Chinese investments and business Essay

For more than ve years now, master(prenominal)land chinaw be has been the most key trade coadjutor of Africa (OECD, 2011). Its growing enthronements in the Afri passel uncorrupted show the denite long-term interest that the Asian country has in Africa. When comparing the manner and the effectiveness of doing personal line of credit in Africa of Chinese companies and of western companies, a lot of remainders atomic number 50 be found. These divergences can inspection and repair us better understand why Chinese rms are world more successful in Africa than European and American rms but also why they continue to be so eager to multiply and deepen their furrow partnerships in Africa.The particularities of the Chinese elbow room to do business in Africa that enhance this growing investing trend can be assembled in three public characteristics of the Africa-mainland china relations the long-term relationship that was built betwixt China and African countries over the year s, the efcient model utilise by Chinese companies to cultivate a good enough delineation in the eyes of the African spate and the important role played by the Chinese government through diplomatic efforts.1. Africa and China, in good terms since 1955.At the Bandung conference in 1955, China has allied with the newly independent African countries in order to resist agains each form or colonialism or neocolonialism. This rst contemporary step reects the aim that China has since been adopting allying with African countries by showing them that China is on their side and helping them ght the western hegemony. By positioning on their side and emphasizing their common interest and interchange up to(p)ities in resisting the western world, China has gained a great trust in Africa. This process was greatly catalyzed by the actions ofthe Chinese government from the 1960s trough today.On the some other side, complicated diplomatic relations between the African and the western countr ies move over make it more difcult for the European and American companies to do business in Africa. Indeed, political leadership from the westbound have had negative behaviors with African leaders and people, only emphasizing the poverty, the instability and the lack of democracy of this continent and underrating Africas potential for business (Rieff, 1998). In fact, companies from the western world were only pushed by their leaders to invest in Africa in the 1990s, when these latter started to realize the performances of Chinese rms in Africa(Sautman & Hairong, 2007). On this side, we see intelligibly that the Western countries are late compared to China and still suffering from their image of neocolonialists. Furthermore, it is interesting to see that China has been paying more attention to the longterm consequences an interests, when investing in African countries. On the other side, the western countries as seen by the Africans as investing selshly and only looking for rap id expansion without caring about the long-term consequences for Africa and its people.Also, when looking at Hofstedes cultural dimensions, we observe that China and mevery African countries are similar on certain dimensions such as individualism (low) and power distance (high), which could make it easier for Chinese companies to invest in Africa. Nonetheless, the success and the attraction of China in Africa bes to have deeper explanations, and some authors suggest that a straightforward Chinese model exists when it comes to its commercial activities on the African continent (Li, 2005). This specic method of investing in Africa is do possible for Chinese rms through Chinas philosophy to encourage foreign pose investments (FDI) and with the help of all the Chinese savings.2. A more efcient model, a better image, a better business environment. Since the beginning, China was able to play on the same side as African countries as they can relate to some similarities in their his tory. Indeed, both African and Asian countries, except for Japan and Korea, were resurrecting countries non to long ago, after suffering of decades of colonialism from the Western countries. In this sense, China, which is the best developed of the South countries can thus show the way to African countries and understands the situation there far better than the Occidental countries do.To go horizontal further, some authors argue that increased trade and investment from China is reducing the African dependence on the US and other Western countries it is then seen as mutually benecial (Itano, 2005) It is because of that mutual understanding and benet that Chinese companies see Africa as a less risky proposition. These companies have understood how to do business in Africa and how to overcome the risks of that continent.At rst, it could look like Chinese, American and European companies are doing business in the select same way they all extract resources such as oil and buy tax materials from Africa, time exporting other consumer goods. However, China seems to be more seless when doing it. Chinese companies, thanks to their still cheap manufacturing force, is able to export goods to Africa that are way cheaper than the ones from Western countries, and sometimes tear down cheaper than the local African goods (Donnelly, 2005). Moreover, Chinese companies seem to have understood that to improve their business relationship with African stakeholders, they have to really contribute to the exploitation of the country in which they operate. While the Western companies have an image of only improving the GDP of the nations in which they do business, only looking at their interests, pretend to be helping African countries because they help them grow.However, the main difference between Chinese and Western way of investing is that the rst one has been helping Africa to develop magical spell the second one has only brought growth but no realdevelopment. The Chin ese companies seem to have done more to help industrialism grow in the