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Chinese firms help Gabon progress

Updated: 2014-07-25 08:44
By Joseph Catanzaro and Li Fangchao ( China Daily Africa)

The 26-year-old engineer is one of about 100 locals employed by China Harbour Engineering Company, which is about halfway through a 350,000 sq m land reclamation project worth $120 million that will transform the coastline, and eventually become the bedrock of the city's new business and entertainment district.

Ipemboussou, who used to work for a French engineering company, says Chinese companies are earning an increasingly good reputation based on solid results.

"For 50 years (after independence), we had Western companies here in Gabon," he says. "Nothing changed. Now, China is changing everything. With Western companies, if the government could not pay, the work stopped. Chinese companies finish the job. It means Western companies now have to do better and be better. Either way, it's better for Gabon."

According to Gabon government figures, China is still ranked as only the country's No 5 trading partner, behind the United States, the European Union, Australia and Malaysia.

Former colonial power France still looms large in Gabon, both in the affections of local people, and in trade and investment. About 10,000 French citizens still reside in country, and 300 French companies maintain a local presence.

But while China is still a relative newcomer in terms of foreign direct investment, Jebbari echoes Ipemboussou, saying that simply by virtue of entering the market in Gabon, Chinese companies have created increased competition that is forcing all foreign investors to offer better deals.

"It's very good for Gabon, it's good for Africans and it's very good for the Chinese," Jebbari says. "We have lots of investors now, lots of competition, and we need to be smart in choosing the best."

Chinese entrepreneur Xu Gongde, who has run a string of small businesses in Gabon for 27 years and employs about 700 locals, agrees the competition is good for the country but tough on those trying to break into the French-dominated market.

"Right now we cannot compete with the French in Gabon," he says. "This is a former French colony; their culture, their language, it's all from France. The government officials are French educated. They have most of the good resources and they have already taken the better projects. China is developing here, but it will take some time."

Sinohydro's director in Gabon, Zhang Chunxiang, says Chinese companies need to find new, international markets. He is open about the commercial advantages that come with financial backing from the Chinese government, but says immediate profits are not always forthcoming.

"Yes, we use low-interest loans to boost Chinese enterprises in Africa," he says. "But for Chinese companies, we need a longer-term vision."

Zhang says Sinohdryo aspires to attain a level of recognition and trust in Gabon that will bring the company both construction and service contracts.

"The operational side of things is much more profitable than construction. The profit margin is about 20 percent. In construction, it's about 5 percent. In China we operate many power stations, but in Africa the French operate our power stations."

Zhang, who is convinced China will increasingly win service contracts in Africa, says the key to the Chinese strategy is patience.

"Chinese companies need to go out into the world. The first step is to work hard. Then after that, we move up. It's going to take some time. We'll just work hard and keep trying to proveourselves so we can move up. Localization is our goal. We want more projects so people can know our company. We want to get on an equal footing with the Western companies."

Jebbari says Sinohydro's approach is a long-term gambit that just may work."Chinese companies know how Africans think now and, most of all, they are very patient. I dealt with an American businessman who said to me, 'Time is money.' I said to him, 'That is in America.' In Africa, you have to be patient. The Chinese have this patience. They have learned a lot."

But in the short to medium term, all stakeholders acknowledge Chinese companies still have a long way to go.

An immediate hurdle all Chinese companies say they face in Gabon is a critical shortage of skilled labor, and reluctance on behalf of many locals to undergo training. This is even though government statistics show only about 250,000 people among the country's 1.67 million population, half of which is aged 20 years or younger, has formal employment.

Government regulations stipulate 30 percent of China Road and Bridge's workforce must be locals.

"That's only on the condition we can find the skilled local workers we need," Yang says. "We can't."

Sinohydro's biggest challenge also is human resources, even though it has tried to tackle the problem proactively, Zhang says.

"We have a lack of skilled people. We offered to train some local people to become technicians with us. Only 20 local people arrived on the first day (of the course). After five days, only five were still there."

Aviation Industry Corporation of China is another company that is trying to tackle the skills shortage in Gabon. It has signed an agreement to establish three trade schools that will provide about 4,000 locals a year with qualifications to operate manufacturing, construction, and agricultural machinery.

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