Dragons in Lion Territory China’s Business relations with Africa

Dr. Emmanuel Kodzi

INTERNATIONAL BUSINESS

Africa and African-American Studies Lecture Series: SYNTHESIS

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Image InformationTitle Cave 329 at Dunhuang

Mogao Cave 329

heavenly king riding a dragon

Date 7th century

Location China (PRC)

Gansu

Dunhuang

Material pigment

Style Period Tang

Description view from east, looking west

west wall, inside of niche, ceiling mural

ARTstor Collection The John C. and Susan L. Huntington Archive of Buddhist and Related Art

Source Data From: The John C. and Susan L. Huntington Archive of Buddhist and Related Art, The OhioState University

Download Size 1024,1024

Photo  credits:  Artstor  

Photo  credits:  Artstor  

Dragons  in  Lion  Territory:  China’s  business  rela6ons  with  Africa  

Photo  credit:  Kai  Krause  

Dragons  in  Lion  Territory:  China’s  business  rela6ons  with  Africa  

•  Why am I interested? –  Business in Ghana –  Research at Purdue –  Discussions at OSU

•  Why should you be interested? –  Connectedness of economies –  Balance of economic and political power

Dragons  in  Lion  Territory:  China’s  business  rela6ons  with  Africa  

•  Africa: chaos, poverty, aid? •  Africa: innovation, development, integration?

•  China’s approach –  high-level and grassroots business deals –  smart and sustainable relationships? –  Since 1991: 1st foreign minister trip abroad is to Africa

•  Implications for international business –  Fight, engage or avoid? –  India, Japan, US …

Dragons  in  Lion  Territory:  China’s  business  rela6ons  with  Africa  

•  Implications for international business –  New Silk Route –  Lessons for African countries?

Photo  credit:  the  diplomat  

•  Addis Ababa (1/27): –  MoU on continental transport, high speed rail, aviation,

road highways linking capitals across continent •  Detailed agreements with individual countries

Engaging  the  AU  

Photo  credit:  bigstock  

•  China Machinery Energy Corporation in $982m contract with Angola’s Energy & Water Ministry –  Develop gas-fired power plant in North West of country.

•  Latest oil and gas discoveries boost exports, and spur investment in new gas power capacity in the country –  Angola to invest $23b in energy sector by 2017

Angola  

Photo  credit:  google  maps  

•  Chinese took over abandoned positions in copper belt during recession ($400m in 2009) –  Now reaping benefits (mines + smelter); long term

•  Business investments with higher rates of return than in mainland China (e.g. 5.6% vs 12.5%) –  Chinese migrants in range of service businesses –  Better quality of life

Zambia  

Photo  credit:  google  maps  

•  China Africa Resources: London-listed with Namibia as main country of operation –  AIM: sub-market of the LSE for smaller companies –  CAR owns extensive zinc, lead, silver and vanadium

deposits at Berg Aukas in Northern Nambia.

Namibia  

Photo  credit:  google  maps  

•  Chinese National Petroleum Company: 6-year agreement to increase oil production –  Settles CNPC debt owed by Sudan government –  Business forum in Beijing: focus on investment

opportunities in Sudan for Chinese businesses •  agriculture, industry and trade. Inflow of Chinese capital.

•  China is largest foreign investor in Sudan

Sudan  

Photo  credit:  google  maps  

•  $4b project to dig new Suez Canal. Heavy Chinese investment –  Natural fit for China’s Maritime Silk Road vision –  Project to be run by army

•  US sending military helicopters to Egypt (main military partner); China focusing on economic agreements

Egypt  

Photo  credit:  google  maps  

•  China’s economic growth requires continuous energy supply. Increasing oil dependency –  CNOOC incorporated in Hong Kong, listed on NYSE,

largest producer of offshore crude and natural gas in China; presence in Canada, Gulf of Mexico, and U.K.

–  Strong in Nigeria, new developments in Uganda, plus Equatorial Guinea, Congo, Algeria, Gabon

Nigeria  

Photo  credit:  google  maps  

•  Chinese-financed $30b city in Modderfontein, Gauteng –  01/2015: 1600 hectares of land acquired in 2013

($7b) to build the city. –  residential units, central business district –  “the Manhattan of Africa”

South  Africa  

Photo  credit:  google  maps  

•  450mile rail line to Djibouti – by early 2016 –  $4b by Chinese Railway / Chinese Engineering firm –  3200 miles of new lines across the country by 2020 –  Vision of becoming manufacturing hub with efficient

transport, plentiful labor, cheap power •  Textile and garment, shoes, vehicle assembly, industrial zones •  H&M sources material from Ethiopia

Ethiopia  

Photo  credit:  google  maps  

•  $2.6m Bong mine deal with Chinese consortium –  Increased commercial engagement with China; potential

increased FDI, trade, and other commercial activities •  Long history of development finance in Liberia •  Ebola interventions •  Chinese language school

–  Power asymmetries?

Liberia  

Photo  credit:  google  maps  

•  Strategic lines between Nairobi and Mombasa, then connect interior of East Africa with Indian Ocean –  Part of Maritime Silk Road –  Financing of several infrastructure projects –  Tussle over 76 cybercrime suspects (cross-border fraud $16.5m)

•  Follow court process and diplomatic channels •  Power asymmetries again? •  Conservationists asking China to stop the trade in ivory and rhino horn?

Kenya  

Photo  credit:  google  maps  

•  International Conference (Re-Thinking African-Asian Relationships, March 2015) to identify and explore ideas about societal development driven by intensified market-oriented interactions. –  Impact on “community”, “development”, “diplomacy” ,

“sustainability” , “worldviews”, “cultural intelligence” –  Stellenbosch University and Goethe University

Response  

Photo  credit:  CCS  

•  Economic growth in Africa –  Falling commodity prices but rising manufacturing and

service sectors •  Telecom, transport, finance, agriculture, entertainment •  Nigeria: oil was 90% of foreign exchange revenue but

14% of GDP; now services at 52% of GDP •  Similar diversification in Angola, Botswana etc.

–  Changing cycles of growth and stagnation by decoupling economy from commodity woes

Economist, 2015

Looking  ahead  

Looking  ahead  Economy Ease of Doing Business

RankSingapore 1New Zealand 2United States 7Germany 14Mauritius 28Japan 29Mexico 39Israel 40South Africa 43Rwanda 46Turkey 55Italy 56Ghana 70Botswana 74Vietnam 78Costa Rica 83Namibia 88China 90Swaziland 110India 142Nigeria 170Venezuela 182Afghanistan 183

Doing Business Rankings show improvement

World Bank 2014

•  FACT: several US businesses still consider China as a key supplier

•  FACT: China focuses on Africa both as a supplier and consumer

•  PROPOSITION: US may reap disintermediation advantages through directly engaging Africa

•  APPLICATION: current growing international focus on Africa may be signaling to academics the need to understand and theorize frameworks associated with success in African markets

Looking  ahead  

Contact    Dept of International Business, Rollins College

or  African and African-American Studies Department

Dragons in Lion Territory

Credits  to:   for  links  to  several  stories