plant, old and new. The installed production capacity is 4 million linear metres of cloth (processing). The mill employs some recent weaving technologies such as airjet looms and rapiers.

JV Textiles started exporting in 1980 to neighbouring countries. Today about 15 per cent of total production is exported, mainly T-shirts, towels, cotton fibres and other manufactures going to the UK, Germany and Sweden. It has links with other firms on sub-contacting terms (e.g. Henkel chemicals, other textile mills, etc.).

Current capacity utilization rates are 45 per cent for weaving, 35 per cent for knitting and 42 per cent for processing. The decline in production has mainly been attributed to the change in inputs from polyester to cotton (since 1980), since the machines were originally designed to process polyester.

The Morogoro Canvas Mill

Established in 1979 (production starting in 1985), the Morogoro Canvas Mill is the only public textile firm being run under a foreign management contract (M/S Hebox Holland Engineering BV).

The installed capacity is about 4.6 million square metres of assorted canvas products, with a labour force of 1 032 employees (850 working in the factory). Morogoro Canvas Mill was originally planned as a supplier of canvas to the Morogoro Shoe factory. When that factory went bankrupt, the canvas mill adjusted swiftly by changing its product mix and entering the export market (uniforms, grey cloth and bed sheets). Today the mill exports about 60 per cent of its output. The cost structure is dominated by cotton, followed by chemicals. Unlike other public textile firms, Morogoro Canvas is not a member of the holding corporation TEXCO. Autonomy in decision-making is quite high.

The breakthrough in the export business is mainly attributed to special machines used for export production. Morogoro Canvas has quite a sizeable and diversified export market (the US, the UK, Canada, Holland, Germany, Saudi Arabia, the UAE and neighbouring countries).

Tanganyika Textiles Industries Ltd

Tanganyika Textiles was established as a private company in 1959 and has remained wholly private since then. The employment level is currently around 450 employees. Inputs have changed from rayon yarn to cotton yarn, which now accounts for about 70 per cent of total production cost. Capacity utilization rates have been falling during the last decade from about 41 per cent in 1980 to around 20 per cent at present. Export performance has not been good. The only export market was Kenya, and when the East African Community collapsed in 1977 the firm completely lost its export market and has not recovered it, mainly because Kenya has developed its own textile base.

Morogoro Polyester Textiles Ltd (Palytex)

The firm was established in 1985, mainly to supply the domestic market. It is publicly owned, with a labour force in 1990 of 1 890. The main inputs are cotton. polyester, rayon, dyes and chemicals. Capacity utilization is about 40 per cent (processing). The quality of its grey cloth has gradually been improved. Exports include yarn and blended fabrics.

It has subcontracting links with other firms (e.g. Hoechst and ClBA-Geigy for dyes and chemicals, Dawooe for rayon and polyester) and a service contract with international Computers Limited (ICL). The company runs a workshop for making and repairing some spare parts.

Firm strategies

The strategy of a firm covers the explicit or implicit plans adopted by an enterprise to achieve certain targets and the means to be pursued to achieve such ends. Targets may include levels of growth, the range of products to be produced or marketed, markets to be penetrated, skills to be enhanced or acquired, processes to be used or developed, etc. Enterprise strategy is crucial because it may determine performance and the pace and extent of the acquisition of technological capabilities.

NEM's strategies

NEM has always had a vision of becoming a leading supplier of electrical fittings to East Africa. A number of strategies have been pursued to achieve this end, notably an export marketing strategy which aims at earning foreign exchange to ease the chronic shortages of raw materials and other imported inputs which the company has faced and at providing alternative outlets given the competitive character of the domestic market, especially since the mid-1980s. Efforts to enter the export market have been successful. What remains is to work hard on quality control and to secure markets other than Sweden.

Other strategies used by NEM to avoid raw material and foreign exchange shortages have included: (1) the development of new products using local raw materials, (2) concentrating on products that have a relatively lower import content and (3) attempting to increase the local content in existing products. One marketing strategy that gives NEM a competitive edge is its ability to provide a full range of electrical fittings.

The success of these strategies has been enhanced by NEM's active and continuous search for new product ideas from many sources, its ability and willingness to subcontract other firms and a flexible technology that can be used for a wide variety of products.

Themi's strategies

During its first five years, Themi Farm Implements seems to have been lacking a clear operating strategy. The demand for its two major products, ploughs and ox-carts, was high and Themi's was satisfied with the status quo. There is no evidence of a conscious search for new ideas and initiatives or a deliberate strategy to innovate. The absence of a competitive environment seems to have acted as a disincentive to innovate.

