African mar­ket re­mains ma­jor at­trac­tion

China Daily (USA) - - FRONT PAGE - By KANG BING kang­bing@chi­


In com­ing to in­vest in Africa, one should have a thor­ough un­der­stand­ing of the lo­cal la­bor and em­ploy­ment poli­cies.”

Chi­nese in­vestors re­main en­thu­si­as­tic about the African mar­ket de­spite frus­tra­tions and chal­lenges com­ing from un­ex­pected re­stric­tions, mis­un­der­stand­ings and cul­tural con­flicts.

For years, Chi­nese en­ter­prises, both ma­jor State-owned ones and pri­vately owned small ones, have been find­ing their way onto the African con­ti­nent ei­ther to trans­fer their pro­duc­tion ca­pac­ity or to seek new mar­kets.

There are now more than 10,000 Chi­nese en­ter­prises op­er­at­ing in Africa, with 90 per­cent be­ing pri­vately owned, ac­cord­ing to Wei Jian­guo, vice-pres­i­dent of the China Center for In­ter­na­tional Eco­nomic Ex­changes.

In South Africa alone, there are more than 300 Chi­nese en­ter­prises, in­vest­ing a to­tal of $13 bil­lion in fi­nance, elec­tron­ics, telecom­mu­ni­ca­tions, au­to­mo­biles and con­struc­tion engi­neer­ing.

If the pre­vi­ous in­vest­ment could be re­garded as trial run, the Belt and Road Ini­tia­tive cer­tainly serves as a big boost to Chi­nese in­vestors’ new moves in Africa. A fo­rum held by mem­bers of the South Africa Chi­nese En­ter­prises Trade As­so­ci­a­tion in Johannesburg last month re­vealed that en­cour­aged by the ini­tia­tive, al­most all the big Chi­nese play­ers are work­ing out plans to in­vest more in Africa.

Beijing Automotive In­dus­try Corp, for in­stance, is speed­ing up the con­struc­tion of its man­u­fac­tur­ing plant in Port El­iz­a­beth, South Africa, to­gether with its joint ven­ture part­ner the South African In­dus­trial De­vel­op­ment Co.

Li Xingx­ing, ex­ec­u­tive vice-pres­i­dent of BAIC In­ter­na­tional De­vel­op­ment

De­spite re­ports of con­flicts be­tween the part­ners, Li Xingx­ing, ex­ec­u­tive vice-pres­i­dent of BAIC In­ter­na­tional De­vel­op­ment, promised that the plant will go into oper­a­tion ac­cord­ing to the orig­i­nal sched­ule.

“The equip­ment for the assem­bly line worth about $50 mil­lion has been man­u­fac­tured back home and is ready to be shipped to the plant now un­der con­struc­tion, and the plant will go into oper­a­tion with­out any de­lay,” Li said in his of­fice merely a few hun­dred me­ters away from the con­struc­tion site of the new plant, neigh­bor­ing a truck assem­bly fac­tory of FAW in Coega In­dus­trial De­vel­op­ment Zone.

Li’s 5.5 bil­lion yuan ($843 mil­lion) project is not only BAIC’s first over­seas man­u­fac­tur­ing plant but also South Africa’s big­gest over­seas in­vest­ment in decades.

Ear­lier, a lo­cal cham­ber of com­merce claimed that the project was five months be­hind sched­ule, that prob­lems in­volv­ing pro­cure­ment and lan­guage dif­fer­ences were hin­der­ing com­mu­ni­ca­tion be­tween the part­ners and that con­struc­tion ma­te­ri­als that should have been sourced lo­cally were im­ported.

Li said mis­un­der­stand­ings did ex­ist, al­though they have been smoothed out and both sides had adopted a co­op­er­a­tive at­ti­tude.

While BAIC is mend­ing its re­la­tions with part­ners, Tong Ren Tang, the lead­ing tra­di­tional Chi­nese medicine pro­ducer, is try­ing to per­suade re­lated South African au­thor­i­ties to grant visas and work per­mits to TCM doc­tors with­out whom its busi­ness in the coun­try would come to a stand­still.

