Chinese and African officials, business people and experts pointed out that Africa's abundant resources, vast market, increasingly perfect investment environment and the Chinese government's recent policies to promote China's investment in Africa will attract more and more Chinese SMEs in Africa. Investment, to achieve development and win-win. At present, China's SME investment in Africa has become a boom.
Experts pointed out that the current lack of clear investment strategies for Chinese SMEs in Africa, financial support and imperfect security systems, and increasingly fierce competition are urgently needed to be solved.
More and more Chinese SMEs will “go to Africaâ€
Wang Chao, Vice Minister of the Ministry of Commerce of China, said that since the beginning of this year, Sino-African trade has resumed growth. In the first half of the year, it has reached US$61.2 billion, a year-on-year increase of 65%, and it is expected to exceed US$100 million for the whole year.
Wang Chao said that in recent years, China-Africa economic and trade cooperation has flourished. From 2000 to 2008, China-Africa trade grew at an average annual rate of 33.6%. In 2008, it broke through 100 billion US dollars for the first time. In 2009, China became Africa's largest trading partner.
Wang Chao said that China-Africa economic and trade cooperation is highly complementary. Africa is a continent with a large population and great development potential. China has a vast market, rich development experience, and the much-needed funds and technology of African countries.
At present, Chinese companies are actively investing in Africa, with more than 1,600 investment companies. The investment projects are spread across 49 countries in Africa, involving agriculture, mining, processing and manufacturing, infrastructure, trade and commerce. In recent years, China-Africa economic and trade cooperation has been continuously expanded. In addition to traditional industries such as trade and infrastructure construction, the two sides have also achieved satisfactory results in cooperation in agriculture, finance, tourism, transportation, new energy, health and education.
China Africa Heavy Industry Investment Co., Ltd. is a joint venture initiated by China Yituo Group and China-Africa Development Fund. It is committed to investing in the establishment of agricultural machinery and engineering machinery assembly marketing centers in several African countries.
Li Youji, chairman of the company, said: "The vast majority of countries in Africa have low levels of agricultural mechanization and backward infrastructure, leading to slow economic development. In recent years, more and more African countries have increased their focus on agriculture and infrastructure construction. And the increasing demand for construction machinery provides an opportunity for Chinese manufacturing companies to enter the African market."
At present, China Africa Heavy Industry Investment Co., Ltd. has established assembly plants and marketing service centers in five countries including South Africa, Côte d'Ivoire and Benin, providing tens of thousands of agricultural machinery and equipment for local agriculture and directly employing nearly 200 mechanics. The technical school trained hundreds of students and produced good economic and social benefits.
Huang Meibo, a professor at the School of Economics at Xiamen University, said that resource-rich Africa is one of the key areas for China to implement the “going out†strategy. In 2000, the China-Africa Forum was established, including the establishment of new initiatives such as the China-Africa Development Fund, which promoted China to Africa. Investment is growing rapidly.
Huang Meibo said that among the more than 1,600 enterprises that invest in Africa, most of them are small and medium-sized enterprises except for more than 100 large enterprises. The non-investment industry is mainly concentrated in resource extraction, light industrial product manufacturing, construction, agriculture and other industries. . It is foreseeable that with the implementation of the relevant policies of the third forum of China and Africa, more SMEs will move to Africa.
SMEs invest in Africa's lucrative Huang Meibo said that companies are more lucrative in investing in Africa. Many African countries have low taxes, low labor costs, abundant energy, and low prices. At present, most companies that invest in Africa perform well and receive relatively good returns. For example, Ningbo Xinglong Vehicle Industry Co., Ltd. developed copper mines and cobalt concentrates in the Congo, and achieved sales of US$20 million in the year and US$60 million in the second year.
"Africa has a lingering appeal to Chinese goods. It is inexpensive, rich in variety, and most of China's goods are very suitable for the consumption of the vast majority of people in Africa." After graduating from university in 1993, he was sent to Africa by a Chinese state-owned enterprise. Opening up the market, Hui Honglin, who has now set up his own company, has a deep understanding of business opportunities in Africa.