different African countries where they operate. According to the Carnegie Endowment for external Peace, in 2009, 29% of Chinas FDI to Africa went to the extractive industries but it represented 60% of U.S. FDI . During the same year, the CEIP reported that China had invested more in manufacturing, and in African jobs, than the U.S did (Proctor, 2013). Chinese companies have found that helping the African countries to develop and to industrialize, while providing low-cost technologies to their African partners (Muekalia, 2004) allowed them to build better relations with these partners and get more connections locally, which seems to be native she doing business in Africa.The last characteristic of this Chinese model is very interesting and it has to do agin with the similarities between the two cultures. While western expatriates in Africa show a very negative image of their countries, this is not the case at all for the Chinese workers. These latter appear to have a closer life-style to the African people than the workers and businessmen from Europe and North-America. The have similar living conditions, are not interior over the African employees and do not demand indecent salaries. On the other side, the Western executives and workers, even among Non-governmental organizations (NGOs) seem to have an exploitative behavior and take advantage of their position (Wainaina, 2006). This type of behavior can, without any doubt, be called neocolonialism, and this is what makes Western companies loose the trust an collaboration of their African partners.This altered relation between Western and African companies create an even riskier environment for the rst to business on the seconds territory. Nevertheless, Chineses good behavior and long-term earned respect allows its companies to enjoy good relations and an easier business environment. This important difference, however, is not only imputable to the Western companies actions, but particularly to the wrong strategies of theirgovernments, completely opposed to Chinas diplomatic strategy.3. Efcient diplomatic efforts from the Chinese government. Indeed, as it was s abet before, the diplomatic efforts of the Chinese government in Africa are more than 50 years old. The best example for this is the Tanzania-Zambia railway project, implemented by China during the 1960s and the 1970s, and which was made possible through the help of round fty thousand workers from China ( Hall & Peyman, 1976). This is the perfective tense example of the way China has been doing diplomacy in Africa for the past half century it brings help without severe to force things and knowing that they will get something in return. In the opposite, E.U. and the U.S. have always attached conditions to their help inAfrica, demanding changes from their governments and forcing different legal and economic reforms.Indeed, these governments have continuously tr ied to force their western invention of democracy into the African countries, while pushing for more deregulation and privatization. This obsession for democracy, coupled with an almost unhidden neocolonialist commit to educate the African people has pushed the Western leaders into complicated relationships with the African people and has deteriorated their image in the continent. Today, some of the Western governments start to see their mistakes and realize that their strategy has not been the right one and has made investing in Africa even more complicated for their rms.When she was still Secretary of State, Hillary Clinton, ex- declared that the U.S. rms should look for sustainable partnerships in Africa that add value rather than extract it. (Salvaterra, 2012) However, these countries still have a long way to go, as they have been using international treaties that have weakened African nations (Nunn & Price, 2004) and that are seen as promoting an aggravated form of worl dwide unequal exchange (Sautman, B &Hairong, Y, 2007). China, on the other side, has been promoting infrastructure, human capital and other long-term investment, while Western countries have been promoting only primary products and rst-aid. Chinas government has neer given any ofcial political support, while keeping smooth relationships with the African leaders, which is a deep difference with the U.S. and the E.U.This difference seems to be the most obvious when it comes to aid in Africa. Western countries aid is called tied aid , meaning that the aid will only provided in certain conditions, which will benet the stakeholder performing the aid. For example,when a U.S. passes a contract with an African developing country, it ties the nancial aid it will provide to this African country to the covenant to use this money to buy goods from American rms or non-prot organizations. Chinese aid, on the contrary is broadly untied . The best description of this divergence of strategies between China and the Western countries seem to be exposit by Julius Nyere (1974), when he declared that the Chinese people have not asked us to become communists in order to qualify for this loan They have never at any point suggested that we should change any of our policies .ConclusionThe main reason why it is easier for Chinese rms to do business in Africa than for other rms seem to be contained in this quote. China has been building a positive relationship with African countries, where both parties are winning and where Africas free agency is taken into account and even valued. The Chinese diplomats and companies have managed to cut the risk of corruption and of change from the African people by building a good image in their eyes and becoming friends with them.On the other side, Western rms still suffer from these risks of corruption as they rarely benet from a trust-based relationship in the African countries, which is crucial when trying to work around this problem. By having neocolonialist behaviors and building win-lose situations instead of win-win situations, they made it even worse for them to do business in Africa.