Business Chinese Weekly: "Old Africa" Trinity helps China develop the African trillion-dollar market

On July 23, Obama departed for the fourth time as president of the United States on a trip to Africa, visiting Ethiopia and Kenya. Before leaving, he gave an interview to Jon Sopel, the BBC's North American editor-in-chief. Sobel asked, "Isn't it the Chinese who are taking the lead in Africa?" The AU headquarters building you will walk into was built with Chinese funding, the road you walked was built by Chinese, and you will rub shoulders with countless Chinese businessmen along the way. ”

Sobel's words encapsulate China's influence in Africa. Although Africa has been a recipient of China's aid funds*5655 for a long time and is growing, trade and investment between China and Africa have become increasingly active over the past decade. China has been a trading partner of Africa*5655 since 2009.

From 2004 to 2014, U.S. trade with Africa more than doubled from $50 billion to $110 billion, according to public data. During the same period, China's trade with Africa surged from $10 billion to $200 billion, with more than 1 million Chinese citizens, mostly workers and businessmen, entering Africa during that time. According to the 2015 Africa Attractiveness Survey released by Ernst & Young, China's FDI in Africa increased by 166.7% in 2014, replacing India in seventh place, while Africa's total foreign direct investment (FDI) increased by 136% year-on-year in 2014.

"Africa's precious resources are undoubtedly quite important to China, after all, it is a manufacturing powerhouse." Bloomberg Businessweek said in an opinion piece in early August 2014. But the demand for raw materials is only one of the three pillars of China's strategy towards Africa. "China's second strategy is to use Africa as a springboard to help Chinese companies grow into global players." The article also points out that the third pillar of China's strategy towards Africa is Africa's consumption potential. "The Chinese expect a significant portion of global population growth to come from Africa by the next century, and they further anticipate the emergence of a dynamic high-spending middle class in Africa, and will make 'bullish' decisions accordingly." And this has the potential to be a "game-changing force".

For many Chinese companies, Africa is the beginning of their internationalization. "We're all 'old Africa' anymore." Xiao Jiang, general manager of Sany Heavy Industry South Africa, said. In 2005, he went to Africa to develop business, and "old Africa" is what these Chinese managers who were the first to explore the African market call themselves.

As a domestic *5655 construction machinery enterprise, Sany's equipment first appeared on the construction site in Africa with the contracting of infrastructure projects by Chinese-funded enterprises in Africa. In 2002, Sany's *5656 batches of equipment were sold to Morocco, and three years later, the company began to vigorously explore the international market. At present, Sany's machinery and equipment in Africa has nearly 10,000 units, and many of the colleagues who entered Africa with Xiao Jiang have become the backbone of Sany's internationalization and have been transported to other international markets for management work.

According to the financial report, in 2014, Sany achieved international sales revenue of RMB 9.822 billion, accounting for 32.3% of the company's sales revenue.

Li Bo, an analyst at UBS Securities, believes that the industry is optimistic about Sany's equipment export prospects, mainly because Sany's overseas has been done early, and localization is an important strategy to develop overseas markets.

Xiao Jiang stressed that Chinese companies are increasingly competing in a market-oriented way in Africa. South Africa, for example, is seen as a preferred destination for Chinese investment projects in the EY report. But it is also a gathering place for the world's construction machinery brands, in addition to cranes andPort machineryIn addition, construction machinery, earthmoving machinery and mining machinery are firmly occupied by European and American brands to occupy a large market share. "In the early days, we sold equipment through customer recommendations, and later began to do street sign advertising, exhibitions, product promotion meetings, martial arts competitions and so on." Xiao Jiang said, "But the establishment of the brand* is mainly through the demonstration role of landmark projects, especially some national key projects." ”

At present, Africa and the Asia-Pacific region have become two important markets for Sany's internationalization*, and Africa is also one of the regions with Sany Heavy Industry's export volume of *5655. Xiao Jiang said that on the one hand, the national strategy "One Belt, One Road" provides strong support for companies related to the development of Africa, on the other hand, because of the slowdown in the growth rate of domestic and African infrastructure affected by commodity prices, Sanshan initially sought the possibility of selling machinery and equipment, and wanted to participate in construction and investment at a deeper level. Sany has entered the mining industry in Africa, and residential industrialization projects in several African countries are also being investigated, which will be implemented in the form of EDC (Total Turnkey Solution, commonly known as "turnkey project"). In addition, Sany is also looking for new opportunities in power supply and ports. These three new business segments will be implemented through PPP (Public-Private Partnership).

Zhang Chun, an associate researcher at the West Asia and Africa Research Office of the Shanghai Institute of International Studies, said, "For the international community, the impact of China-Africa relations*5655 is the rapid progress of economic relations. He believes that the international community's attitude towards China-Africa relations has gone through three stages, from the lack of time to take care of it before 2005, to the anger and panic after the 2006 and Beijing Olympics, and then to the subsequent reassessment of China-Africa relations, and seeing the positive impact that China has brought to Africa, and even other countries have begun to pay attention to Africa.

According to the forecast of consulting firm McKinsey, Africa's GDP will reach $2.6 trillion by 2020, and 128 million African households will have disposable income and generate $1.4 trillion in consumer spending. According to incomplete statistics, there are now about 3,000 Chinese companies in Africa, of which 80% are small and medium-sized private enterprises. These enterprises cannot catch up with the central enterprises in terms of investment amount, but the number of enterprises is very considerable.

Eric Olander, a user of Central Africa issues and has worked for CNN, BBC, France24 and other media for more than 20 years, said: "For now, most African countries lack the infrastructure necessary for the development of China's manufacturing industry. As Africa's industrial and trade-related infrastructure (ports, highways, etc.) continues to grow, we can expect China to develop outsourced production in Africa to improve its position in the value chain. ”