Africans also in­vest­ing in China

African coun­tries have poured over $14 bil­lion in in­vest­ments

Africa Renewal - - CONTENTS - By Bo Li

China, the world’s new­est eco­nomic su­per­power, sur­passed the United States as Africa’s largest trad­ing part­ner in 2009. Since then, China’s in­vest­ments in Africa have been grow­ing at a stag­ger­ing speed. But many peo­ple are not aware that the Sino-Africa re­la­tion­ship is not just a one-way street.

Be­yond the small busi­nesses that at­tract Africans in Guangzhou—the so- called ‘Cho­co­late city’ in China be­cause of the large num­ber of Africans who live there—African com­pa­nies have made con­sid­er­able in­vest­ments in China. By 2012, Africans had in­vested a cu­mu­la­tive $14.2 bil­lion in China, a 43% in­crease from the $9.9 bil­lion in­vested by 2009.

In 2012 alone, the amount of di­rect in­vest­ments from Africa to China was about $1.4 bil­lion, mostly in petro­chem­i­cal, man­u­fac­tur­ing, whole­sale and re­tail­ing in­dus­tries. Some of the top African in­vestors in China came from Mau­ri­tius, South Africa, Sey­chelles and Nige­ria, ac­cord­ing to the White Pa­per on Eco­nomic and Trade Co­op­er­a­tion be­tween China and Africa pub­lished by the Chi­nese gov­ern­ment.

For ex­am­ple, not many peo­ple out­side China have heard about Snow beer, the world’s best-selling beer by sales vol­ume, be­cause it is pro­duced and sold only in China. Even fewer are aware that an African com­pany, the South African Brew­eries (SABMiller), runs Snow beer as a joint ven­ture with a Chi­nese firm and pro­duces many other pop­u­lar Chi­nese beer brands as well.

SABMiller (for­merly SAB be­fore it ac­quired the Miller Brew­ing Com­pany in 2002) be­gan its ex­pan­sion into China in the mid-1990s. Its first move was to ne­go­ti­ate with the gov­ern­ment-backed China Re­sources En­ter­prises, for joint own­er­ship of China Re­sources Snow Brew­eries, which is now the largest brew­ery in China. While most for­eign brew­eries strug­gle to sell their brands in the Chi­nese mar­ket, SABMiller has con­cen­trated on pur­chas­ing lo­cal Chi­nese brew­eries.

SABMiller’s win­ning strat­egy is to keep on pur­chas­ing shares in lo­cal brew­ers and in­vest­ing in the pro­duc­tion of pop­u­lar Chi­nese brands with­out in­volv­ing it­self in daily oper­a­tions and man­age­ment of the com­pa­nies. To­day, 30 years af­ter its first in­vest­ments, SABMiller co- owns more than 90 brew­eries with Chi­nese Re­sources, pro­duc­ing around 30 beer brands with a 23% mar­ket share.

Tu­nisia’s in­vest­ment in China’s fer­til­izer pro­duc­tion has an even longer history. Ini­tially launched as a key pro­ject of China’s 8th Five-Year Plan, the Si­noArab Chem­i­cal Fer­til­iz­ers Com­pany (SACF) was a joint ini­tia­tive reached by Tu­nisia and China when Tu­nisia’s late Prime Min­is­ter Mo­hammed Mzali vis­ited Bei­jing in 1984. SACF wisely used the con­tin­u­ous in­vest­ments in its tech­ni­cal re­form and fa­cil­ity ex­pan­sion in the new mil­len­nium, which sig­nif­i­cantly in­creased its pro­duc­tion and qual­ity con­trol ca­pac­i­ties. Widely praised as a suc­cess­ful SouthSouth Co­op­er­a­tion model, the com­pany has grown to be­come one of the largest com­pound fer­til­izer pro­duc­ers in China.

De­spite the global re­ces­sion that jeop­ar­dized most coun­tries’ in­vest­ment plans, the amount of di­rect in­vest­ments from Sey­chelles to China reached the $100 mil­lion mark in 2009, com­pared to $7 mil­lion worth of Chi­nese in­vest­ments in Sey­chelles dur­ing the same pe­riod. The large num­ber of off­shore com­pa­nies anony­mously reg­is­tered in its In­dian Ocean is­lands could pos­si­bly be the an­swer to this puz­zle, an­a­lysts say. Coun­tries like Mau­ri­tius and the Sey­chelles are mag­nets for busi­ness en­ti­ties and en­trepreneurs around the world be­cause of their re­laxed tax­a­tion, lighter reg­u­la­tion of cor­po­rate ac­tiv­i­ties and greater busi­ness flex­i­bil­ity. On the other hand, their strict preser­va­tion of con­fi­den­tial­ity for busi­ness trans­ac­tions and in­di­vid­u­als has made it al­most im­pos­si­ble to track where the in­vest­ments that are flow­ing out of these is­lands ac­tu­ally came from.

Big dreams in ‘Lit­tle Africa’

SABMiller and the other large cor­po­ra­tions only tell part of the story of Africans seek­ing eco­nomic op­por­tu­ni­ties in China. Media re­ports es­ti­mate that China is home to more than 200,000 African im­mi­grants. In the first nine months of 2014, Guangzhou, a south­ern Chi­nese city host­ing the largest African com­mu­nity in Asia, doc­u­mented 430,000 ar­rivals and de­par­tures at its check points by na­tion­als from African coun­tries. Cer­tain neigh­bor­hoods in Guangzhou are vir­tu­ally all African, of­ten re­ferred to as ‘Cho­co­late City’ or ‘ Lit­tle Africa’ by lo­cal cab driv­ers.

The gov­ern­ment of Hong Kong al­lows 90-day visa-free stays for cit­i­zens of many African coun­tries, such as Botswana, Egypt, Kenya, Malawi, Namibia, Swaziland, Tan­za­nia, Zam­bia and Zim­babwe, mak­ing the spe­cial ad­min­is­tra­tive re­gion the eas­i­est en­try point for African traders who make up the ma­jor­ity of the African pop­u­la­tion in China.

AP Im­ages / Yi chang

A shop­per buys Snow beer at a su­per­mar­ket in Yichang city, cen­tral Chi­nas Hubei province.

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