The last golden land? : Chinese private companies go to Africa

A new dynamic presence is spreading rapidly and widely across Africa: that of
Chinese private enterprises. For these firms, Africa is ‘the last golden land’ of
economic opportunity. Based on the most extensive survey to date of Chinese
private firms, business associations and government officials across China and
sub-Saharan Africa, this paper explores the critical questions of why these
enterprises are investing in Africa? What are their perspectives on Africa’s
investment climate? The study shows a growing number of firms that contradict
the stereotype of Chinese firms in Africa. Pushed by intense competition within
China’s domestic marketplace and pulled by the glint of new opportunities, many
small, private manufacturing firms are heading to Africa quite independently of the
Chinese government. They grasp this opportunity in a ‘three jump’ pattern. The
first of these ‘three jumps’ are better known, from doing business within China to
exporting to Africa; and then from exporting to Africa to investing in production in
Africa. The third jump is less familiar: to investing in industry parks in Africa.
Chinese firms cluster in new business parks, collaborating in coordinated
production. Yet simultaneously, and contrary to popular perceptions, they are most
concerned about the competition they face from other Chinese firms and not by
competition from African or other expatriate firms in Africa. The Chinese business
sector in Africa thus has growing ‘enclave’ characteristics: enterprises are located
together in business parks, and simultaneously both competing with one another
and cooperating and largely doing business with one another in the supply chain.
They are relatively optimistic about the investment climate in Africa, especially
those obstacles created by governments and public policy. However, Africa’s
prospects for successfully harnessing the Chinese private firms to its development
goals lies in the way each is adapting to their growing understanding of each
other.
Keywords: Chinese Private Enterprises; internationalisation; ‘Three Jump’ Pattern;
enclave characteristics; Africa investment climate; development implication.