Best time to do business, says old Africa hand

Times change and so do perceptions. In 2000, the Economist magazine, in a cover story, depicted Africa as "the hopeless continent". But last year, the same magazine did another cover story on Africa, but with a different theme. The cover showed the silhouette of a giraffe on a prairie, with its long neck indicating Africa's sharp economic growth curve and promise.

Such perceptions about Africa abound even now, says Wei Jianguo, secretary-general of the China Center for International Economic Exchanges, a Beijing-based think tank that seeks to promote international economic research and exchanges. Wei, who is often called the African expert in China, is one of the few Chinese who have seen the sea change in Africa over the years.

Wei says his relationship with Africa has gone through two phases. The first began in 1972 with a two-decade diplomatic career during which he took up various positions at the commerce department at the Chinese embassies in Gabon, Tunisia and Morocco. After returning to China, he began the second phase of his relationship with Africa, being involved in various Sino-Africa initiatives, something that continues to this day.

He still remembers the momentous day in 1973 when the first Chinese cargo shipment arrived in Morocco.

"The arrival of the Chinese goods coincided with that of a Japanese ship carrying electronic goods. After the cargo was unloaded, I noticed that the products from the Japanese ship were mostly radios and televisions, while those from the Chinese ship were tea and simple porcelain products. Because of poor packaging, more than 70 percent of the porcelain bottles and lamps from China were broken."

Wei says at that time he wished he could see more high-value products from China being shipped to Africa. His wish seems to have partly come true, with bilateral trade between China and Africa being worth $210 billion last year. High-value products such as automobiles and spare parts accounted for most of the exports from China to Africa.

Official figures show that non-financial investment from Chinese companies in Africa was $3.5 billion, but Wei says if one were to add the Chinese companies that are registered in other countries and regions, the total amount would touch $17.5 billion.

"It is the best time to do business in Africa," Wei says, adding that among the 10 fastest-growing countries in the world, six are in Africa.

"This gives great opportunities to Chinese companies, especially to those suffering from over-capacity in the domestic market," he says.

Last year, more than 62 percent of the investment was from over-capacity industries, such as textiles, cement and machinery, government figures show. "Africa has just started its industrialization process, and we are at the right time to fill the void," Wei says.

Among this "going to Africa" wave, private businesses are even more active than state companies. Official figures show that state companies have built more than 3,000 kilometers of railways and more than 8,000 km of roads in Africa, while private companies have built 5,000 km of railways and 10,000 km of roads.

And in recent years, the structure of Chinese investors has evolved. "Previously, Chinese companies were focused on winning engineering, procurement and construction orders. They are now concentrating on other areas of infrastructure development and also on higher-end industries such as telecommunication. Huawei and ZTE are setting up towers across Africa and providing broadband access to many African countries. Chinese companies have also been training a considerable number of local engineers."

Business opportunities abound in Africa, Wei says. He cites Namibia, where there is a growing demand for bottled mineral water. "Namibia, however, does not have any local company that can make plastic water bottles. This vacuum has been filled by a Zhejiang-based private company, which has set up a local bottle factory."

There are more than 700 Zhejiang-based companies in Africa, which shows how passionate private enterprisers are and how vast the market is in Africa, Wei says.

"Chinese businesses have been extremely smart in their operations in Africa. There is this Chinese company in Nigeria that is doing extremely well in the steel sector. Though Nigeria needs a large amount of steel, it has to import raw materials such as coal and iron ore from other countries. The Chinese company realized that there was a profitable option to recover steel from the millions of abandoned vehicles in Nigeria." But these moves alone are not enough, Wei says. "Chinese companies also have to learn to work with others in order to gain the maximum benefits."

He uses an African proverb that "one person can walk fast, but a team can walk further" to encourage partnership between Chinese and international companies.

Wei cites China Power Investment Corporation, which teamed up with US mining company Alcoa to jointly develop a bauxite mine in Guinea. "CPIC is a power company and Alcoa knows about bauxite mining. A mega-project requires different expertise."

Chinese companies can also learn from these Western partners during this process, Wei says. "For instance, they pay a lot of attention to feasibility studies before entering a market, and they start building distribution networks at a very early stage."

Creative thinking is also important when doing businesses in Africa, Wei says. "Business opportunities exist not only in conventional industries, but also in industries in infancy.

"Kenya is a popular tourism destination, but there are not many good facilities for tourists. About 10 Chinese private enterprises from Northeast China have helped build a bird observatory site in Masai Mara National Reserve and they have made good money.

"Last year about 800,000 Chinese tourists traveled to Kenya, this is a significant number if you consider the fact that Chinese tourists to Thailand every year are just 3.5 million."

wangchao@chinadaily.com.cn

(China Daily Africa Weekly 05/02/2014 page5)