However, the liberal and competitive environment after the mid 1980s cost Themi market shares for its two major products. To cope with the problem Themi has adopted survival strategies. One strategy focused on product diversification. Themi has embarked on the production of new products including hand-operated oil presses, oil explores, manual water pumps, water storage tanks, manual and electric drill presses, presses for making cement and soil bricks, and hay bailers.

To expand its market and generate foreign exchange, Themi, through the Catholic Religious Services, has searched for and secured new export markets for its products in Uganda, Rwanda and Burundi. It has also introduced a strategy of improved product delivery services, involving setting up independent satellite units to supply spares for fast-wearing parts and to repair customers' implements. The strategy has boosted demand because the firm's major competitors, Ubungo Farm Implements (UFI) and Mbeya Farm Implements Co., do not offer such services. Domestic sales have been further boosted by the use of the Tanganyika Farmers Association as distribution agents.

Rationalization of management and production has been another strategy. Initially, production and marketing decisions were centralized. To increase motivation and encourage an aggressive search for alternative markets, there are now three autonomous product departments, for ploughs and ox-carts, oil presses and drill presses. Each department has to be aggressive in innovating and looking for markets for its respective product.

Afrocooling's strategies

Afrocooling Systems has a vision of producing, marketing and exporting high-quality products. This vision was also prompted by shortages of raw materials and foreign exchange and by competition from imported products. In pursuit of this objective Afrocooling has adopted four main strategies in the fields of appropriate technology' innovative production, innovative marketing and quality control. The technology used by the enterprise is relatively small-scale, simple, labour-intensive and flexible. These attributes have enabled the firm's engineers to adapt, assimilate and standardize it. The technology is flexible in the sense that it can be used to produce over 500 varieties of radiators.

The firm's major technological improvement has been the standardization of the design for radiator tubes and structures with the assistance of a design engineer imported from India. Other innovations have included the substitution of local brass and bronze fittings for imports and the making of its own toolings, spares and industrial heat exchangers in-house. Rigorous quality control has been the major source of Afrocooling's competitive edge. Change in product design is a continuous process based on customers' needs and product performance. Its products have been approved by Sweden to be used in the Tamco truck assembly plant, which is a joint venture between a local parastatal firm (State Motor Corporation) and a Swedish firm (Saab-Scania). Similarly' the Valmet Company of Finland has approved the firm's radiators for use as original equipment in its tractor assembly plants in Tanzania and Brazil. Afrocooling markets its products aggressively at home and overseas. It now exports radiators to Sudan, the UK, Egypt' Kenya and the Gulf States.

Matsushita's strategies

Consistent with the Japanese tradition, the operations of Matsushita have been guided by the vision of producing high-quality competitive products. Another factor has been the fear of being pushed out of the market by either genuine competitive pressures or a monopolistic situation developing within Tanzania. The firm has developed explicit strategies in the areas of utilizing mass assembly lines skill enhancement and aggressive marketing.

The assembly of components and parts into finished products is extremely labour-intensive and would be expected to benefit from the low wages prevailing in Tanzania. Furthermore' the assembly of standard products and components in large volumes is considered the key to the realization of economies of scale. To achieve and maintain high levels of quality in the products the workers have to be skilled. Matsushita has thus placed strong emphasis on local training. Of all the workers who have received training, in-house (on-the-job) training has accounted for 50 per cent, training in local institutions accounts for 35 per cent and training abroad (in Japan Sweden and Pakistan) has accounted for 15 per cent. There is a strong quality control department and the company has a systematic and aggressive marketing strategy. It is continuously carrying out product market research, conducted in most cases by consultancy firms. Aggressive marketing is also reflected in regular advertising in both local and regional media and a systematic collection of customer enquiries. Matsushita exports batteries to Rwanda, Burundi, Zaire and Malawi.

The textile firms strategies

Four of the five textile firms in our sample were established as part of the import substitution strategy. Most of these firms attempted to export only after several years of operation: Friendship Mill after eleven years; JV Textiles after nine years, Polytex after two years. Their entry into the export business came in response to two factors: the loss of local markets, especially after the liberalization of trade which saw an influx of second-hand clothes (see Table 8.6) and new opportunities arising out of new contacts and market research.

When these changes started to he felt, firms started targeting the export market. However, a number of problems were experienced: poor quality, due mainly to old machinery, and high costs, partly reflecting the technology in use and partly due to high costs of operation, which in the past were easily recovered given the monopoly position of these firms and the cost plus' pricing method in use. These problems necessitated changes in strategy if these firms were to survive, changes which are currently being coordinated by TEXTMAT (Textiles Manufacturers' Association of Tanzania).

