China is one of the biggest commercial powers in the world, and its influence in Africa is getting more visible. African countries rely significantly on the commercial affairs they have with China, and most local economies are based on such international trading. China and Africa trade relations are developing from year to year, and both partners benefit from it. And the investment that China makes in African countries is not only related to goods and an import-export business. China is extremely interested in exploring local resources found in Africa and creating new industries to develop.
It is important to understand that this collaboration between China and Africa started centuries ago and it got perfected over time. When it comes to China, its main interest is to find resources for its population that keeps growing almost in a threatening way.
African countries, however, need finances and support to reach new levels of certain industries. And these two goals seem to go perfectly hand in hand with all the partners involved. Besides these main objectives, China is also offering new jobs to African people with every local investment they make. The new jobs contribute equally to the local economy in Africa which is important especially in poor countries.
The Main Reasons China Invests In Africa
When it comes to why does China invest in Africa, the reasons are multiple, and they last for centuries. There are reasons of an economic nature as well as of a political nature. And these reasons keep growing along with China’s population and its developed needs. Even nowadays, the main China investment in Africa is focused on mining and oil.
However, along with this main sector of investments, there are several infrastructures and food processing industries that benefit from Chinese investments. Not to mention that the plan is to invest in even more developed areas such as ports, transportation, and communications.
But these types of investments are also supported by the majority of African governments and the Chinese state as well. Some Chinese Companies that developed in Africa are also owned by the state. It enables them access to certain government programs and even funds. But this also increases the competition in the local markets. It is all worth it considering that Africa is one of the richest continents on Earth, especially when it comes to raw materials.
Here are the most important reasons that keep China motivated enough to invest in the African continent!
Fuel is one of the main reasons for Chinese investment in Africa. The way Chinese market functions and develops has a direct influence on many economies worldwide. Since the Chinese population keeps growing, this brings new needs for more natural fuel and resources. It also increases the need for other goods such as food and even technology. But Africa can supply the natural fuel that China is aiming to achieve more than other categories of goods.
Mining in African countries is an ongoing business for China, and it also is a source of resources that are much needed. But the need for such raw materials is not only a present one. China is investing in such mining activities to cover its necessities for years and decades to come. From the entire foreign investment fund, mining represents almost a third of it.
2. Political Reasons
Another significant reason for which China is investing in Africa is geopolitical influence and power. Chia is a very important political factor in Asia, and it was always interested in expanding its influence. African countries, on the other hand, are large and not developed enough to represent power regarding geopolitics. And this is a great opportunity for China when it comes to expanding its power and increases its influence.
China is chasing such political motivation by investing in the infrastructure of several African countries. By doing so, the influence of China in these countries is increasing, and this leads to more political power. China’s goal seems to be to reach a higher level of control when it comes to central economic elements such as the utility sector. Also, telecommunications and energy are another two sectors of interest for China.
And last but not least, by investing in African countries, China is increasing its economy. China is a country with impressive economic powers and opportunities. It works for other markets trading with the Chinese market but also for their economic stability.
China has a tradition of great business strategies, and they find new forms to develop them over the years. It improves not only the local Chinese market but also the way China interacts with other markets.
The workforce in China keeps increasing as well, and with new investments in other countries, it can only bring a positive outcome. It will offer new job opportunities for Chinese people including the chance to live and work abroad, in countries from Africa.
China- Africa Trading
The China Africa trade statistics change from year to year and find new ways to improve the trading between these countries. But even after the financial crisis that hit in 2009, the international trading between China and Africa kept increasing. The best aspect of the bilateral trading is represented by Chinese exports in Africa.
However, when it comes to African exports to China, things were not as steady along the years.But even with the challenges, the international trading continued in a successful direction. Last year alone, South Africa was the largest importer of Chinese goods after Egypt and Nigeria. On the other hand, Angola, South Africa, and Congo were the main African countries that exported different goods to China.
In an obvious way, one of the most popular goods that Africa imports from China are rice. And since rice became almost part of the African culture, it is the main product imported in many countries. However, China is also exporting other foods and products to Africa as well, such as different types of noodles and even meat and vegetables.
Along with the increased investments that China makes in the different African country, the image of China reached new levels. African people appreciate and look up to Chinese people thanks to these types of trading.
Overall, Chine represents around 3 percent of the entire foreign investments in African countries. And they are planning to implement more investments for the near future. It might not seem like a high percentage but considering that it represents key aspects in African industries, it remains a significant one.
China invests in both urban and rural areas of Africa and doesn’t discriminate as long as there is potential. The same logic applies to different trading affairs between China and African countries.
When it comes to major investments, China gets involved at different levels in different African countries. Chinese investment in Africa by country differ a lot especially regarding the number of firms. In Mauritius, there are 60 projects in present development and around 40 firms with a prolific activity, while in Namibia there are 66 Chinese projects with around 30 firms.
