Chinese companies set the pace

Updated: 2013-03-29 07:50

By Cecily Liu (China Daily)

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 Chinese companies set the pace

Ian Taylor says the Chinese government is engaging with Africa as a responsible global superpower. Cecily Liu / China Daily

Investment in infrastructure projects makes real difference to communities, says expert

Africa has played a key role in shaping China's economic prowess and proved that fortune indeed favors the brave, says Ian Taylor, professor of international relations and African politics at the University of St Andrews, Scotland.

Taylor, a leading expert on China-Africa ties, says Chinese companies have, through their unique development pattern, forced many Western companies to alter their old strategies on Africa.

Citing an example, he says: "Chinese companies are securing a lot of contracts in areas like Francophone Africa where the French companies used to get everything since the colonial days. What has now happened is that French companies are now being forced to put in higher value bids."

Taylor says that Chinese companies have set the tone for economic engagement in Africa by investing heavily in infrastructure projects that make a real difference to communities.

"What's good about Chinese engagement is that Chinese companies build infrastructure in Africa alongside the energy contracts it gains. But prior to China's engagement, Western companies would just have the energy contracts, so there was no attempt to improve infrastructure."

The best thing is that Chinese companies have showed the rest of the world that though commercial gains are important, it is also equally important to strive for gains through sustainable and community development.

Taylor says that Western companies are still lagging behind Chinese companies' contribution to Africa's infrastructure, but they are increasingly willing to provide financial aid to African governments to secure contracts against Chinese competition.

Chinese companies set the pace

He explains this is because Chinese businesses are more capable of building cost-effective infrastructure projects, and their workers are more experienced at building infrastructure in challenging environment similar to that of African countries.

"The current Western rethink on Africa has been largely due to the commercial success of Chinese companies."

He says in many ways it was a like a culture shock as the Western colonial thinking was that Africa was a backward and lost continent, and hence not suitable for heavy investment despite its rich resources.

The bigger concern for Chinese companies in Africa has not been the tough environment, but the barrage of criticism often unleashed by Western companies, he says. "It is common to see China being made the scapegoat in several major African issues."

The most common misconception is that Chinese companies are flooding African markets with cheap goods and thereby knocking the small and medium-sized African companies out of business. Taylor says his research has shown this to be untrue.

He says that when the African Growth and Opportunity Act became a law in the US in 2000, many multinational textile companies relocated to Africa to cash in on the export benefits offered by the continent.

Under the AGOA, Sub-Saharan Africa's apparel exports to the US accelerated from $776 million in 2000 to $1,782 million in 2004, a growth of 130 percent.

He says this boom was artificial, and hardly benefited local African textile companies. In 2004, nearly 99 percent of Botswana's textile exports were goods manufactured by foreign companies. During the same period, Namibia accounted for 96 percent, Kenya 98 percent and Madagascar 92 percent.

When the AGOA expired in 2005, many multinational textile companies moved away from Africa, causing a slump in African textile exports.

This period coincided with the growth in Chinese textile manufacturing exports, thereby creating the impression that China was making profits at the expense of African companies, Taylor says.

Another misconception is that Chinese companies only employ Chinese workers for infrastructure projects. The reality is that a large number of local people are employed in the projects undertaken by Chinese companies, Taylor says, citing a 2007 study conducted by the Centre for Chinese studies at the Stellenbosch University in South Africa.

The study examined Chinese infrastructure projects in Angola, Sierra Leone, Tanzania and Zambia, and found that, except in Angola, local residents accounted for more than 85 to 95 percent of the total workforce.

Taylor says such misconceptions about China are often driven by biased reports published in the Western media. These reports are subsequently picked up by African media, and play a key role in influencing African popular perception.

"It seems that some Western media organizations have an agenda to portray China in the worst light possible. So they look for the bad stories and report these as if they are typical of the Chinese involvement in Africa," he says. "For example, if there is an accident in a mine in Zambia owned by the Chinese, then that's reported as being typical of Chinese, which is ridiculous of course."

Taylor believes that the Chinese government should be more proactive in communicating its side of the story to the media to alter these misconceptions.

"It's important for Chinese embassies in Africa to point out that a lot of Chinese companies in Africa are privately owned, and any bad practices they carry out, like having poor safety standards, do not necessarily represent Chinese government policy.

"If privately owned Chinese companies misbehave, the Chinese government should react, and make African governments understand that they are trying to make Chinese companies respect local laws and safety standards."

This is important, as Africans always take individual Western companies to task for their wrongdoings, rather than blame the Western governments, as they know these entities are private enterprises.

He says China's engagement with Africa has been a rapid learning process for China, and he has seen several changes in recent years.

The best example of this is the stringent social responsibility measures being adopted by Chinese companies in Africa.

"Chinese companies are increasingly signing up to international norms on safety and environmental standards, and becoming involved in activities like providing education for the local population. They are behaving like responsible multinationals and are not hesitant to talk about it," Taylor says.

He says the Chinese government is also engaging with Africa as a responsible global superpower.

That, however, does not mean that it is China's responsibility to help Africa grow.

"There's a limit on how much China can help. China can't transform Africa, in the same way that Britain and France can't transform Africa. It is Africa's responsibility to change itself."

(China Daily 03/29/2013 page24)