One common factor is that all textile firms import technology. The first strategic response was then to effect changes in the technology used. Specific machines were imported to cater for export production with an emphasis on automation Changes have taken place in the processes of printing (replacement of roller and flatbed printing with rotary screen machines), winding (with the introduction of electronics) and in weaving (airjet looms and rapiers). The introduction of these new machines has been relatively easy due to the reorientation of human resources development in response to the market changes. The emphasis has shifted slightly from in-house training to high-level training, in some cases overseas. In addition, the accumulated skills of the past, in areas such as the fabrication of spaces, tooling, etc., have greatly helped in enabling firms to modify certain machines. They have, for example, gone from using imported rayon to local cotton and from imported starch to local cassava starch. These modifications have resulted in a considerable reduction of production costs, as import content was lowered. Operational costs have been further lowered through streamlining employment.

One area which has seen great strategic response has been marketing, with the goal of targeting the export market. Through individual firm efforts and TEXTMAT, firms have established an export 'desk' within their organizational structure and have even been able to penetrate the highly competitive markets of the West, where specialized products are sold, although on a small scale. Specific new marketing strategies have included the appointment of marketing agencies abroad, effective participation in trade fairs abroad, a close working relationship with the Board of External Trade in the search for new markets, market visits and advertisements in mass media overseas.

Despite these strategic responses there are certain limiting factors to exports (even where firm orders have been secured). These include low production levels (see Table 8.7) attributed to old machinery, despite the introduction of new machines at certain stages; insufficient working capital (Mbelle, 1992; Nelson and Persson, 1992; de Valk, 1992); poor quality control and the 'hostile domestic operating environment' (unfavourable fiscal policy and tight monetary policy).

The domestic market, which in the past was assured regardless of the quality and price of the textiles produced, has experienced some dynamism with the liberalization of the economy, especially after 1986.

Firms' investment capabilities

One structural weakness of Tanzanian industry has been its lack of investment capabilities (Mlawa, 1983; Bagachwa, 1991, 1992; Wangwe, 1992). Firms lack the skills needed (1) to identify and evaluate projects, (2) to specify the appropriate and correct location, scale, and product and input mixes, (3) to research, select, bargain for, purchase and transfer the appropriate technology and (4) to participate in carrying out basic and detailed engineering functions, e.g. equipment specification, procurement and testing, civil construction, mechanical erection and commissioning, and to execute the start-up and training functions.

It is possible to hire some of these skills from specialized engineering or consulting companies or the manufacturers of capital goods in developed countries. However, the cost involved is likely to be heavy. Moreover, as the case of the milling industry has shown, the lack of active local participation in the design and execution of certain critical investment functions may lead either to inappropriate technology choices and the subsequent failure to master, adapt and improve upon imported technologies, or to failure to establish linkages with local suppliers of capital goods (Bagachwa, 1991, 1992). These major sources of industrial inefficiency happen because valuable opportunities for technological learning and spill-over are lost (Lall, 1992). It is therefore important that such skills be developed, either through past experience or through conscious training.

NEM's investment capabilities

Under SIP, NEM, like many other 'junior sister' firms' was not given the opportunity to participate in the early entrepreneurial investment functions such as the selection of the products and technology, or in the negotiations with a senior Swedish firm. During the first phase these functions were performed by SIDO, with assistance from FIDE. SIDO conceived of the investment idea and carried out a market search to identify products. It then secured Sweden as a donor of technology and technical assistance. SIDO, together with the technology supplier and FIDE, agreed on the type of products to be produced and the type of technology to be used. FIDE then identified a medium-sized Swedish firm, Eldon, which produces similar products, to act as a senior sister in transferring the production technology to NEM. The contract between the NEM and Eldon was formalized by SIDO. SIDO, through public advertisements, invited entrepreneurs to hid for the running of NEM. The present NEM entrepreneurs were selected by interviews and entrusted with the management of the firm. SIDO used funds provided by SIDA to procure equipment and deliver it to NEM under a low-interest hire purchase arrangement.

In addition, SIDO provided a low-rent shed, electricity and water to NEM. The role of Eldon was to install and commission the machinery, to guarantee its functioning, to make regular visits to oversee operations, to continue assistance with marketing and product development and to provide technical training in Sweden and on the job.

Thus NEM's entrepreneurs missed the opportunity to participate in and learn from the key initial entrepreneurial tasks. When selecting the entrepreneurs, SIDO considered their formal education and past experience. In effect the selected entrepreneurs were like hired managers'. But what is important is whether these selected managers assumed the typical roles of entrepreneurs, i.e. developing new ideas, testing them and put them into operation.