The following list represents the most important African countries from the perspective of Chinese investments according to the latest statistics:
1. Nigeria is the most important country in Africa where China decides to invest for several decades now. There are not less than 404 developing projects all over Nigeria and around 240 firms.
2. South Africa is the second African country in this top with 280 projects and 152 active Chinese firms.
3. Zambia is an African country with 273 Chinese projects developed and 125 firms active. And Chine is planning to get even more involved in this African country considering its great potential.
4. Ethiopia is another country that is the host to around 255 Chinese projects and 114 active firms. The collaboration between China and Ethiopia is a long one, and it is supposed to be even better developed in the next decade.
5. Egypt is an African country with a lot of import-export activities with China. When it comes to Chinese investments, Egypt is hosting 197 of them and close to 100 firms that are constantly active.
6. Congo (the Democratic Republic of Congo) is enjoying 193 Chinese projects that are entertained by 80 local firms.
7. Ghana is hosting 192 Chinese projects that are being maintained by 90 firms. But for Ghana, this is a very positive outcome considering that the country is not a very large one.
8. Angola is enjoying 189 Chinese projects and 80 firms working on implementing them. Angola and China collaborate greatly even when it comes to import-export business.
9. Zimbabwe was home for 167 Chinese projects developed over the years and has around 68 local firms taking care of them
10. And last but not least in the top 10 countries is Tanzania with 149 Chinese projects and 85 local firms.
But China invests in around 22 African countries, and each country is based on different types of projects and trading. As some African countries are rich in raw materials and fuel while others are rich in different types of goods, China had to adapt to different conditions. The import-export business is destined for countries that can export a variety of goods such as cocoa coming from Ghana.
But the mining of raw materials in African countries is the true source of Chinese economic development. Chinese investment in Africa statistics varies from country to country and from year to year. But the constant international relationship between the two countries is what remains constant. Other important African countries that benefit from such a relationship with China are Mali, Gabon, Uganda, Mozambique, Algeria, Kenya, and Sudan. And most African countries have economies that rely tremendously on Chinese investments and trades.
These types of affairs open a new world of possibilities for Chinese exporters, importers, and investors as well as for Chinese workers.
The Amazing Business Opportunities That Africa Offers To China
The African continent is a field of new chances for Chinese companies that want to expand to an international level. Chinese companies investing in Africa are of many domains, and some of them reached financial success on the African market.
In the entire African continent, there are around 10 thousand Chinese firms involved in local business. The initial investment made by Chinese companies when they break into the African market is usually recovered within a year of activity. And sometimes even sooner. In worst case scenario, a Chinese company can recover its initial investment in around three years of activity, but such cases are isolated.
This incredible success is possible thanks to Chinese business owner who are experimented and brave enough to act on such a financial market. But the common secret they all share is the ability to bend their products and services to match the requirements of the African market.
Here are the most important Chinese companies that hit absolute success in Africa!
The mobile phone brand Tecno broke into the African market and conquered the East coast of Africa. Tecno is owned by Transsion Holdings and reached success in many countries around the world but the level of popularity it got in Africa topped the rest. In some East African countries, the Transsion Holdings reached around 40 percent market share which is impressive.
Also, the products that Tecno offers on the African market are adjusted to fit the needs of African people. They created a special keyboard in Amharic which is the official Ethiopian language. Also, Tecno created devices that can capture photos of people with darker skin tones.
Twyford is a famous ceramic factory located near Kenya’s capital. The factory was put together in less than a year between 2015 and 2016. Initially, the company started out by bringing tile materials into Nigeria, but they extended to other African countries. And what is specific to this company is that most workers are from Kenya, proving that Chinese companies hire locals when there is such a possibility. Overall, Chinese companies offer jobs to millions of Africans.
Huawei is popular worldwide not just in Africa. This company helped African companies to develop a new level of technology and take their working to a new level. Huawei also makes money transfer a lot easier through M-Pesa mobile programs and other applications. And the success of this company reached almost the entire African continent with promising opportunities for the future. When it comes to trade invest Africa, Huawei is an example to follow by those who consider breaking into the African market.
4. Sunshine Group
The Sunshine Group is quite a particular Chinese company considering that it started in one industry and developed from there. Sunshine Group was set up in Tanzania in 2012 and was a company concerned about mining. However, it didn’t stop there, and it got involved in agriculture and transportation. Sunshine Group invested 100 million USD, and the profit kept coming soon enough. It increased the company’s ability to impact the African market at different levels.
StarTimes is one of the most commercial television providers in Africa. The company has around 10 million subscribers who might not seem a lot, but it is a great success. StarTimes reached around 30 African countries over the past years, and it continues to expand.
The way this company works is by investing in a low-cost satellite television system. StarTimes also adapted the price for its services to the financial abilities of locals. For example in countries like Tanzania, StarTimes lowered their subscription price to 90 percent to reach more clients. Also, the company introduced television to rural African areas which weren’t accessible before.