The Economist - UK (2022-05-28)

6 Special report China in Africa The Economist May 28th 2022

Businessandtrade

With African characteristics

O

utsidea barinFungurume,a miningtowninCongo,men

cakedindustspitpeanutshellsontothefloor.Inside,where

ChineseNewYearlanternshangfromthewalls,Emmanuel(not

hisrealname)explainshowthingschangedafter2016,whena ma­

joritystakeintheTengweFungurumeMine(tfm) wassoldbyan

AmericanfirmtoChinaMolybdenum.Hesaysthenewowners

triedtocuthissalaryandusedsubcontractorswhorecruitdayla­

bourersandeschewsafetyprotocols.Hesaysstaffraciallyabused

andhitCongoleseworkers.“WelovedAmericans,”hesays.“We

arefedupwiththeChinese.Theytreatuswithtotaldisrespect.”In

response,saysEmmanuel,somecolleagueswentonstrikeand

burnedtheChineseflag.(ChinaMolybdenumsaysit adherestoall

Congolese laws andinternational labour standards, andthat

abuses“cannotpossiblybehappeningwithinthetfmsite.”)

Around70%oftheworld’scobalt,whichisanessentialminer­

alintheproductionofelectricvehicles,isminedinCongo.China,

whichdominatescobaltrefining,hasa strangleholdoveritspro­

duction.In 2020 Chinesefirmsownedorhada stakein 15 ofCon­

go’s 19 cobalt­producingmines.Americanofficialshavetriedto

persuadePresidentFélixTshisekeditoloosenChina’sgrip.But

Chinesefirms,supportedbytheircountry’sdiplomats,arecanny

innavigatingCongolesepolitics,lobbyingnotjustMrTshisekedi

butpowerfulpoliticiansinminingregions.

ToordinaryCongolese,thearrivalofChineseminersisanother

episode in a history of venal elites colluding with extractive firms

to  exploit  the  country’s  immense  resources—and  its  people.  But

residents  of  Congo’s  mining  towns  seem  to  think  Chinese  firms

are  more  ruthless  than  Western  ones.  “The  Chinese  don’t  really

care  about  the  people  and  the  community,”  says  Donat  Kambola

Lenge,  a  human­rights  lawyer  in  Kolwezi.  “They  just  care  about

havingrelationshipswithpeopleinpower.”

YetthoughChinesemininginCongoispartofthestoryofChi­

nesebusinessinAfrica,itisnottheonlypart.TheextentofChi­

nesebusinessinterestshasdeepenedandbroadenedinthepast

twodecades.Somegovernments,likeCongo’s,failtousetherela­

tionshiptodeliverbenefitstoordinarypeople,butothersdoa bet­

terjob.Viewedasa whole,China’sbusinesslinksreflectpatterns

ofglobalisation,nota newcolonialism.

ThedatahintatChina’sgrowingfootprint.Annualflowsoffor­

eign­directinvestment(fdi) fromChinarosefromjust$75min

2003 to$4.2bnin2020.ThestockofChinesefdiinAfrica($44bn)

islowerthanBritain’s($66bn)orFrance’s($65bn),butslightly

higherthanAmerica’s($43bn).ThevalueoftradebetweenChina

andAfricahasrisenfrom$10bnin 2000 toa record$254bnin

2021—morethanfourtimesthatbetweenAmericaandAfrica.For

Chinathatisjust4%oftotaltrade,lessthanwithGermany.But

Chinahasmovedfrombeingthemainsourceofimportsforjust

fourofAfrica’s 54 countriestomostofthem.

Goingshopping

African  shoppers  have  also  benefited  from  cheap  Chinese  pro­

ducts.  In  Kolwezi  phone  shops  are  emblazoned  with  logos  from

Infinix, Itel, and Tecno, all of them owned by Transsion, a Chinese

firm whose phones account for almost half the sub­Saharan mar­

ket, more than twice the share of Samsung, its nearest competitor.

Unlike  the  South  Korean  firm’s  devices,  or  Apple’s,  Transsion’s

products are designed for Africans. Its cheapest phones cost $20,

have African­language keyboards and camera exposures that are

adjusted  for  black  skin.  In  2015  Transsion

launched Boomplay, Africa’s most popular

music­streaming  service.  Cobus  van  Sta­

den of the South African Institute of Inter­

national  Affairs,  a  think­tank,  says  that

firms like Transsion have normalised busi­

ness in Africa. “They have changed the dis­

cussion  about  the  nature  of  the  African

market  itself,  by  showing  you  can  make  a

shitload of money. That is where China is a

game­changer.” 

McKinsey, a consultancy, estimates that

there are 10,000 Chinese firms active in Af­

rica—several times the number that are ac­

tually registered with the commerce minis­

try in Beijing. Almost a third of McKinsey’s

sample  had  profit  margins  greater  than

20%.  Whereas  the  largest  are  often  soes,

around 90% are private firms.  About a fifth

of them are in construction. Chinese com­

panies are thought to win around half of all

African construction contracts that are ten­

dered  to  foreign  firms.  They  may  benefit

from state subsidies, but many simply out­

compete  their  rivals.  One  Kenyan  bigwig

contrasts  the  approach  of  French  firms,

which take months to do feasibility studies

and put their staff up in posh hotels, with

the  urgency  of  the  Chinese,  who  sleep

three­to­a­room to keep costs down. 

Roughly a third of Chinese firms are in

Chinese companies have made their mark on the African

continent, in ways good and bad

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