Themi's investment capabilities

Themi's entrepreneurs, like those of NEM, were brought into a ready-made project. SIDO and the USAID-sponsored AP/VDP conceived of the project to produce ox-drawn tool bars and ox-carts for the local market. They then advertised for entrepreneurs to manage the project. Out of a total of 62 groups, one partnership group of seven indigenous entrepreneurs was selected. In contrast to NEM, these entrepreneurs were then responsible for the procurement of machinery. installation and tooling. Funds for equipment were provided as a low-interest loan by USAID through AP/VDP and channelled through the RDD's office. The Tanzania Rural Development Bank (TRDB) provided a short-term loan to procure raw materials.

The choice of technology and its supplier (in the UK) was made by the entrepreneurs themselves after receiving several quotations from various suppliers. They were also responsible for procuring the equipment and participated fully in the installation and commissioning of the plant. Some assistance was obtained from SIDO and AP/VDP technicians. This investment capability was possible because three of the entrepreneurs, though not very experienced, held a degree (BSc) in engineering. It was said that this direct participation facilitated the procurement of simple technology which is suited for most general engineering works. And, unlike most equipment procured by SIDO, this equipment was not mix-specified. Although the product had been chosen by SIDO and AP/VDP, which limited the type of technologies which could be used, Themi's entrepreneurs could still make their choice from various equipment suppliers offering significant sophistication' price and quality differences. It was therefore possible for them to negotiate for the best terms.

Afrocooling's investment capabilities

Unlike the entrepreneurs of NEM and Themi, who were assisted by the state (through SIDO) in performing certain early entrepreneurial functions, those in Afrocooling had to undergo the long and difficult but instructive process of feasibility studies, project identification and execution. The feasibility study and civil works were contracted to local firms. The entrepreneurs hired consultants from India to specify and supervise the construction of the factory and install and commission the plant. The entrepreneurs obtained quotations for the supply of equipment from the leading radiator equipment manufacturers in the world. Equipment from a variety of suppliers in the UK, the then West Germany and India was selected. The entrepreneurs participated fully in all these negotiations, showing a grasp of pre-investment tasks rare in Tanzania. The equipment selected is considered appropriate to the Tanzanian condition, given the firm's flexible, small-scale and labour-intensive operations.

Matsushita's investment capabilities

In the case of Matsushita, all the investment functions, such as feasibility studies, site selection, technology research, negotiation of contracts, civil construction, equipment erection, commissioning and procurement, were performed by the parent company, Matsushita Electric Industries of Japan. It was claimed that at that time (the mid-1960s) there were no Tanzanians with sufficient engineering capability to participate in the decision-making process.

The textiles firms' investment capabilities

Investment capabilities in the textile firms vary mainly according to the nature of ownership. While the government made all the decisions in the case of the public firms Friendship, Polytex (through the parastatal holding company TEXCO) and Morogoro Canvas, for JV Textiles and Tanganyika Textiles the decision was made by the (private) managing director.

The feasibility studies for the public firms were undertaken through bilateral donor arrangements (e.g. the Chinese for Friendship) or under multilateral arrangements (e.g. Canvas Mill). Even in the case of the two private firms, foreign consultants were invited in. This reflects the absence of indigenous capacity at that time, though such capabilities now exist even within the firms.

The choice of technology (machinery, product range, etc.) in the case of public firms was mainly dictated by the source of finance (e.g. the Chinese government in the case of Friendship) while private firms had their choices made by the managing director. Civil works were done by foreign firms in all cases.

One factor which is common to all public firms is that the current management is not knowledgeable of what transpired at the crucial early stages (feasibility, construction, commissioning), except for the Canvas Mill, which still has a foreign management contract.

Production capabilities

Production capabilities are the skills necessary for: (1) process engineering, i.e. specifying equipment, laying out raw materials, setting engineering and maintenance routines to ensure efficient plant operation, making adoptions and material substitutions, energy conservation, process improvement and the introduction of new techniques: (2) product engineering, i.e. establishing the optimum product design, modifying purchased designs (acquiring know-how), introducing new products (acquiring know-why), basic research; and (3) industrial engineering, i.e. overall planning of production, determination of batch sizes, sequencing and scheduling, make-or-buy decisions, materials planning and inventory control.

NEM's production capabilities

If one were to judge NEM's production capability by its formal qualifications then the stock is unimpressive. There are two graduate engineers, four diploma holders, three FTC (Full Technician's Certificate) holders and four certificates in business. The rest of the workforce of 107 do not have any recognized formal certificates. Of the 70 workers in the production department, only four have recognized formal credentials, i.e. one has an advanced diploma and three are FTC holders.

