Africa also investing in China

CHINA, the world’s newest economic superpower, surpassed the US 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 (R172.9bn) in China, a 43 percent increase from the $9.9bn invested by 2009.

In 2012 alone, the amount of direct investments from Africa to China was about $1.4bn, mostly in petro-chemical, 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 Co-operation 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, SABMiller, runs Snow beer as a joint venture with a Chinese firm and produces many other popular Chinese beer brands as well.

SABMiller began its expansion into China in the mid1990s.

Its first move was to negotiate with the governmentbacked 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 breweries.

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Co-operation

Chinese 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 firms.

Today, 30 years after its first investments, SABMiller coowns more than 90 breweries with Chinese Resources, producing around 30 beer brands with a 23 percent market share.

Tunisia’s investment in China’s fertiliser production has an even longer history. Initially launched as a key project of China’s 8th five-year plan, the Sino-Arab Chemical Fertilisers 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 South-South co-operation model, the company has grown to become one of the largest compound fertiliser producers in China.

Despite the global recession that jeopardised most countries’ investment plans, the amount of direct investments from Seychelles to China reached the $100 million mark in 2009, compared to $7mworth 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.

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. This feature is part of a series by the UN’s Africa Renewal features service ahead of the 3rd International Conference on Financing for Development in Addis Ababa, Ethiopia (July 13 to 16).