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18 April 2014
 
Consultancy Africa Intelligence (CAI) is a South African-based research and strategy firm with a focus on social, health, political and economic trends and developments in Africa. CAI releases a wide range of African-focused discussion papers on a regular basis, produces various fortnightly and monthly subscription-based reports, and offers clients cutting-edge tailored research services to meet all African-related intelligence needs. For more information, see http://www.consultancyafrica.com
 
 
   
 
 
Article by: Consultancy Africa Intelligence CAI
 
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The Chinese media is currently in a tizzy over the phenomenon of upper-middle class residents immigrating to wealthy Western nations - Australia, Canada, the United States (US) - to live, work and invest. However, some Chinese citizens, either less wealthy or more adventurous, have been taking off for another continent. Chinese immigration to Africa is often characterised by damaging, even violent cultural tensions, as state-owned enterprises (SOEs) engage in large-scale infrastructure projects as part of China’s recent ramp-up of investments in Africa.

However, the small-scale Chinese entrepreneurs who have followed - and occasionally preceded - the SOEs have also been criticised for their increasing presence in all corners of the continent. Instead of being antagonists, can they also be sources of productive cultural exchange, or potential drivers of local economic growth? Taking the case of Chinese in Namibia as one example, it is easy to see that talking about China as a unified entity makes little sense - there are stakeholders on both sides of the table that may themselves not see eye to eye.

Background

Chinese relations with Africa go back thousands of years, but the cultural connections truly expanded when the famed mariner Zheng He sailed from China along the coast of East Africa, trading in goods and livestock. Chinese started to live in Africa permanently during the 17th century, mostly as convicts from Dutch colonies in southeast Asia bound for South Africa. A later wave of migration occurred in the 19th century when Chinese labourers were brought by the British to work in agriculture and infrastructure.

In the midst of what the media often calls the ‘new scramble for Africa,’ these pre-existing cultural ties and the Chinese Government’s pro-Africa foreign direct investment policies combine to make ‘making it’ in Africa a real possibility for Chinese entrepreneurs. At the same time, the African media and some national Governments have indicated that they are concerned about Chinese business displacing local businesses and undercutting domestic industry.
China-Namibia relations, via diplomatic dispatch

China and Namibia established diplomatic relations in 1990.(2) As with many developing countries, relations were premised on the explicit acknowledgement that ‘Taiwan is an inalienable part of the territory of the People's Republic of China.’ In a follow-up to this endorsement of Beijing’s “One China policy,” the Government of Namibia announced its support of the Anti-Secession Law in 2005.(3) In 2009, the two countries signed economic and technical cooperation agreements and celebrated the completion of FOCAC-related projects, where three rural primary schools were handed over to the Namibian Government, and a hospital project continued.(4) When heavy flooding inundated northern regions in April 2009, the Chinese Government and some Chinese businesses sent emergency assistance in the form of cash transfers, training, and non-food items.(5)

On 19 May 2011, chairman of the Standing Committee of the National People’s Congress Wu Bangguo visited Windhoek on the heels of a performance by the Chinese Wu Shu Troupe at Namibia’s national opera house.(6) Wu gave a presentation at the China-Africa Young Leaders Forum, also being held in Windhoek, where he emphasised that ‘China and Africa are good brothers that treat each other as equals.’(7) At the same event, Justice Minister Pendukeni Iivula-Ithana called China a ‘super-friend’ and dismissed the efforts of the Washington consensus to ‘break’ the relationship.(8)

China-Namibia relations on the ground: the African perspective

The rosy relationship described in the official news does not necessarily match the sentiments on the ground. In one recent article, Namibian political scientist and frequent political commentator Alfredo Tjiurimo Hengari decried Namibia’s relationship or even reliance, on authoritarian regimes like China.(9) The recent history of Namibia’s uncritical engagement’ has resulted in the constant presence of Chinese in Namibian society, which he likens to a ‘cactus.’ For him, the FOCAC represents a neo-colonial framework within which China pursues their economic interests without thought to the reception of their companies and workers by local communities. He concludes by cautioning that “[China’s] business practices could be met by indifference by the ruling elite - but the palpable tensions with the local populations are not in its strategic interests.”(10)

An earlier article by freelance author Tessa Thorniley lends a little bit of context and nuance to the debate.(11) She quotes Sussex University researcher Jing Gu, who claims that up to 80% of Chinese businesses in Africa are small or medium-sized enterprises. These mom-and-pop stores, restaurants, salons, and other businesses do not keep the Chinese Government’s foreign policy in mind, with profits being the only factor. This attention to the bottom line may crowd out many local businesses. At the same time, however, Thorniley introduces Oxford doctoral candidate Alex Gadzala, who sees another side to this phenomenon, where competition from small Chinese businesses will also force local business to adapt, ultimately accelerating economic growth and increasing their ability to operate in the global economy.

The Windhoek Chamber of Commerce, unfortunately, does not see the positive impact that Gu and Gadzala hope for. Instead, they lobbied the Government for protection from Chinese competitors, effectively shutting down small-scale foreign direct investment in the sectors most affected - services and public transportation.(12) The question is how will Chinese immigrants react to this constrained business environment? Many of them arrive in Africa as SOE employees, and then shift into the private sector as they identify entrepreneurial opportunities.