However, if one takes into consideration experience and on-the-job training, then the production capabilities at NEM are not as low as they appear. Two of the entrepreneurs (shareholders) of NEM had 13 and 10 years, respectively, of work experience in business and industry at both supervisory and managerial levels before starting NEM. The other five also had a considerable industrial experience and business knowledge of six or more years as owners of small enterprises before joining NEM. Two of the entrepreneurs also underwent training in Sweden before the machinery was installed. The heads of the three departments have all undergone training at least once in Sweden. Regular on-the-job training has also been provided for 48 workers, and 20 other workers have been trained in local institutions. The combination of prior experience, short-term in-house and external training, learning by doing and frequent contacts and advice given by the senior sister and consultants have helped to enhance the workforce's production capability acquisition.

NEM has acquired some limited capabilities to perform some of the elementary process engineering functions. A recent evaluation report found all of the five machines bought ten years ago looking 'fairly new' and functioning properly (INTERMACOS, 1991, p. 5). This suggests that the machines have been properly maintained. The machines have adequate stocks of spare parts to cope with any major breakdown. The supplier of machines still exists and is a reliable source of spares.

NEM has developed its capacity to carry out both preventive and corrective maintenance. It has maintenance manuals for all core equipment. During the early years, preventive maintenance and regular overhauls were carried out with the senior sister's assistance. However, through experience and training, there is now an in-house capacity to perform such functions. The involvement of NEM's technicians during the expansion phase is said to have been instrumental in the selection of flexible technologies that are capable of producing a large variety of products.

Information generated from interviews and corroborated by evidence elsewhere (Alšnge, 1987) suggests that NEM has the capacity to perform some of the tasks of product engineering. This is reflected, for example: in (1) new initiatives such as a systematic and active search for new product ideas from a wide range of sources, customers, product catalogues, imported products, the senior sister, etc.; (2) innovative activities such as the development of their own tools, modification of assembly workplaces, establishment of new production lines, introducing new local components in existing programmes and minor adaptations to imported product designs; and (3) a product market search which has included diversification from production for domestic to export markets to avoid raw material shortages associated with a lack of foreign exchange' lowering of import content from 100 per cent at the time of inception to about 86 per cent in 1991 and a recent initiative to look for alternative sources of imported inputs and for export markets besides Sweden.

Themi's production capabilities

Themi has not been able to acquire appreciable production capabilities. Although it started with three graduate engineers, these did not have significant industrial or business experience. From the outset the management of the firm lacked vision, determination and drive. Themi is particularly weak in administrative capabilities. The managing director of the firm is an engineer who had had neither prior management training nor previous experience in managing a small or large firm. The firm would certainly have benefited a lot if it had hired an experienced manager. The department of finance lacks qualified personnel. The accounts section is disorganized and functions on an ad hoc basis. One is struck by the absence of a section or department of marketing. At present each of the three departments (ploughs and ox-carts oil presses and drill presses) is supposed to market its own products. The firm does not have any marketing strategy. Marketing and sales are probably the weakest parts of Themi.

It is obvious that Themi lacks the capability to perform even some of the industrial engineering functions. The department of research and planning exists only on paper, having had no qualified personnel since its inception. There is no evidence of raw material or inventory control systems. Information on production and sales is not easily accessible.

Themi has, however, some limited inventive capabilities. It has made some modifications in imported designs for hand planters, groundnut shellers, hand operated presses, hand pumps and ox-carts. It has the capacity and ability to maintain, service and repair almost all equipment. Themi's inventive capability is also reflected in the more than 15 new products it has introduced into the market.

The process of capability acquisition has been rather slow in Themi due to various factors. Foremost has been the lack of management with significant industrial or business experience who would be able to take the initiative in training and product development. Other factors include the failure to hire qualified personnel to handle the various specialized functions of the different departments, the lack of training and marketing strategies and a lack of entrepreneurial vision.

Afrocooling's production capabilities

Afrocooling's production capabilities are very impressive. The firm's top management group already had considerable industrial experience, business knowledge and more formal technical and commercial education prior to joining the company. All the shareholders held shares in other companies before forming the company. They also manage a successful firm, Auto Mech Ltd. which rehabilitates automotive engines. Today the company has five graduates, three holding BSc degrees in engineering and the other two in finance and business management. There are two expatriates from India: an engineer and a financial advisor. There are five diploma holders: four in engineering-related fields and one in finance. There are 47 other skilled workers holding certificates in engineering trades' with 10 holding FTCs.

