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China investment in africa (1)

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Conference on Entrepreneurship in Africa (UK 2011): China Investment in Africa , William So

Conference on Entrepreneurship in Africa (UK 2011): China Investment in Africa , William So

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  • 1. Chinese Investment in Africa: Opportunities and Challenges William So July, 2011 [email_address]
  • 2. Why Invest in Africa
    • One of the few unsaturated markets
    • Sustainable economic growth
    • Large population/market size
    • Less strong competition
    • Generally ‘China friendly’
    • Politically important
    • Rich in untapped natural resources
  • 3. Chinese Companies in Africa
    • State-Owned Enterprises (SOE)
    • Non State-Owned Corporations
    • Private Businesses
  • 4. SOE
    • Typically large operations
    • Projects funded by Chinese government, usually through G to G loan (well funded)
    • Infrastructure, resources
    • Skilled labour, low percentage of local labour
    • Priorities
      • China’s interests
      • Company’s Interests
      • Profit
  • 5. Non State Owned Corporations
    • Typically medium size
    • Projects funded by Chinese investors (sufficiently funded)
    • Manufacturing, technology
    • Skilled labour at senior level, higher percentage of local labour
    • Priorities
      • Profit
      • Company’s Interests
      • China’s Interests
  • 6. Private Businesses
    • Typically small size, mostly individually owned
    • Projects funded by individuals (poorly funded)
    • Trading, shops and restaurants
    • Low skill labour, small labour force
    • Priorities
      • Profit
      • Profit
      • Profit
  • 7. Challenges
    • POLITICAL
      • Unstable governments
      • Civil Wars
      • Growing anti-Chinese sentiment
      • Political issues with non-African countries
  • 8. Challenges
    • SAFETY AND SECURITY
      • Frequent kidnapping of foreign workers
      • High crime rate in many cities
        • Difficult to attract employees to take African assignments
        • Usually employees have to be confined to a secured compound with limited outside contacts
  • 9. Challenges
    • CULTURAL ISSUES
      • Language barrier
      • Way of doing business
      • Food
      • Religion
        • Most Chinese employees are there for a short period of time, so they have no intention to ‘mix’ with locals, therefore locals don’t see them as ‘friends’.
  • 10. Challenges
    • FINANCIAL RISKS
      • Debts
      • Fraud
      • Change of government
        • SOEs and large corporates are protected by government loans and funds
        • Barter deals are common
  • 11. The Future
    • The growth of Chinese investment in Africa will increase
    • More local presence from Chinese non state-owned corporations and private businesses
    • More African presence in China