Tar­get­ing thou­sands of Chi­nese liv­ing in South Africa and Africans who are tak­ing a lik­ing to Chi­nese medicine and acupunc­ture, Tong Ren Tang has opened five clin­ics in dif­fer­ent cities. Its busi­ness would have been boom­ing had it not been for the fact that the com­pany finds it dif­fi­cult to ob­tain work per­mits for TCM ex­perts whose di­ag­no­sis and pre­scrip­tions are cru­cial to the oper­a­tion.

As a tra­di­tion, many TCM doc­tors gained ex­pe­ri­ence and fame through long-time prac­tice and got pre­cious tips from their masters. Such masters, how­ever, may not meet the re­quire­ments of the South African au­thor­i­ties which stress ed­u­ca­tional qual­i­fi­ca­tions. As a re­sult, ap­pli­ca­tions by good doc­tors are turned down, frus­trat­ing the com­pany which wants to pro­vide high-level TCM ser­vice to lo­cal peo­ple.

Its clinic in Johannesburg, forin­stance,isopen­buthasno doc­tors. “We have to bor­row doc­tors from other clin­ics, and that means other clin­ics have to be closed dur­ing their ab­sence,” said Zhong Peng, pres­i­dent of Tong Ren Tang’s African busi­ness.

Zhong said his com­pany has al­ready hired 22 em­ploy­ees, 15 of whom were lo­cal hires, and is in talks with lo­cal uni­ver­si­ties to pro­vide acupunc­ture cour­ses. “We have plans to set up more clin­ics and phar­ma­cies in other African coun­tries in the next three years,” he said.

Cheng Long­hai, project di­rec­tor of the Zanz­ibar air­port ter­mi­nal in Tan­za­nia, on the other hand, has his headaches. “Hope­fully, we can restart our project and hand over the key to our part­ner be­fore the first half of 2019,” Cheng said. Stand­ing in front of the half-fin­ished ter­mi­nal which dwarfs the nearby ter­mi­nal in use, Cheng said the project had been at a stand­still for al­most two years be­cause of money prob­lems.

An over­seas project of Beijing Con­struc­tion Engi­neer­ing Group, the ter­mi­nal in­volves an in­vest­ment of $128 mil­lion. The big­gest struc­ture in Zanz­ibar, the ter­mi­nal’s roof and glass cur­tain walls have been com­pleted, al­though more money will be needed for in­te­ri­ordec­o­ra­tio­nan­d­e­quip­ment.

The good news for Cheng is that the lender re­cently came for an on-the-spot in­spec­tion and it’s likely that new funds will flow in and the re­main­ing work will be restarted be­fore the end of the year. That will be a great re­lief to Cheng and his team of 15 Chi­nese work­ers who have been liv­ing in their Zanz­ibar dor­mi­tory tend­ing the half-fin­ished project.

While money mak­ing is a ne­ces­sity for a Chi­nese en­ter­prise in Africa, only by go­ing lo­cal and ben­e­fit­ing African peo­ple can it en­sure its sus­tain­able de­vel­op­ment, ac­cord­ing to Li Xingx­ing from BAIC. Most of the Chi­nese in­vestors are mak­ing sure that 90 per­cent of the em­ploy­ees are lo­cal and a big por­tion of ma­te­ri­als con­sumed are sourced lo­cally. In South Africa alone, Chi­nese en­ter­prises are em­ploy­ing more than 24,000 lo­cal peo­ple, ac­cord­ing to SACETA’s 2016 white pa­per. BAIC is plan­ning to pro­vide 800 jobs to lo­cal work­ers and en­gi­neers once its plant is fully op­er­a­tional.

“In com­ing to in­vest in Africa, one should have a thor­ough un­der­stand­ing of the lo­cal la­bor and em­ploy­ment poli­cies, “said Li, who has been shut­tling be­tween Beijing and Port El­iz­a­beth for years. His other sug­ges­tions include a care­ful fea­si­bil­ity study of the lo­cal mar­ket and strictly abid­ing by the lo­cal laws and reg­u­la­tions.

“The big­gest thing lies in how we, the Chi­nese, can build it into a lo­cal com­pany and adapt to lo­cal con­di­tions. And this may need a change of mind­set as well as prac­tice,” Li said.


Two em­ploy­ees walk in front of SASUKA minibuses made by a joint ven­ture be­tween SAIC and a lo­cal part­ner in Springs, South Africa.

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