Besides prior industrial and business experience, the process of capability acquisition has been enhanced through learning by experiencing, i.e. managing their own firm, and by intensive training in both the plant and outside institutions. Although most of the training is aimed at developing further manual (production) skills, there is also limited training in management and marketing. Between 1981 and 1991 the firm trained 50 workers on the job, 20 in local institutions and two in India. The firm also imported a design engineer from India, who has taught other engineers how to standardize the design for radiator tubes and structures. Some technicians have been trained in preventive and corrective maintenance and in fault diagnosis through simulation of faults in some equipment. Experience accumulated over time, high formal qualifications and learning-based knowledge have all enabled Afrocooling to design appropriate future strategies and to acquire considerable production capabilities.

Matsushita's production capabilities

In spite of Matsushita's emphasis on local training, there seem to be less opportunities for the indigenous workers to upgrade themselves technologically. This is partly because the assembly line is one of the most labour-intensive and least skill-intensive portions of the production process. There is thus little incentive to search for or train more skilled operators and technicians. Recruitment has thus been mostly based on primary-school (Standard VII) levers, who are then trained on the job. The lack of opportunities is also partly because areas with the greatest potential for enhancing capability acquisition are confined to the expatriate personnel. Besides, the managing director is a Japanese, which means a lost opportunity for a Tanzanian manager to learn from experience. Moreover, the responsibility for new product design and market research are limited to the directors of planning and production and marketing departments, who are Japanese. Most of the training for local workers has therefore focused on manual skill development and there has been little training to enhance management, administrative and marketing capabilities. Perhaps the process of indigenous capability acquisition will be enhanced now that Matsushita intends to move into the manufacturing of radios. But this will also depend on the division of labour between the Japanese and Tanzanian workers.

The textile firms ' production capabilities

Skills development in the textile industry was traditionally focused on training employees in trade skills, especially at the shop-floor level. This has recently changed to training middle- and senior-level personnel, with greater weight being given to production, technical and engineering departments. Professional skills are also being emphasized.

In the past, training was done mainly by public firms (partly out of government funds) and the private sector had no major formal training programmes. The private sector, however, got publicly trained professionals through attractive incentive schemes. Some private firms (e.g. JV Textiles) now have comprehensive training programmes within the country and even abroad.

The end results of the past and current programmes. are that there are personnel with high-level skills (at least a first degree in the relevant field) to head departments, and firms have also acquired capabilities to fabricate a wide range of spares, etc., which has improved maintenance and enabled them to carry out important modifications to machinery, such as conversions from imported to local inputs.

Except for the Canvas Mill, the textile firms have acquired the local capability to oversee the entire production line and beyond to marketing.

Determinants of production capabilities

The examples of NEM and Afrocooling suggest that a major source of production capabilities is the accumulation of entrepreneurial, technical and managerial skills from previous experience in commerce and industry. Where such experience is absent (as with Themi)' industrial performance and hence export competitiveness are bound to be very weak. The case of Themi also demonstrates quite well that the existence of entrepreneurs, even those driven by the profit motive, eager to take risks and with higher formal education, may not in itself be a sufficient condition for the development of dynamic capabilities unless it is associated with the capability required to organize and manage the production process.

Training is another important source of capability acquisition. As Lall (1992, p. 117) notes, even the operation of the easy, low-technology activities with which industrialization generally starts requires literacy and schooling, a range of basic skills and some high-level technological and managerial skills. The government must therefore provide the base of literacy or formal training needed for industrial capabilities. Training within firms can expand the base but cannot be a substitute for basic formal education. Some private firms which have their own resources (such as Matsushita) or access to foreign technical assistance (such as NEM) have managed to train their staff. But even in such cases, the training has been on a short-term basis and is certainly insufficient for developing capabilities to handle the advanced and more demanding stages of industry Themi has failed to train its staff because it lacks resources. Firm-level training is also bound to be limited because private firms may fear losing their trainees once they are sufficiently qualified. Thus, as industrialization develops, it will not be enough for the government to provide primary and secondary education as a broad base for industrial skills. Further formal technical education will be needed.

Flexible and adaptive capabilities

Flexible and adaptive capabilities are skills and abilities that enable an enterprise to cope with rapidly changing global market conditions and technological developments. One of the major recent global technological changes has been the introduction of new technologies, especially the major technological breakthroughs in the fields of microelectronics and IT, biotechnology, material sciences and renewable energies. A major consequence of the technological revolution is that comparative advantage, international competitiveness and the international division of labour are now determined not so much by natural endowments or the invisible hand as by (1) access to new technologies, (2) capacity to respond to rapidly changing consumer tastes with new and differentiated products, (3) the ability to seek out new market niches and (4) improvements in productive efficiency.

