Chinese companies have a role to play

Africa is now in its rudimentary phase of industrialization, a stage that not only paves the way to economic development, but is the key to survival for most African workers. This year, as Chinese companies have invested in Africa they have played a positive role in accelerating that industrialization.

By and large, Africa has maintained a peaceful, stable investment environment and development momentum. In the past two years more than a dozen African countries successfully held elections. Niger and Guinea achieved a smooth transition to an elected government from a military regime.

African countries have adopted a series of measures to encourage trade, attract foreign investment, strengthen infrastructure construction and improve people's livelihood.

The impact of the global financial crisis on the continent's economy has been relatively light, and its strong recovery is well demonstrated by its annual growth of 5 percent last year.

According to the International Monetary Fund, seven of the world's 10 fastest-growing economies in the next five years will be African.

In addition, African countries have remained united and called for even closer ties, adding impetus to the push for political and economic integration in the continent.

As the world has increased its support to Africa, China has been in the vanguard, greatly increasing cooperation, aid and investment in the continent. But there is no reason why the Africa-China relationship cannot get even better.

Last year China's direct investment in Africa was $1.7 billion, 58.9 percent higher than the year before. Various international partners have expanded Africa's foreign financing channels and are good for more cooperation in various fields.

The health of the China-Africa relationship is illustrated by the good work of the Forum on China-Africa Cooperation, through which China has taken a series of cooperative initiatives that have won recognition from many African countries.

But there are challenges, too.

Chinese companies tend to treat Africa as a whole. But each country has distinct cultures and traditions, geography, laws and regulations, so a one-size-fits-all approach will not do.

This year, events in North Africa had an impact on regional peace and stability, and intervention by external forces only increased the uncertainty. The international financial crisis continues to simmer, so African countries generally face greater pressure from imported inflation. Famine in the Horn of Africa placed food security near the top of the agenda.

There are some structural problems for China-Africa cooperation. The quantity of cooperative programs has grown rapidly. During the process, problems such as those with the quality of goods, labor management and protecting local employees' interests cannot be ignored.

In addition, Chinese companies' "going out" strategy in Africa has not fostered a whole industry chain yet. And cooperation in peace and security and people exchanges need to be strengthened.

Globally, not everyone has warmed to the idea of good China-Africa relations. Some, languishing in a Cold-War mentality, have criticized China over its Africa policy, seeing its presence in the continent as a "threat" and as "neocolonialism".

But on the whole, over the next decade, opportunities outweigh challenges. If Chinese companies want a promising future in Africa, they should pay attention to the following.

First, insist on sincere friendship and equality.

Traditional China-Africa friendship has always been a cornerstone of economic and trade cooperation between the two. This friendship should not just stay on the national level or the political level, but permeate into business level and people-to-people exchanges. In that way, companies can have sustainable development in the continent.

Second, insist on mutual benefits and common development.

Chinese companies have to bring to African countries tangible benefits. Besides their own interests, they should pay more attention to what African countries are most concerned about how to achieve industrialization and improve people's living standards, for example. Something can be done in this regard.

Third, make efforts to build a good image in Africa.

Chinese companies should reflect on their own problems, sort out their management, comply with local laws and customs, protect the interests of local employees, and commit to sustainable development and environmental protection.

Fourth, undertake more research on the African market.

Before investing in Africa, it is important to get the right information and to be familiar with the country's political, economic and investment environment, laws, regulations, and administrative and judicial systems. Companies should make great efforts to train their staff to help them get familiar with Africa culture and related information, and have an international vision.

Fifth, take heed of risks and manage them properly.

Changes in North Africa this year greatly affected Chinese business interests. Companies need to set up mechanisms and be prepared to respond to emergencies.

The author is professor of economics and vice-president of Chengdu University, who specializes in China-Africa trade and investment. The views do not necessarily reflect those of China Daily.

(China Daily 12/21/2012 page7)