From 1993 to 1997, Hui Honglin worked in Togo in Africa and Benin in Congo. During this period, he inspected the markets of many African countries. “This is one of the hot spots for the development of Chinese enterprises.†In 2001, Hui Honglin established its own company in Shenzhen, mainly engaged in the export of textiles to Africa.
Africa has made Hui Honglin's dream and will continue to provide him with a stage for development. Now his company has exported 20 million US dollars for five consecutive years. In May of this year, he formed a solar technology company with the main goal of the African solar application market.
Huang Meibo said that the spontaneity of investment behavior, active trade activities, and the survival and development of traditional industries in Africa are the characteristics of Chinese SMEs investing in Africa.
Since the establishment of the China-Africa Forum in 2000, China-Africa economic and trade cooperation has developed in depth, investment in African entities has become increasingly diversified, more and more private enterprises have moved to Africa, traditional state behavior has been transformed into corporate behavior, and SMEs have spontaneously invested in Africa for commercial interests. This has made China's investment in Africa an unprecedented expansion, and currently covers 81% of the country's proficiency.
Business activities are active, but most of them are small businesses. Nearly 900 trade and production enterprises run by small and medium-sized enterprises in African countries, mainly involving the flexible retail industry and the low-tech primary processing industry. The investment scale is small, and the investment totaling more than 1 million US dollars is a minority.
Traditional industries have a large space for survival and development in Africa. Africa is rich in resources and has a large market demand potential, but the industrial economy is relatively backward. China's small and medium-sized enterprises have strong processing and manufacturing capabilities, and the two sides are highly complementary. Labor-intensive enterprises such as shoes, garments and handicrafts have strong survival and development space in Africa. For example, Li Chuanfa, a business owner of Taizhou City, Zhejiang Province, invested in Egypt to establish the Egyptian-Chinese Footwear Company in 2002. He now has more than 50% of the tourism shoe market in Egypt.
The three major problems need to be solved. Experts pointed out that the lack of clear investment projects, lack of investment funds, and increasingly fierce competition are the problems faced by Chinese SMEs in “going to Africaâ€.
At present, China-Africa Development Fund Assistant General Manager Fan Zhanjun has accumulated more than 30 investment decision-making projects. The total investment of the project is more than 5 billion US dollars. About 30 project funds have been established internally, and some projects are being tracked and cultivated. But this obviously does not meet the growing demand for non-investment financing for SMEs.
Huang Meibo said that SMEs have insufficient funds and cannot meet bank requirements in terms of credit and mortgages. As a result, the financing and exchange channels of foreign exchange funds are not smooth, which restricts the investment decisions and scale of enterprises in Africa. Encourage enterprises to “go out†policies, but financial support is limited.
Spontaneous investment of small and medium-sized enterprises, due to limited understanding of Africa, lack of clear positioning of investment strategies, lack of clear and long-term investment plans, and lack of sufficient capacity for SMEs to operate overseas, do not have sufficient human resources, especially lack of understanding of Africa, Talents who understand business, management, and foreign languages ​​have affected the development of the company.
In addition, as the world's economic development continues to expand demand for energy, raw materials and markets, Western countries have increased their control over Africa in terms of investment and aid. Some countries have also used human rights as an excuse to accuse China of its investment activities in Africa.
Experts attending the meeting believe that to solve the problem of SMEs' funds, the relevant Chinese departments should substantially increase the preferential funds, set up a support fund for SMEs to invest in Africa on the basis of the China-Africa Development Fund; encourage Chinese financial institutions to enter Africa and provide local Chinese SMEs. Convenience in finance, trade settlement, financial management consulting, etc.
The government has established a specialized agency to be responsible for information consultation and evaluation of investment in Africa, and to grasp the political, economic, and cultural information of relevant investment fields or regions, and to provide assistance for Chinese enterprises to invest in Africa.
On the other hand, SMEs themselves should increase their competitiveness in the African market by increasing technology research and development, improving product quality, and broadly exploring the market. They will continue to grow and develop in the current situation of companies competing for African markets.
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