Chinese enterprises expand in Africa for mutual benefit

Africa has long been a favorite investment destination for Chinese enterprises because of the continent's rich resources, thriving market and supply of cheap labor. According to China Newsweek, Chinese enterprises have been increasing investments in Africa for more than 50 years.

It was no surprise, therefore, when Chinese Premier Li Keqiang and his wife Cheng Hong visited Ethiopia (the headquarters of the African Union), Nigeria, Angola and Kenya on a trip from May 4 to 11 -- the first such visit by the newly elected Chinese leadership.

While attending a trade, economic and cultural forum held in Ethiopia on May 6, Premier Li met a local Chinese entrepreneur who complained his company has been facing overseas financing problems for years.

Li said China's State Council is aware of this issue ,and government financial departments would soon be issuing details of upcoming support for his company.

Statistics from The Voice of Africa, an e-magazine issued by Chinese in Kenya, shows the total labor force of Africa will reach 1.1 billion by 2040, with half of the labor force living in urban areas. By 2050, there will be 2 billion consumers in Africa, at which point Africa will become one of the world's largest markets.

By the end of 2013, China's direct investment in Africa reached US$25 billion, involving more than 2,500 Chinese enterprises. Since 2009, China has consistently been Africa's largest trading partner. The overall trade volume topped US$210.2 billion in 2013. Africa has become China's important import source and second largest overseas destination for contracted projects and emerging investments.

Cooperative projects benefit local people

The China Road and Bridge Corporation (CRBC) tops the list of Chinese investors in Africa. The 150-km A109 Highway Mtito Andei -- Bachuma Gate Road built in Kenya has drawn particular attention.

As the country's main trunk road, the A109 -- known to local people as the "China Road" -- links the capital Nairobi to the country's largest port Mombasa. It extends northwest to Uganda via the A104 Highway and north to Ethiopia via the A2 Highway, becoming an international transport lifeline connecting the African hinterland with ports on the Indian Ocean.

CRBC entered Kenya in 1984. Over the past 30 years, it has built more than 20 bridges with a total contract value of US$1 billion.

Currently, CRBC is building a road in south Nairobi with an investment of about US$200 million. This is considered an important part of Kenya's 10-year transport plan and is expected to be complete in June 2015.

A Kenyan worker who joined CRBC in 1986 told China Newsweek that misunderstandings had caused some conflicts between the Chinese managers and local employees in the 1990s, since many Chinese managers couldn't speak English while local employees didn't understand Chinese. Then, they began to learn Chinese. Now, language is no longer the obstacle.

Localization and mutual trust

Localization is a necessary condition for the development of both CRBC and other Chinese companies in Africa.

While commenting on China's investment in Africa, the British magazine The Economist said that an awareness of localization should be strengthened among Chinese investors, and would be beneficial both to Africa and the development of Chinese enterprises.

Zhai Ming, a worker with a Chinese oil enterprise office in Nigeria, said that while investing in projects, they had to deal with local governments and local tribes. He said they must be very careful because there was always the possibility of hidden traps.

"For example, local people have told us there was gold and nickel ore somewhere underground, and even offered us maps and government certification to prove it. However, after investment and exploration, we found nothing. Then it's a difficult and endless process to deal with the problem.

"For many years, with the support of domestic enterprises, we have tried our best to communicate with local governments and tribes. We have tried to make friends with locals by helping solve practical problems for them to reduce political risks as much as possible," Zhai said.

A worker with China's Huawei Company said understanding Africa and integrating into the region was a long process, and sometimes there was a heavy price to be paid.

"Now, most local people think Chinese enterprises are not predatory, but constructive, and Chinese people are nice and honest. The two sides need each other," the worker said.

According to Chinanews.com, many local African employees working in Chinese enterprises have been promoted over the years through long-distance education or business training in China, and this has further cemented understanding.