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Through another looking glass

Updated: 2013-06-14 07:48
By Chris Davis ( China Daily)

 Through another looking glass

Melissa Cook says China's active involvement in Africa is part of Beijing's going-out policy. Provided to China Daily

China approaches the continent with a perspective that is different to that of the us, specialist says

A conversation with Melissa Cook, head of African Sunrise Partners, LLC, about China's involvement in Africa is full of superlatives: biggest, largest, best. It's also to the point: China's strategic push into Africa is having ripple effects that she believes no one is paying close attention to. "There are a billion people in Africa with a rapidly growing population," Cook says. "It is the driver of the world's growth in the next few decades. China is playing a very important role in that, for better or for worse, and I think it's mostly for better."

Cook spent four years as an analyst with the financial service group CLSA in Hong Kong, where she learned about China's strategy for "moving up the value chain" from a low-value-product economy to a high-tech, high-income one. She became interested in what that may mean for the world. Her new firm specializes in bringing private-sector capital to Africa, where she sees "a significant uptick in the ability of countries to absorb capital in very productive ways".

"China is the biggest, the most aggressive, the best financed and has the largest number of companies that are active in Africa, whether they are state-owned or private," she says during a recent interview near her home in Patterson, in upstate New York.

Cook will be a speaker at the New York Forum/Africa Conference to be held June 14 to 16, in Libreville, Gabon. She keeps focused on big themes unfolding in Africa: Improved governance, a rising middle class and expanding infrastructure. "What does it mean? How do you invest in it?" she asks.

China's involvement in Africa is part of Beijing's going-out policy, she says. "They want their companies to go out into the world, create new markets and get sales that are not from China."

First and foremost, she says, is China's goal of resource security. "China needs to have much better access to resources for the long term, so they don't get stuck."

China takes a much more independent, hands-off view to what some people call foreign aid and others call foreign direct investment, she says. That is: They go in and invest where they think they can make money.

The US, she says, goes in with "19 political preconditions as to what has to happen before they'll invest". Too often, she says, the aid will come in the form of donations, which typically undermine a local market. "If you ship a tanker load of corn," she says, "you've destroyed the local corn farmers' pricing".

"If you come in and build a road and telecom network-which is what the Chinese do," she says, "you've helped your companies develop a new market." And along the way, she says, the equipment installed is all Chinese-made, so it comes with service and upgrade revenues built in.

"It's a completely different mentality. It's strategic and it's economic."

Cook acknowledges the "global pressure points" of controversy that have come with China's involvement in Africa. Chief among them is that China brings in its own workers.

"That used to be true," she says, adding that it is up to local governments to negotiate the make-up of a labor force or supply chain on a given project, something African leaders are doing.

"If you look now at worksites in Kenya, Tanzania, Nigeria, the company that is the contractor for the entire job may be Chinese because they came in and were extremely competitive on the bid. But if you look around the worksite, the workers are all African."

China is also criticized by environmentalists because, as Cook puts it, it does not have the same environmental, social and corporate social responsibility imperatives as others. "People are looking at the environmental devastation in China and saying we cannot allow that to happen here," she says, adding that Chinese businesses are beginning to realize that going in and destroying is detrimental business in the long run.

China has also come under fire for giving money to governments some regard as unsavory, without using their influence to pressure for change. "The powers that be in China have no interest in being seen as the evil empire," Cook says. "They realize that bad press can come back to China in different ways. They are not completely oblivious to this but they do come in with a much clearer message: This is the investment, this is the economic impact, and that's what we are doing here."

China, as she puts it, has a "very clear policy of non-intervention".

What Chinese companies are best at, she says, is going into a country, rolling up their sleeves and getting their hands dirty learning their subject. If a Chinese firm wants the contract on a mineral reserve, even if it is in what is perceived to be a danger zone like South Sudan, "they will go and pitch a tent there and wait so that when they see the activity, they are the first ones in line to bid on the concession".

By contrast, US companies go through the embassy, stay in hotels in Nairobi and fly in and out, she says.

The Chinese are also masters at engineering any manufacturing process to get the most cost out of it, she says, creating products that are dramatically cheaper and of much better utility, ideal for the emerging markets consumers of Africa.

"The US wants to see Africa as a basket case of poverty and war," Cook says. "That's how it's portrayed in our press." The US is trying to do a better job there, but they are still burdened by red tape, she says. If a US bank "tries to go in and finance something, they have 300 rules about how they have to do it and the Chinese have none. So guess who gets the deal done."

The biggest problem facing most African countries remains unemployment, she says. "When you have pervasive, persistent, hopeless unemployment you will have huge problems," Cook says. "When people have jobs, they solve their own problems.

"Whoever wants to criticize China for what it's doing should keep this in mind," Cook says. "The Chinese have gone in and funded, built and facilitated infrastructure that is going to allow all kinds of stuff to happen that will absorb these young people into productive work. If we want Africa to not be an unstable part of the world, that's what has to happen."

Cook sees China's involvement in Africa as a net positive for the continent. China brings substantial financial resources to the table, and if African nations use the revenue from the sale of resources in a sensible manner, they can sustain long-term economic growth that is not related to the sale of resources, she says, adding that setting fair terms is up to the African governments themselves.

Cook remains optimistic on the future of Africa because of improvements in communication and education, and people are now pushing back on their governments to do the right thing. "You may or may not change the outcome if China has a more activist role in making governments do the right thing," she says, "but it has to come from the grassroots as well".


(China Daily Africa Weekly 06/14/2013 page19)

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