Chinese investments and business Essay

For to a greater extent than ve years now, mainland chinaware has been the most important parcel out partner of Africa (OECD, 2011). Its growing togments in the African unspotted show the denite long-term interest that the Asian commonwealth has in Africa. When comparing the manner and the effectiveness of doing fear in Africa of Chinese companies and of occidental companies, a lot of remnants can be found. These divergences can stand by us emend understand why Chinese rms are existence much successful in Africa than European and American rms but similarly why they continue to be so eager to multiply and combine their personal credit line partnerships in Africa.The particularities of the Chinese way to do blood in Africa that enhance this growing investing trend can be assembled in three general characteristics of the Africa-China sexual congresss the long-term relationship that was built betwixt China and African countries over the years, the efcient model used by Chinese companies to cultivate a good pick up in the eyeball of the African sight and the important role played by the Chinese semipolitical science by diplomatic efforts.1. Africa and China, in good terms since 1955.At the Bandung league in 1955, China has allied with the newly independent African countries in order to resist agains some(prenominal) form or colonialism or neocolonialism. This rst modern-day step reects the position that China has since been adopting allying with African countries by demo them that China is on their side and sufficeing them ght the occidental hegemony. By spatial relation on their side and emphasizing their common interest and similarities in resisting the western public, China has gained a great trust in Africa. This process was greatly catalyzed by the actions ofthe Chinese government from the 1960s till today.On the other side, complicated diplomatic relations between the African and the western countries guide make it more difcult for the European and American companies to do wrinkle in Africa. Indeed, political leaders from the West stick out had negative airs with African leaders and wad, and emphasizing the poverty, the instability and the lack of democracy of this continent and underrating Africas potential for clientele (Rieff, 1998). In fact, companies from the westerly world were only pushed by their leaders to invest in Africa in the 1990s, when these latter(prenominal) started to realize the performances of Chinese rms in Africa(Sautman & Hairong, 2007). On this side, we see clearly that the westbound countries are late compared to China and still trauma from their image of neocolonialists. Furthermore, it is provoke 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 rapid expansion without caring vi rtually the long-term consequences for Africa and its people.Also, when looking at Hofstedes cultural dimensions, we observe that China and many African countries are similar on certain dimensions much(prenominal) 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 seems to pass on deeper explanations, and some authors suggest that a true Chinese model exists when it comes to its commercial activities on the African continent (Li, 2005). This specic method of investing in Africa is made possible for Chinese rms through Chinas philosophy to get on foreign direct 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 cap qualified to play on the same side as African countries as they can relate to some similarities in their history. Indeed , both African and Asian countries, except for Japan and Korea, were pauseing countries not to long ago, after suffering of decades of colonialism from the Western countries. In this sense, China, which is the beat out developed of the South countries can then show the way to African countries and understands the situation there far better than the Occidental countries do.To go even 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 correspondence and benet that Chinese companies see Africa as a less barbaric 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 exact same way they all extract resources such as oil and buy tax materials from Africa, temporary hookup 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 even 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 development of the dry land in which they operate. small-arm the Western companies have an image of only meliorate the GDP of the nations in which they do business, only looking at their interests, impress 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 while the second one has only brought growth but no realdevelopment. The Chinese compani es seem to have done more to help industrialism grow in the distinct African countries where they operate. According to the Carnegie Endowment for foreign 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 essential 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 come along to have a closer lifestyle to the African people than the workers and business community from Europe and North-America. The have similar living conditions, are not inner 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 look 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 especially to the wrong strategies of theirgovernments, completely opposed to Chinas diplomatic strategy.3. Efcient diplomatic efforts from the Chinese government. Indeed, as it was said before, the diplomatic efforts of the Chinese government in Africa are more than 50 years old. The best slip 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 around fty thousand workers from China ( Hall & Peyman, 1976). This is the perfect example of the way China has been doing diplomacy in Africa for the past half coulomb it brings help without trying 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 tried to force their western conception of democracy into the African countries, while pushing for more deregulation and privatization. This obsession for democracy, coupled with an almost unhidden neocolonialist desire 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 widely distributed unequ al exchange (Sautman, B &Hairong, Y, 2007). China, on the other side, has been promoting infrastructure, human pileus and other long-term investment, while Western countries have been promoting only primary(a) products and rst-aid. Chinas government has never 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 obligation to use this money to buy goods from American rms or non-prot organizations. Chinese aid, on the contrary is mostly untied . The best description of this divergence of strategies between China and the Western countries seem to be described by Julius Nyere (1974), when he declared that the Chinese people have not asked us to become communists in order to qualify for this loanword 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 structure a positive relationship with African countries, where both parties are win and where Africas free agency is taken into account and even valued. The Chinese diplomats and companies have managed to lower the risk of corruptness 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 h aving neocolonialist behaviors and building win-lose situations instead of win-win situations, they made it even worse for them to do business in Africa.