East of Africa (and West of China): Chinese Business in Africa

Authors: Schuetz, Marcus; Ramon-Berjano, Carola
Source: University of Hong Kong
Year: 2010
Number of pages: 20

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Abstract:

Trade between China and Africa was estimated to have quadrupled between 2000 and 2008, with China becoming Africa's third-largest trading partner and second-largest export destination. Trade relationships between China and Africa were mainly concentrated in three areas: primary resources from Africa to China; cheap manufactured goods and FDI from China to Africa, including new investment opportunities such as land acquisition; and outsourcing of farm production, particularly of staples and biofuels. It was estimated that by 2009, 1 million Chinese farmers were working in Africa. Africa had large extensions of fertile land available, although the lack of infrastructure (not only for farming activities themselves but also for transport) and political factors such as land ownership, corruption and governance were serious issues. This case discusses China's growing businesses with Africa and the risks that these can entail, particularly for Chinese state-owned enterprises.



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