According to Deborah Brautigam (2008), the Chinese had a long history in Mauritius, establishing factories early on in 1874 (tobacco) and 1897 (alcohol distillation). They made shoes, boots, rum and aloe bags for transporting sugar since 1925. Unlike the coolie migrants, the Chinese-Mauritius kept close connections with China and had enough capital to travel back home and to find wives.
This was exemplified by the Lim Fat family, who was originally from Canton. Dr. Lim Fat was responsible for cementing the Export Processing Zone Act of 1970 and encouraging other overseas Chinese and Hong Kong business-people to invest and go to Mauritius. By 1982, it was a booming industry, with 115 EPZ firms, of which 59 percent of the capital was invested by Hong Kong Chinese.
As Brautigam argues, networks “were critical for transferring information that would lower the risks and costs to Mauritians of embarking on export-oriented industry” and many of the local investors had at one point worked together in Hong Kong and used their expertise and experience to start new ventures in Mauritius.
Brautigam calls this the “flying geese” model. By 1980s, over half of the EPZ businesses were invested in locally and Mauritius became one of the top exporters of Woolmark knitwear. Interestingly enough, increasing involvement by mainland Chinese firms brought competition against Hong Kong firms. In 2003, Shanxi’s Province’s Tianli Group invested more than $10 million in a cotton yarn spinning mill. Other companies followed suit. By 2005, the textile industry shrank with many firms closing shop and 25,000 workers losing their jobs. Over 35 years since the first Chinese arrived in Mauritius, industrial investments had grown into a collaborative affair, involving local investments and labor. By 2006, restructuring led to many firms moving out of the country or shutting down. In 2007, Mauritius and Chinese governments decided to build a special economic zone (SEZ), also constructed by Tianli Group.
The “flying geese” model was short-lived. This model was also prevalent, as Brautigam argues, in Southeast Asia. What are the features of the “flying geese” model? She explains: 1) it involves joint ventures by locals and external investments 2) there must be a push from the home country, for example, labor costs or perhaps less competition 3) policies in the host country that make it conducive to FDIs and export firms. The last factor also includes economic policies, such as exchange rates and trade and capital liberalization standards that allow export firms to grow.
Mauritius stands as one of the few examples in which Chinese business networks have led to a growth of local ownership. She concludes: “…this suggests that a supply of technically skilled local entrepreneurs will be a necessary prerequisite for the transfer of technology and the start-up of new firms.”