African nations also investing in China

In the run up to US President Barack Obama’s visit to Kenya, speculation was rife on his motivation to make the trip, aside from opening the Global Entrepreneurship Summit.

One of the reasons forwarded was that his trip was an American attempt to counteract China’s growing influence in the economy.

China, the world’s newest economic superpower, surpassed the United States as Africa’s largest trading partner in 2009. Since then, China’s investments in Africa have been growing at a staggering speed. But many people are not aware that the Sino-Africa relationship is not just a one-way street.

Beyond the small businesses that attract Africans in Guangzhou — the so-called Chocolate City, or Little Africa, in China because of the large number of Africans who live there — African companies have made considerable investments in China.

By 2012, Africans had invested a cumulative $14.2 billion (Sh1.4 trillion) in China, a 43 per cent increase from 2009. Chinese government officials have said their country’s cumulative foreign direct investment in Africa in 2012 was $14.7 billion (Sh1.5 trillion), up 60 per cent from 2009.

In 2012 alone, the amount of direct investments from Africa to China was about $1.4 billion (Sh141.8 billion), mostly in petro-chemical, manufacturing, wholesale and retailing industries.

Some of the top African investors in China came from Mauritius, South Africa, Seychelles and Nigeria, according to a report on economic and trade co-operation between China and Africa published by the Chinese government.

Winning strategy

For example, not many people outside China have heard about Snow beer, the world’s best-selling beer by sales volume, because it is produced and sold only in China. Even fewer are aware that an African company, South African Breweries (SABMiller), runs Snow beer as a joint venture with a Chinese firm and produces many other popular Chinese beer brands.

SABMiller (formerly SAB before it acquired the Miller Brewing Company in 2002) began its expansion into China in the mid-1990s.

Its first move was to negotiate with the government-backed China Resources Enterprises for joint ownership of China Resources Snow Breweries, which is now the largest brewery in China. While most foreign breweries struggle to sell their brands in the Chinese market, SABMiller’s winning strategy has been purchasing local Chinese breweries.

Today, 30 years after its first investment, SABMiller co-owns more than 90 breweries with Chinese Resources, producing around 30 beer brands with a 23 per cent market share.

Tunisia’s investment in China’s fertiliser production has an even longer history.

Initially launched as a key project of China’s eighth Five-Year Plan, the Sino-Arab Chemical Fertilizers Company (SACF) was a joint initiative reached by Tunisia and China when Tunisia’s late Prime Minister Mohammed Mzali visited Beijing in 1984.

Widely praised as a successful south-south co-operation model, SACF is one of the largest compound fertiliser producers in China.

Despite the global recession that jeopardised most countries’ investment plans, the amount of direct investments from Seychelles to China reached the $100 million (Sh10.1 billion) mark in 2009, compared to $7 million (Sh709.1 million) worth of Chinese investments in Seychelles over the same period.

However, the large number of offshore companies anonymously registered in its Indian Ocean islands could possibly explain this, analysts say. It is almost impossible to track where investments flowing out of Seychelles actually came from.

Media reports estimate that China is home to more than 200,000 African immigrants.

The government of Hong Kong allows 90-day visa-free stays for citizens of many African countries, including Kenya, making the special administrative region the easiest entry point for traders who make up the majority of the African population in China.

— Africa Renewal

Additional reporting by Dominic Omondi