A big part of SA’S business sector

Chinese firms have established themselves as major contributors in the SA economy

SA’S investment environment and relative ease of doing business make the country a natural target for China’s Outward Foreign Direct Investment strategy in Africa.

Direct and indirect Chinese investments into SA have been growing over the past two decades, during which around 170 medium and large Chinese companies have established themselves in SA.

Of these companies, more than 120 are registered members of the Sa-china Economy & Trade Association (Saceta), a nonprofit organisation founded in 2011 to promote trade and economic relations between China and SA. Its members operate in a multitude of sectors locally including mining, logistics, financial services, manufacturing, information technology, textiles and agriculture.

The fact that so many diverse Chinese companies are investing in SA entrenches the latter’s status as a gateway into Africa. As a member of the Brics grouping along with Brazil, Russia, India and China, SA is regarded as a stepping stone for other members into the African continent.

For SA, Chinese investment is a job creator. Direct employment creation also has multiplier effects. Between 2013 and 2017 China had invested in 34 foreign direct investment projects in SA, which created a total of 11,681 jobs,according to SA’S embassy in China, with the total estimated capital invested during the period amounting to R50.2bn.

China’s ambassador to SA Lin Songtian believes Chinese enterprises have contributed more than US$770M to the SA Revenue Service in the past 20 years with the total value of Chinese investment into SA totalling more than $15bn and creating more than 60,000 direct employment opportunities.

Chinese investments in SA are varied and range across multiple sectors. One of the most significant was the $5.5bn purchase of a 20% stake in one of SA’S oldest banks, the Standard Bank Group, by the Industrial & Commercial Bank of China (ICBC) in 2007. In 2015 Standard Bank sold a further majority stake in its London-based global markets business to stateowned ICBC, globally the largest lender by assets.

ICBC Africa CEO Lubin Wang, says partnering with a local bank allows ICBC to take advantage of opportunities more efficiently. “As the largest commercial bank in Africa by assets, Standard Bank has a long history in Africa, a leading market position, an extensive network, and a healthy balance sheet. Other factors that were important to ICBC were Standard Bank’s good governance structure, its approach to risk, and its future development strategies. These were all important factors that determined the final investment.”

Wang, who also sits on the board of Standard Bank, says the partnership with Standard Bank Group allows ICBC to offer comprehensive and leading financial services both to Chinese and global clients entering African markets.

ICBC has more than 16,000 branches in China and an additional 419 branches in 45 countries around the world. As Africa has attracted an increasing number of Chinese companies to the continent, ICBC realised it needed a