“One boss’s experience with business in Africa”(13): A Chinese perspective

Chen Haiping from Jiangsu province in eastern China runs a textile spinning and dyeing factory in Namibia. When competition became tougher in China and he wanted to move up the production stream, he began to look for a place to start his own business. Africa, to him, seemed like ‘virgin land’ where increasing economic development meant an increasingly large consumer base. He chose Namibia for its stability and its reputation as a ‘little Europe.’ While he started by opening a restaurant, he soon started his clothing factory in Windhoek and opened a small shop. Later, he also owned a warehouse and a wholesale market.

Chen shares one important lesson - that Chinese should be cautious working with other Chinese. Not all are trustworthy, and Chen tells stories of being tricked by translators and accountants. He even refuses to use Chinese banks, and instead has started his own in Namibia. Chen concludes with the note that being familiar with local regulations is very important.

Both the nature of the businesses and the business models seem to be entirely accidental. Many Chinese who start businesses in Africa eventually hire family members from China; some of the worst traffic workers to construction sites and brothels. Additionally, according to another post by the same blogger, Chinese business owners do not feel that they get any support whatsoever from the Chinese Government.(14) He says, “It’s almost like the people who are really pushing China-Africa relations are just us ordinary Chinese businesspeople!” In fact, he goes so far as to argue that without their role promoting trade in Africa, many factories back home in China would go under, unemployment would increase, and those high-profile trade balances would be less impressive.

Policy solutions: Shared knowledge and shared growth

In mid-April 2011, the China Development Bank (CDB) announced that it disbursed roughly US$ 14 million in loans to help African entrepreneurs.(15) At the FOCAC forum in Sharm el-Sheik, the fund pledged in total US$ 1 billion. CDB documents highlighting the new loan programme quote Chairman Chen Yuan:

“Overseas investment is not a zero-sum game; it is important to stick to the principles of mutual benefit, win-win results and local development…”

From what the above cases imply, it seems that policy changes must extend further down than national-level dialogues and unimaginable sums of loans or aid assistance. Instead, the Chinese Government should use its embassies to increase contact with ordinary Chinese business people already in Africa. If China wants to improve both its overseas image and its strategic position, it will have to move away from infrastructure projects towards small-scale training and business programmes and the development of cultural, as well as economic exchange.

NOTES:

(1) Contact Sarah M. Brooks through Consultancy Africa Intelligence's Asia Dimension Unit ( asia.dimension@consultancyafrica.com This e-mail address is being protected from spambots. You need JavaScript enabled to view it ).
(2) ‘Joint Communiqué of the Government of the People’s Republic of China and the Government of the Republic of Namibia on the establishment of diplomatic relations’, Ministry of Foreign Affairs of the People’s Republic of China (MoFA), http://www.fmprc.gov.cn.
(3) ‘Namibia supports the Anti-Secession Law passed by the National People’s Congress of China’, Ministry of Foreign Affairs of the People’s Republic of China (MoFA), http://www.fmprc.gov.cn.
(4) ‘Bilateral Relations’, Ministry of Foreign Affairs of the People’s Republic of China (MoFA), http://www.fmprc.gov.cn.
(5) ‘The second batch of Chinese donations to Namibian flooded areas’, Ministry of Foreign Affairs of the People’s Republic of China (MoFA), 13 April 2009, http://www.fmprc.gov.cn.
(6) ‘Wu Bangguo begins his friendship visit to Namibia’, The China Daily, 20 May 2011, http://www.chinadaily.com.cn. and ‘Chinese martial arts appear onstage in Namibia’, The China Daily, 19 May 2011, http://www.chinadaily.com.cn.
(7) ‘Top Chinese legislator lauds friendship, cooperation during visit to Namibia’, Xinhua News Agency, 22 May 2011, http://news.xinhuanet.com.
(8) Nico Smit, ‘China is a ‘super-friend’ – Swapo’, The Namibian, 23 May 2011, http://www.namibian.com.na.
(9) Alfredo Tjiurimo Hengari, ‘China 3, Namibia 1 – China is a cactus in Namibia’, The Namibian, 20 May 2011, http://www.namibian.com.na.
(10) Ibid.
(11) Tessa Thorniley, ‘The real Chinese entrepreneurs make their presence felt in Africa’, The Daily Maverick, 11 August 2010, http://www.thedailymaverick.co.za.
(12) Ibid.
(13) ‘One boss’s experience with business in Africa’, Blog: Old Ma goes to Africa, Posted 22 August 2010, http://blog.sina.com.cn.
(14) ‘What should Chinese businesspeople in Africa think of Chinese embassy officials?’, Blog: Old Ma goes to Africa, Posted 14 April 2011, http://blog.sina.com.cn.
(15) ‘China National Development Bank supports small- and medium-enterprise development in Africa’, Xinhua, 20 April 2011, http://finance.qq.com.

Written by Sarah M. Brooks (1)

Edited by: Consultancy Africa Intelligence CAI
 
 
 
 
 
 
 
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