Broadcasting Time: 2006-05-24

Hello and welcome to this edition of Africa Express here on China Radio International. As always, I'm your host, Wei Tong.

The first forum on Chinese investment in Africa has kicked off in Beijing early this week. As one of the campaigns during the Week of Africa in China, the forum offers a platform on which Chinese enterprises can acquire first-hand investment information from African officials. Senior diplomats from over 43 African countries have attended the forum in the hopes of finding Chinese partners to finish nearly a hundred different investment projects.

Trade between China and Africa has been developing rapidly over the past few years. Statistics released by China's Ministry of Commerce indicate that Sino-African trade in 2005 has reached nearly 40 billion US dollars, a 37 percent increase compared with the previous year. China has become Africa's third most important trading partner, followed by the United States and France.

And China's accession into the WTO has triggered more foreign enterprises enter the Chinese market. Thus, more Chinese enterprises have been propelled to "go outside" and explore new markets themselves. Africa poses a fairly large investment potential, as explained by the president of the China Society for African Studies, An Yongyu:

"Africa boasts abundant natural resources and well-preserved ecosystems. As far as I know, Africa has 17 different kinds of mineral resources and strategic metals. One out of every three tons of gold in the world comes from Africa. The iron ore in Liberia is 67 percent pure iron, the highest proportion found in the world. And with the fast developing Chinese economy, China is in dire need of natural resources. Africa needs advanced technology from China to exploit these resources causing more Chinese enterprises to become eager to invest in this sector."

Among all natural resources, oil is the most important part of China's Africa strategy. China is currently experiencing the fastest growth in oil demand in world history, in order to keep pace with its staggering economic development. And at present, 25 to 30 percent of its oil imports come from Africa.

Chinese enterprises have now taken more interest in investing in Africa, contributing to the growth of the Chinese economy. China Area Chief Expert of the International Managers Organization, Shi Yongxiang, one of the organizers of this forum, offers this analysis:

"China has accumulated a vast amount of capital. The per capita GDP has reached 1,100 US dollars, doubling the figure in Africa. And the investment rate in China is over 40 percent but the figure is just halved in Africa. Therefore, Chinese enterprises are encouraged to invest in Africa in order to boost its economy. In addition, Chinese textiles, clothing and IT products have become more competitive and the vast African market has offered these industries good opportunities to make profits."

Shi Yongxiang adds that in addition to investing in the domestic African market, Chinese enterprises can make bigger profits in the export trade since there are no quota restrictions in place as when exporting their products to European and US markets.

More than 600 Chinese enterprises have launched business in Africa over the past ten years. Chinese investment projects in Africa are mainly in the fields of infrastructure construction, mining, real estate, transportation and energy exploitation. And Chinese products have boosted the local economy, provided Africans with daily necessities and most importantly, offered abundant job opportunities. And now, in order to encourage even more investment from China, African countries have fostered many favorable conditions. Here is the African Union ambassador to China, Pierre Passi:

"Generally speaking, Chinese enterprises can enjoy preferential tax policies in Africa. Some countries have loosened foreign exchange controls so that investors can send more remittances back home. We will continue to simplify the procedures so that more Chinese investors will be attracted to launch businesses in Africa. Finally, we'll make full use of the upcoming China-Africa Cooperative Forum and Summit to offer more business opportunities to Chinese investors."

Pierre suggests that Chinese enterprises should process natural resources in Africa and then export the products to domestic and international markets instead of exporting natural resources directly. He says this would bring benefits to both parties.

However, some Chinese experts at the forum have suggested that Chinese investors should think about things very seriously before making such decisions. They shouldn't regard Africa as a place of zero investment value, nor should they mistakenly think Africa is full of ‘gold', or consider it just a place where they can simply take a piece of the pie. They should choose the right projects to lower investment risks as much as possible.
Some Chinese enterprises have achieved success. The Sanye Group Company, specializing in domestic appliance manufacturing, is one of them. It has had a branch company in Ghana for over ten years and plans to spread its business across Africa. Tomorrow we'll share its Africa success story with you. So thanks for listening and bye for now!