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Why Western media are wrong to claim Chinese businesses want out of Africa
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In 2011, the BBC aired a documentary on Chinese migrants in Africa, called: “The Chinese Are Coming.”
Barely six years later, Western media such as the Financial Times and Quartz now say the Chinese are leaving, alleging that overseas Chinese are returning from the continent because low commodity prices have devalued African economies.
The influx of Chinese in Africa since the early 2000s has been linked to booming trade ties and the strategy of Chinese companies to “go overseas.” But without reliable statistics, it remains debatable to say migration has peaked and the trend has started to reverse.
Western media appear to have drawn this conclusion by combining the decline of trade figures with the frustrations of migrants about the business environment — from weak currencies to exorbitant taxes and fees.
Chinese have been settling on the continent since their ships first arrived at East African shores in the 15th century. They remained for six centuries through good times and bad, while small ethnic Chinese communities have existed for over 100 years in some African countries.
Since 2000, the number of Chinese migrants in Africa has risen dramatically and has been estimated at over 1 million. Even if a tiny fraction of these Chinese have packed up and left this time, there should be no concern. A decline in the number of small businessmen is a sign that the China-Africa economic engagement is entering a new phase.
Early Chinese construction projects in Africa did involve a substantial number of Chinese laborers. But over the years, the African work-force has gradually gained the skills required and adapted to Chinese work systems. A trend can be seen in Chinese companies hiring more local workers. The shift makes business sense. Hiring Chinese to work overseas is more expensive than ever, with higher wages, away-from-home allowances, food, accommodation, insurance, transportation costs... just to name a few.
Across the continent, Africans typically fill more than 85 percent of the jobs on labor-intensive projects. And they are not only laborers and technicians, more are becoming managers and consultants.
Other than construction workers, small retailers were also said to be leaving. But on the other hand, African businessmen have been living in major Chinese trading hubs, such as Guangzhou and Yiwu, for some time and are able to order made-in-China products themselves. This serves as evidence that African business communities have benefited from the economic engagement and they have learned enough to outperform the immigrants.
Nowadays Chinese entrepreneurs are encouraged to invest in more sophisticated sectors where they hold a comparative advantage. Retail has lost its appeal.
It is also worthy to note that Chinese migrants have been lured to return due to opportunities in China, rather than being forced to leave due to sluggish economic growth in Africa.
Game changer
Fuqing, in east China’s Fujian Province, has likely produced more emigrants than other places in China. For centuries, residents of the coastal villages surrounded by hills took dangerous voyages to sea to find better places to live. But the Internet revolution, along with improvements in rural infrastructure, has become a game changer. People in remote villages can easily find buyers via e-commerce apps and websites. A modern logistics network also aids the movement of goods. It is not just about trade. Villagers can have access to quality healthcare and education and take part in other economic activities through online collaboration.
As China is continuously exploring new economic drivers, Africa stands a good chance of benefiting.
Chinese e-commerce guru Jack Ma, founder and chairman of Alibaba Group, made his first visit to Africa in July, centering on empowering young African entrepreneurs. Alibaba will arm African youth with skills required for e-commerce, and the company’s mobile payment subsidiary Ant Financial is expanding to the continent. When launching Alipay in South Africa, company executives said they saw “big potential in Africa.”
Global consultancy firm McKinsey last year issued a report called “Lions on the Move II,” which said that despite a dip in growth in a few oil exporting countries, Africa’s long-term fundamentals are strong and there are substantial market and investment opportunities on the table. The continent is seeing a massive urbanization process and will have a larger working-age population than either China or India by 2034.
Another McKinsey report dedicated to China-Africa partnerships said Chinese companies in Africa — about 90 percent of which are private businesses — could be earning revenue worth US$440 billion by 2025, up from US$180 billion today. New opportunities lie in technology, housing, farming, financial services, transportation and logistics.
People from Fuqing, or Fujian Province at large, have long been known for their business acumen. It is hard to imagine that they would choose to leave after being on the ground for some years. Maybe it is just a pause before they find the right sector and dive back in.
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