Myths about employment in Africa should be dismissed

By Barry Sautman and Yan Hairong Source:Global Times Published: 2015-6-28 21:18:01

Illustration: Liu Rui/GT

Do Chinese enterprises in Africa contribute to employment by localizing workforces? The most widespread, persistent concern expressed in Western discourse over China's interface with Africa is that Chinese firms "bring their own" and do not hire locals. US political leaders framed that view as a mantra of 2014's US-Africa Summit. President Barack Obama stated that his "advice to African leaders is to make sure that if, in fact, China is putting in roads and bridges, number one, that they're hiring African workers."

Our database on workforce localization shows that, on average, locals are more than four-fifths of employees at 400 Chinese enterprises and projects in 40-plus African countries. The proportions are, however, much lower for top managers and significantly lower for engineers and other professionals.

There is some variation among African states in localization rates at Chinese enterprises and projects.  Those in construction in Angola and Algeria have lower than average (but still majority) proportions of locals, Angola because of de-skilling due to 27 years of war and Algeria because of migration of skilled workers to Europe.  South Africa and Zimbabwe's higher industrialization and education levels result in especially strong localization at Chinese firms.

Extractive industries, manufacturing and construction mostly have 80-95 percent local workforces, although construction has examples of local skills shortages or host government political needs for rapid project completion requiring that work-intensive Chinese be brought in.  The lowest rate of workforce localization is among the two large Chinese telecommunications firms, the private Huawei and the State-owned ZTE.

Yet, despite acute shortages of engineers and technicians in many African states, these companies do have half-to-two-thirds local workforces.  There is generally no sharp distinction between Chinese private firms and SOEs in workforce localization: private firms have a greater economic incentive to localize, while SOEs also have political incentives.

Almost every Chinese manager in Africa we have interviewed has recognized that the advantages of localization, such as a lower wage bill, improved government relations, and local knowledge acquisition, outweigh such drawbacks as loss of control functions, less specialized employee experience, and slower work pace.

Many managers seek to deepen the trend and recently some Chinese firms in Africa, each with thousands of employees, have exceeded 99 percent localization.

Localization of workforces at Chinese enterprises is already well-developed and, generally, the longer Chinese firms are in Africa, the more they localize. Africans elites may not regard that as sufficient however. Their focus on management positions is a source of discontent, but media-created stereotypes play a great role.

One stereotype is of few locals at Chinese firms, but many at other foreign companies in Africa. Western firms have had a much longer tenure in Africa than their Chinese counterparts, enabling them to grasp the low-hanging fruit of African resources and markets, generate greater profits, and pay higher salaries to attract Africa's talent. Our cross-national data nevertheless indicates that because there are now Chinese firms with some years on the continent, Western firms do not generally have higher localization rates.

Another stereotype is of Chinese firms unwilling to localize because they ethnocentrically seek to isolate Chinese from Africans or because the Chinese government sees Africa as a dumping ground for surplus labor. Chinese with small and medium-sized enterprises in Africa however are more likely than Western expats to live among Africans and learn local languages.

China's exporting its surplus labor also makes little sense, because Chinese in Africa who work for significant firms, as opposed to being self-employed and migrating on their own, number only in the tens of thousands, but derive from a nation of 1.4 billion people.

To encourage Chinese enterprises to further contribute to employment, African political actors and media should recognize that these firms understand the net benefit of localizing workforces, increasing local content in operations, and bridging cultural gaps between Chinese and Africans. Myths about Chinese firms' putative non-localization should be abjured and those propagated for political ends by anti-Chinese political forces should be counteracted, so that Africans can move on to reality-based job issues within the China-Africa relationship.

Barry Sautman is a professor at the Hong Kong University of Science & Technology and Yan Hairong is a professor at the Hong Kong Polytechnic University.

Posted in: Viewpoint

blog comments powered by Disqus