On August 26 2021, the China-Africa Business Council (CABC) released its “Report on Chinese Enterprises Investing in Africa: Market Power and the Role of the Private Sector” in Beijing, China.
The report used over 50 experts and researchers and surveyed over 300 entrepreneurs and 300 Chinese companies in eight months.
It notes that Chinese enterprises contributed to industrialisation and improvement of livelihoods in their investment in Africa, making them some of the driving forces promoting Africa’s economic growth, which can be reflected in a number of avenues, including creation of jobs, improvement of construction of infrastructure and park management of host countries.
The report states that Chinese private enterprises (CPEs) have become the main forces driving China-Africa economic and trade investment cooperation. It explains that CPEs are undergoing a transition from “going to Africa” through “settling in Africa” to “establishing roots in Africa”.
Its estimates that by the end of 2021, the stock of Chinese enterprises’ direct investment in Africa should be no less than USD56 billion. Private enterprises account for about 70 percent of the scale of Chinese enterprises’ direct investment in Africa. The report says the proportion of 100 key CPEs reinvesting in Africa is around 30 percent.
It believes that the AU Agenda 2063’s inclusion of inclusive economic growth as one of its important goals improved Chinese enterprises’ mid-to-long term appeal and can help Africa achieve “resilient growth and unleashed potentials”, which manifested in aspects that realised Africa’s demographic dividends. According to the report, the most rapid urbanisation will emerge, offering great potentials for manufacturing.
“This resources-blessed continent is benefiting from the new round of technological revolution,” it notes. “In response to the problems of Chinese companies themselves, the report points out: Chinese enterprises have a comparatively short history of ‘going global’, especially in Africa. “They generally lack experience of foreign investment and international operations,” the report states.
It says over the past 20 years, some shortcomings and deficiencies have also been revealed, mainly in the following areas: First, lack of long-term planning for investment in Africa. Second, insufficient coordination among Chinese enterprises. Third, lack of overseas business experience and risk management capacity. Fourth, cross-cultural communication challenges. Fifth, lack of support from professional service agencies. Sixth, CPEs have not yet established sustainable investment and financing models and support systems.
In the eyes of Chinese companies, the report states that the uncertainties in the six aspects need to be addressed, especially the safety-related uncertainties, structural problems of the economies, policy fluctuations, currency exchange rates, insufficient industrial support, and salient differences between countries.
The report says Chinese enterprises remain optimistic about investing in Africa and constantly improve their capacity-building in response to their own problems and shortcomings, explore further cooperation and integrate into Africa’s socio-economic development.