The non-textile firms' flexible and adaptive capabilities

Access to new generic technologies, i.e. technologies that are potentially applicable as inputs across a broad spectrum of industries, is crucial, because they can drastically improve possibilities for upgrading existing technologies and for extending the range of organizational innovations. Three of the sample firms, NEM, Afrocooling and Matsushita, use computers in certain aspects of firm operations. Mostly, however, computers are used for general office work in accounting and payroll functions. In Matsushita they are also used in projecting market demand and machine inventories. None of the firms uses computers to control processes. The three firms also have fax facilities. Themi has no access to fax and computer facilities. Matsushita is contemplating automation in some of its assembly processes to increase efficiency, improve quality and raise productivity. Afrocooling has plans to modernize its equipment.

All firms have shown some flexibility in responding to rapidly changing consumer tastes by introducing new and sometimes differentiated products. NEM has introduced automatic power spraying of paint instead of manual painting to improve quality. Themi had to introduce marketing agents and zonal services and repair units to streamline its marketing operations. Afrocooling made a market breakthrough by standardizing its radiators. Matsushita maintains a strong department of quality control.

These flexible and adaptive abilities, however, are still at an elementary level. Access to new technologies is still difficult due to the lack of sufficient resources (e.g. Themi). Where resources are available there are still formidable obstacles to be overcome. Supportive infrastructure is still very weak (e.g. constant telephone interruptions and power failure), resulting in constant machinery breakdowns. Linkages between the users and producers of new technologies are weak because all the new technologies are imported and the market is still too small to motivate the supplier to provide back-up support. The telecommunications infrastructure which could have permitted data transmission between user and producer is non-existent or malfunctioning. Already there are problems of inadequate software and specialized components. Moreover, low levels of education mean that most workers are not easily trainable to handle or operate new technologies.

The textile firms' flexible and adaptive capabilities

The need for flexibility and adaptability to global developments is enormous in the textile world. The global environment has witnessed changes in many fields, e.g. production and trade relations, management practices and industrial organization, market characteristics, hardware and software technology, etc.

The textile industry has been influenced by these developments to a great extent. At the spinning stage the development has mainly been in the form of automation using single roving technology. The latest in this respect is the open-end spinning spindle, which processes rough yarn into individual fibres ready to be made into ready-to-use yarn. At the weaving stage the technological developments have included moving to fully automated looms as well as developments within the loom technology itself. The latter has led to a number of options: shuttle systems, projectile looms rapier looms, airjet and wetjet looms. Weaving is the most important stage. It demands flexible adaption to technological and market changes.

The introduction of microelectronics (computers) at the finishing stage has brought about a great change in finishing, increasing precision and time control and reducing the labour input. The response to these global technological developments in the textile industry has varied from firm to firm. The main limiting factor is finance, since the desire to acquire technology and the necessary information are there. By the very nature of textile processing, the piecemeal introduction of new technologies at separate stages is possible and need not create pressure at the subsequent stage, as semi-finished products can be exported.

Linkage capabilities

Linkage capabilities relate to specific skills which enable the enterprise to locate and interact with efficient input and technology suppliers, product customers and various institutions providing credit, technical, research, R&D and infrastructural support services.

The non-textile firms' linkage capabilities

Generally speaking, linkage capabilities were observed to be weak in the four non-textile firms under study. Limited subcontracting arrangements exist between NEM and three other SIP firms: i.e. Arusha Metal Industries (AMI) provides NEM with galvanizing services; Kilimanjaro Metal Shapers (KIMESHA) makes wall brackets for lights for NEM; and Uhandisi Industrial Fasteners makes special screws and rivets for NEM. There were no subcontracting arrangement outside the SIP network of firms. The bulk of intermediate inputs for NEM's operations are supplied by a single Swedish firm and almost all its exports go to a single Swedish firm. This implies the absence of significant forward and backward linkages within the economy and reflects a limited ability to locate customers and input suppliers outside the SIP arrangement. The firm needs to diversify input and technology sources and export markets to minimize the vulnerability that comes with dependence on a single customer or supplier. When the supplier is also a competitor the risks become much greater (Ernst and O'Connor, 1989).

Themi does not have any subcontracting activities with other industrial firms. The absence of linkages between Themi and other larger firms such as UFI and Mbeya Farm Implements is especially striking. The firm is, however, linked back to the National Steel Corporation of Dar es Salaam, which provides most of Themi's mild steel. Themi has also forged some forward linkages with the agricultural sector via sales of ploughs and ox-carts.

