Chinese Companies Help Africa’s Manufacturing Sector Achieve ‘Leopard Leap’

Chinese Companies Help Africa’s Manufacturing Sector Achieve ‘Leopard Leap’

Wei Jianguo

Date: Thu, 09/07/2017 - 17:31 / source:Yicai
Chinese Companies Help Africa’s Manufacturing Sector Achieve ‘Leopard Leap’
Chinese Companies Help Africa’s Manufacturing Sector Achieve ‘Leopard Leap’

(Yicai Global) Sept. 7 – Africans cheered as the Belt and Road Forum for International Cooperation opened in Beijing this May.

 They hope that as an all-weather partner China will help them fulfill their manufacturing dreams as soon as possible. Private Chinese companies have also been busy investing in Africa’s manufacturing industry. Over 10,000 Chinese firms are active in Africa, of which 90 percent are privately-owned and one-third engage in manufacturing, according to McKinsey Global Institute. In Africa, Chinese companies account for 20 percent of the continent’s manufacturing. Of these, more than 48 percent bring in new products and services to Africa and 36 percent introduce new technologies and help train local talents. China has become a key driver of Africa’s manufacturing modernization drive, the McKinsey report says.

 Chinese President Xi Jinping and South African President Jacob Zuma witnessed the signing of an agreement between the two countries to jointly build an industrial park when Xi visited the African nation in March 2013. Since then, the Atlantis Industrial Area in Cape Town has been bustling ever since. Dozens of Chinese-owned factories produce parts for television makers, with thousands of local employees working in spacious, well-lighted workshops. The industrial park produces over 500,000 television sets in various sizes and specifications a year, which not only sell in South Africa to meet local demand, but are also exported to more than 10 countries including Canada, Uganda, Nigeria and Cameroon. The entire park has created 15,000 jobs and paid USD28 million in taxes.

 Production, employment, trade and foreign direct investment in the manufacturing sector of sub-Saharan Africa alone have doubled in the past decade, growing from USD73 billion in 2004 to USD157 billion in 2015, which is unprecedented in the continent’s history. African media believe it is Chinese investment that has reshaped its manufacturing industry. Chinese private firms’ investment in more than 150 projects in Africa every year has helped accelerate its industrialization process. Now nearly 8,000 Chinese companies are carrying out almost 4,000 projects in the construction, manufacturing, information technology, infrastructure and energy sectors, with some 3,000 more under discussion.

 All these projects have let Africans feeling that China’s manufacturing sector has changed their continent. Apart from anything else, Huawei Technologies Co., which assembles smart phones in Africa, has surpassed Apple Inc. [NASDAQ:AAPL] and Nokia Corp. [NYSE:NOK] to become the second-biggest brand after Samsung Electronics Co. [KS:005930] in the continent. Locally-produced electric cars, sedans, heavy trucks, bicycles, refrigerators, washing machines and stereos are commonly seen across Africa.

 Mauritius is the only African country that designates the Chinese New Year as a legal holiday. Mauritius’ ambassador to China told me that African manufacturing has achieved a ‘leopard-style leap’ rather than a ‘frog-style jump,’ thanks to China’s help.

 An inspection of a map of Africa reveals an increasing number of Chinese-built industrial parks, processing areas and economic cooperation zones across this vast continent. Thus far, China has built more than 20 industrial parks in Africa, with over 30 more under discussion. These parks house nearly 1,000 manufacturing firms and have created some 100,000 jobs and paid over USD700 million in taxes.

 With a focus on agriculture, the African continent is marching towards a new era of industrialization. With the conclusion of the Belt and Road Forum for International Cooperation, more and more heads of state and heads of government hope to visit China soon, hoping that China’s manufacturing sector can help boost African economy. As Aziz, president of the Egypt’s Suez Industrial Park, said, forget neo-colonialism; all we need is China.

 (The author is deputy head of the China Center for International Economic Exchanges)

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Keywords: BELT AND ROAD, African, investment