Categories: Business Plans

What You Probably Don’t Know About The China-Africa Relationship

You have probably heard the narrative around China-Africa (also known as Sino-Africa) relationship. Many times narratives such as China is colonizing Africa through loans, and China is outpacing the United States as the world economic superpower through business deals made in Africa would be the norm when describing the Sino-Africa relationship.

Indeed, these were some of the narratives sublimely doing rounds during the U.S. President Barack Obama trip to Kenya for the 2015 Global Entrepreneurship. Some believed that President Obama was trying to get back on the good side of the African nations previously perceived as not seeing eye-to-eye with the U.S. A situation many believe necessitated some of the African countries to look towards the East, more specifically China for trade and loans for development.

China already overtook the U.S. as Africa’s biggest trading partner back in 2009. The Sino-Africa trade has since been growing at a very fast speed. However, the common misconception that this trade relationship is a one-way street is not entirely accurate.

There is a handful of African companies that have set up shop in Guangzhou; also referred to as Little Africa or Chocolate City, due to the huge African population living and trading there. These African-owned businesses are making quite a considerable investments in Guangzhou.

Stats indicate that by 2012, African businesses had a cumulative investment in China worth $14.2 billion, a 43% increase from 2009. According to officials from the government of China, the country’s cumulative foreign direct investment from Africa stood at $14.7 billion, a 60% increase from 2009.

In the year 2012, direct investment from African countries to China was $1.4 billion comprising of mainly manufacturing

products, petrochemical products, wholesale and retail businesses. The top African investors in China were from Mauritius, Seychelles, South Africa and Nigeria. This stat is according to a report created by by the Chinese government on trade co-operation between China and Africa.

African Businesses redefining the Sino-Africa relationship

SABMiller

You just like many people living outside China, have probably never heard of Snow beer, the best-selling beer in the world by sales volume. This is because it is only produced and sold only in China. You might be surprised to learn that it is being produced by a South African brewery SABMillers, which produces the Snow beer through a partnership with a local Chinese brewery that also produces other locally popular beer brands in China.

The

brewery was formerly known as SAB when it first ventured into the Chinese market in the mid-1990s and acquired the Miller Brewing Company when it changed its name to SABMiller. The brewer’s first move was to negotiate a deal with the Chinese government-backed China Resources Enterprises for a joint ownership of China Resources Snow Breweries. A company that later turned into China’s largest brewery.

Sino-Arab Chemical Fertilizers Company (SACF)

Perhaps the longest standing Africa to China investment, SACF is a Tunisia company with a significant investment in China’s fertilizer production. The company was initially launched as one of the key projects in China’s 8th Five-Year Plan that gave birth to a joint initiative between Tunisia and China. The deal was put to pen to paper during the 1984 Beijing visit by Tunisia’s Prime Minister Mohammed Mzali. Today, the company is ranked among the leading fertilizer producers in China.

Back in 2009, Seychelles had a total worth of direct investment in China of $100 million while China’s direct investment in the country stood at $7 million

at the same period. Although, experts are skeptical about Seychelles actual direct investment into China given it has a large number of offshore companies that are anonymously registered as established on its islands in the Indian Ocean. They say it is very difficult to track if the investments from Seychelles actually came from that country.

Other media reports claim there are some 200,000 African immigrants living in China. The Hong Kong government only allows for a 90-days visa-free stays of aliens from African countries. Thus, Hong Kong being an administrative region has become the easiest entry point for foreigners into China, and the vast majority of these immigrants are said to be traders.

Milicent Atieno

Proud Kenyan Citizen, loving everything Tech related.

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