It’s Time To Reset China’s Economic Relations With Africa
A week in South Africa and I am even more convinced that now is the time for China’s best private sector companies to take the lead, resetting the China-Africa relationship and growing new profitable businesses as they do. Whether under the umbrella of China’s “One Belt, One Road” go international initiative, or simply off their own desire for growth, now is the time.
There will still be opportunities for China’s state-owned infrastructure builders as Africa extends it road, rail, power and telecom systems in the years ahead, but that is only part of the story. The China traders who have made a living selling marginal quality “Made in China” goods will find life much tougher. Their golden period is over. As China’s ecommerce giants come to Africa, with local language websites and partnerships with local banks for payment, they will gradually displace the traders with higher quality, more reliable products. Local delivery logistics can be a challenge, but will be addressed.
The many private Chinese companies that equip factories, offices, hospitals, schools and homes should be targeting the growing demand that comes as Africa’s middle class expands, from Kenya to Nigeria to South Africa itself. China’s quality but value-priced medical testing equipment, consumer electronics, solar solutions, air conditioners, and more will see extremely rapid growth. Now is the time to establish brands in the minds of first time buyers. Not only should these companies be looking to sell into Africa, they should also be establishing on the ground service operations and factories. Bringing quality manufacturing jobs into key African markets will be a catalyst for a changed relationship.
Agricultural exports to China are still a neglected opportunity. If Australia exports more than US$4 billion of agricultural products to China and has set agriculture as the cornerstone of the new free trade agreement between the countries, why should exports from South Africa be under $200 million? Chinese capital is investing in cold chain and related logistics around the world in addition to production. There must be partnership opportunities to be developed in this. Chinese private capital can move productively into other sectors also. Chinese property developers are looking for international opportunities as their domestic market cools. Companies such as Soho, Vanke and Fortune Land have developed strong reputations for the quality of their business, residential and industrial park developments. There must be partnership opportunities to bring these capabilities (and their capital) to African cities and industrial zones.
Finally, Africa needs to embrace the Chinese tourist much more. It remains very hard for Chinese travellers to get a visa to vacation in many African countries, the marketing of the attractiveness of African vacations in China is lacking, and the number of direct flights is insufficient. Unsurprisingly, the numbers of visitors are in the low hundreds of thousands, with modest growth when they have the potential to rapidly scale into the millions.