The Report on Chinese Enterprises Investing in Africa: Market Power and Role of the Private Sector was released in Beijing
2021/09/02

On August 26, the Report on Chinese Enterprises Investing in Africa: Market Power and Role of the Private Sector compiled by China-Africa Business Council (CABC) was released in Beijing.

As the first special report dedicated to China-Africa economic and trade investment cooperation compiled by a business council in a systematic manner, the report organized over 50 experts and researchers and surveyed over 300 entrepreneurs and 300 Chinese companies in 8 months. Through 63 cases of enterprises and projects, the report mirrors the experience, achievements and trends of Chinese enterprises investing in Africa. Justin Yifu Lin, Professor at Peking University, wrote a foreword entitled “A New Milestone” for the report and African entrepreneur Aliko Dangote wrote another called “A Look into the Future”.

The launching ceremony is organized by CABC, co-organized by CGTN Think Tank and supported by United Nations Industrial Development Organization (UNIDO) and China-Africa Supply Chain Institute. Representatives from academic institutions, UN agencies, embassies to China and enterprises from Africa, China, the US, and the UK attended the ceremony and made remarks and dialogues.

At the press conference, Professor Lin Yifu at Peking University delivered the keynote speech. Wu Peng, Director-General of the Department of African Affairs of the Ministry of Foreign Affairs (MFA), H.E. Mamadou Ndiaye, Ambassador of Senegal to China, H.E. Teshome Toga Chanaka, Ambassador of Ethiopia to China, Wamkele Mene, Secretary General of the African Continental Free Trade Area, Vera Songwe, Executive Secretary of the United Nations Economic Commission for Africa, Wang Licheng, Chairman of CABC and others made remarks. Song Lei, Chairman of the China-Africa Development Fund and Yang Xiaojun, President of China-Africa Fund for Industrial Cooperation also attended the launching ceremony. Experts and scholars from higher education institutions and other institutions including Oxford University, Columbia University, Tsinghua University, Guangdong University of Foreign Studies, Cheikh Anta Diop University of Dakar, Center for China Studies in Nigeria and the Standard Bank Group shared their views.

Michael G. Wang from CGTN presided over dialogues among ambassadors, entrepreneurs and scholars. H.E. AWALE ALI KULLANE, Ambassador of Somalia to China, H.E. S.E.M Adama COMPAORE, Ambassador of Burkina Faso to China, YAO Guimei from China-Africa Institute and representatives from enterprises such as Huawei, Huajian Group, Beijing China Hasan Int’L Holdings and Shanghai Greenroad Int’L Logistics made their presence.

According to the report, Chinese enterprises’ investment in Africa can be traced back to the “starting point 40 years ago” in the 1980s; since 2000, promoted by the Forum on China-Africa Cooperation (FOCAC), Chinese enterprises’ investment in Africa entered a stage of “rapid development in small steps”. Chinese private enterprises (CPEs) in particular, have become the main forces driving China-Africa economic and trade investment cooperation. CPEs are undergoing a transition from “going to Africa” through “settling in Africa”, to “establishing roots in Africa”. There are generally three stages of CPEs’ investment in Africa: the first was the “infancy stage” from the 1980s to the early 1990s; the second, the “initial stage” in the last decade of the 20th century; the third, the “stage of accelerated development” since the start of the 21st century.

The report estimates that by the end of 2020, the stock of Chinese enterprises’ direct investment in Africa should be no less than 56 billion USD; private enterprises account for about 70% of the scale of Chinese enterprises’ direct investment in Africa. The survey conducted by CABC in 2021 found that the proportion of a hundred key CPEs reinvesting in Africa is around 30%.

Chinese enterprises contributed to industrialization and the improvement of livelihoods during their investment in Africa, making them one of the driving forces promoting Africa’s economic inclusive growth, which can be mainly reflected in the following aspects: promoted the industrialization of Africa, created jobs, improved the construction of infrastructure, and drove park management of host countries.

The report analyzes the internal motivations of Chinese companies investing in Africa (returns on investment, market expansion, industrial transfer and the need for resources) and the performance of Chinese companies in major African economies (middle-income countries, resource rich countries and non-resource rich countries). Besides, the report analyzed the performance of Chinese companies in traditional African industries (infrastructure, manufacturing, energy and mining and industrial processing) as well as introducing Chinese companies’ active participation in Africa’s fight against the pandemic and poverty reduction efforts in Africa.

The report believes that the AU Agenda 2063’s inclusion of economic inclusive growth as one of important goals improved Chinese enterprises’ mid-to-long term appeal and can help Africa achieve “resilient growth and unleashed potentials”, which is manifested in following aspects: as Africa realized demographic dividends, the most rapid urbanization will emerge, offering great potentials for manufacturing. This resources-blessed continent is benefiting from the new round of technological revolution.

In response to the problems of Chinese companies themselves, the report points out: Chinese enterprises have a comparatively short history of “going global”, especially in Africa. They generally lack experience of foreign investment and international operations. In the past 20 years, some shortcomings and deficiencies have also been revealed, mainly in the following areas:

First, lack of long-term planning for investment in Africa. Second, insufficient coordination among Chinese enterprises. Third, lack of overseas business experience and risk management capacity. Fourth, cross-cultural communication challenges. Fifth, lack of support from professional service agencies. Sixth, CPEs have not yet established sustainable investment and financing models and support systems.

In the eyes of Chinese companies, uncertainties in 6 aspects need to be addressed, namely, safety-related uncertainties, structural problems of the economy, policy fluctuations, currency exchange rates, insufficient industrial support, salient differences between countries. That said, Chinese enterprises remain rosy for investing in Africa and constantly improve their capacity-building in response to their own problems and shortcomings, explore tripartite cooperation and integrate into Africa’s socio-economic development. Driven by market power, Chinese companies, CPEs, in particular, and more Top 500 Private Companies are focusing on the development and cooperation in new fields such as medium and high-tech manufacturing, medical care and pharmaceuticals, digital economy, and aviation industry while paying attention to traditional investment fields.

FOCAC Dakar Meeting is much anticipated by Chinese companies. As China and Africa move towards higher-quality cooperation, they will also demand more from Chinese and African governments and enterprises.

As Wang Licheng, chairman of CABC, aptly remarked that COVID is still raging around the world and countries are recovering at different paces. Climate, environment, energy and security issues still exist, but cooperation remains the world's trend. In the future, Chinese enterprises, especially CPEs, will actively participate in China-Africa economic and trade high-quality cooperation, promote industrial cooperation in areas such as China-Africa manufacturing and industrial parks to contribute to the socio-economic development in Africa.

It is fair to say that China-Africa cooperation will enter a new development period.

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