Squabbling firms strain Sino-African ties

By Mark Kapchanga Source:Global Times Published: 2014-7-27 21:23:01

Illustration: Liu Rui/GT



The rising trend of Chinese companies "going global" has seen the country emerge as a global trader and investor.

China's outward direct investment has expanded from just $5.5 billion in 2002 to more than $87.8 billion in 2012. For the first time in history, China became one of the top three foreign direct investment outflow countries in the world.

Chinese enterprises' hunger for overseas investment opportunities has also placed the country among the world's largest trading economies. Today, Chinese firms such as Huawei, Haier, China Minmetals Corporation, Sinochem and Lenovo are very competitive abroad.

To succeed in the push for globalization, Chinese firms have perfected the art of acquiring skills and expertise necessary to handle the changing management and governance of their operations abroad.

The global push has not been all smooth though. The main challenge has always been overcoming cultural barriers, stereotypes about China, and mistrust between Chinese and the locals.

In African nations, Chinese firms have managed to overcome most of these hurdles. This explains why many Chinese people now feel at home in countries like Kenya, Tanzania, Uganda, Angola, Ghana and South Africa. Some of them have even married locals.

But the increase in the number of Chinese firms in Africa, some of them with duplicating and overlapping engagements, is turning out to work against China at times.

There is intense competition between Chinese firms, especially in the construction and mining sectors, and some firms now complain that State-run companies enjoy undue advantages such as low-cost financing and cutting-edge technology.

These internal conflicts have seen some Chinese firms not only exposing their competitors' insider business plans, but also disclosing non-critical information to the authorities such as allegations that some firms are not playing by the rules.

Take the battle earlier this year between two Chinese firms that had proposed to supply billions of dollars worth of laptops for school children in Kenya. It started with the use of media in exposing each other's strategies before the fight finally ended up in the courts, and the subsequent cancellation of the tender.

So intense has been the fighting that there are fears it may strain China-Africa relations. Recently, Chinese Foreign Ministry spokesman Hong Lei said the "unlawful behavior of a small number of Chinese people in Tanzania and other African countries has harmed China's image, and had a negative impact on friendly Sino-African and Sino-Tanzanian relations."

Such a strain will certainly affect the win-win relations the two regions have endeavored to achieve in the long run. For some years now, China has prioritized Africa as a strategic spot at economic levels. No doubt, such cooperation will in future significantly shape Africa's affairs through China's growing economic involvement.

China's increasing geopolitical influence and its spectacular growth offer huge opportunities for Africa.

The World Bank has confirmed that China's growing trade with Africa has already given the continent a "major boost." On the other hand, the IMF estimates that Africa's growth overall is close to 6 percent, the highest in 30 years, due in large part to China's growing investment. There are more prospects of increased trade to deliver additional benefits for both Africa and China over the longer term.

But the win-win relations between China and Africa need a solid strategy to deal with the self-fighting that could put a brake to these prospects.

It is imperative for Chinese firms to create synergies in their operations in Africa. Most Western firms that have succeeded in Africa have done so as a result of a combination of cooperation and constructive competition.

Crucially, Chinese firms need to diversify their operations. The current narrow focus on construction and extraction might not yield the much desired-for results for both China and Africa. Yet sectors such as education and agriculture continue to perform deplorably as a result of being starved of resources.

Beyond diversification, the Chinese government needs to deal sternly with a few of its people who are unwittingly engaging in the negative marketing of the country in Africa through poaching, shoddy work, corruption and counterfeiting of products.

Africa should also play its part in keenly appraising Chinese companies' operations in the continent. Without a feedback, it means there would be a gap between the two regions, which could hamper their relations.

Ultimately, the overall strategy for Africa's successful development agenda with China should be built on a pro-growth and pro-poor foundation, democratization and inclusive government systems, improved political and corporate governance, conflict resolution and competitive labor practices.

The author is a journalist on African issues based in Nairobi, Kenya. mkapchanga@gmail.com



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