Afrocooling has managed to establish significant forward linkages through its sales of radiators to the local automobile industry, including vehicle assembling firms such as TAMCO (Scania trucks), TRAMA Valmet (tractors), Landrover and several vehicle repair units. There is no evidence, however, of significant subcontracting arrangements with other domestic firms. Likewise, domestic backward linkages appear to be weak. The bulk of inputs such as brass strips, copper strips and brass sheets are imported from Outokuspan, Sweden.

Matsushita's internal linkages are equally weak. Most of the work involves the assembly of parts and components imported from Japan. Limited backward linkages have been created with Kibo Paper Industries (which provides packing materials) and Tanzania Eyelets (which supplies battery caps).

Other forms of linkages such as economic spin-offs have also been limited. An economic spin-off is defined as a spontaneous outgrowth (in the form of a new enterprise) from a previous activity. NEM has been active in this sense. It has established a new unit on a new site outside its previous location in the industrial estate area to cater for exports. NEM has also established a joint venture with two foreign companies, Finnveden Development and Swedfund, to establish a new company, Arusha Precision Tools and Die Makers Company (ATOMAC). The new company serves as a highly sophisticated tool-and-die workshop. In addition NEM has joined forces with two other SIP firms, Kimesha and the Arusha Galvanizing Company Ltd (AGACO), to establish Galkin, which produces lamps for export. There is no evidence of spin-offs for Themi and Matsushita. The owners of Afrocooling, however, have established a new company, Auto Mech Ltd. which rehabilitates automotive engines.

The absence of significant inter-sectoral linkages can be explained from four perspectives. First, in the cases of NEM, Afrocooling and Matsushita, it reflects the pattern of IS, which emphasizes import-dependent assembly. Second, the case of NEM shows that ease of access to donor funding may discourage producers from actively looking for locally available parts or materials. Third, the case of Themi demonstrates management's inability to search for or appreciate the positive role which can be played by subcontracting, and equally that the large public firms such as UFI and Mbeya Farm Implements lack the resources and technological capabilities needed to set up subcontractors. Lastly, poor inter-sectoral linkages may reflect poor infrastructural facilities for small firms, biases in policies and in credit markets and the lack of an extension network.

Similarly, in all four cases linkages with research institutions were almost non-existent. Themi, for example, viewed the Institute of Productivity Innovation (IPI) at the University of Dar es Salaam and the Centre for Agricultural Mechanization and Rural Technology (CAMARTEC) as competing rather than collaborative institutions (IPI and CAMARTEC make prototypes of agricultural equipment and are supposed to disseminate the technologies to the rural areas). In all four firms there were no cooperation or close links with: (1) institutions charged with applied research and training such as universities, (2) technology generating and design institutions such as IPI, CAMARTEC and the Tanzania Engineering and Manufacturing Development Organization (TEMDO), (3) institutions for industrial standards, testing and quality assurance such as the Tanzania Bureau of Standards (TBS), (4) institutions for technological information such as the Tanzania Science and Technology Commission, or (5) institutions for consultancy, export market information and support such as the Tanzanian Industrial Studies and Consultancy Organization (TISCO) and the Board of External Trade (BET).

Failure to forge close links with industry-related institutions can be attributed to two key factors. First, some firms (e.g. Themi) may not be aware of the usefulness of such links. Secondly, in most cases existing institutions in Tanzania are ill-equipped and poorly funded, staffed and managed and are assigned conflicting objectives. For example, the government's continuous reduction in funds for R&D activities has forced IPI, CAMARTEC and TEMDO to spend less on the development of appropriate technologies and their dissemination in rural areas and increasingly to produce technologies for sale.

The textile firms' linkage capabilities

The textile firms surveyed revealed some limited forms of linkages with other local institutions outside the industry, in most cases of a service nature. TISCO is among the institutions often referred to in plans for future linkages, while training institutions such as the University of Dar es Salaam carry out some consultancy work (with the Institute of Production Innovation of the university being called in for technical services). TEXTMAT attempts to promote interactions among local textile firms by harmonizing production processes (e.g. identification of excess capacity in individual firms and possibilities of subcontracting, trading in spares, joint quality control, etc.).

The firms are strongly linked to the suppliers of their technology, who happen to be foreign. For example, the Friendship Mill is embarking on modernization with the Chinese government, the supplier of its original machines, charting the technology supply programme. The factor limiting links with local firms was said to be that these have little to offer (especially in technology. the crucial area).

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