Africa invests in China too, as relations are “not one-way street”

BY SILVI WRITER

 

Faced with saturated market at home, foreign beer brewers such as United States-based Anheuser-Busch, Interbrew of Belgium and Asahi of Japan rushed to grab a slice of China’s beer market, which was then second only to the US in consumption, back in the 1990s.

While most foreign breweries struggled to sell their branded products, South African Breweries (SAB) had a different strategy, and a more prudent one.

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In 1994, then Johannesburg-based SAB, which acquired Miller Brewing to form SABMiller in 2002, and red chip China Resources Enterprise formed 49:51 joint venture China Resources Brewery – then the mainland’s second-largest brewer behind Tsingtao Brewery. The JV has concentrated on purchasing local Chinese breweries.

It later proved a huge success, as Snow Beer, which it brewed, quickly turned to be the best selling beer in China and the world since 2005, and has been on that throne for consecutive years till today, even after SABMiller sold all its stakes to China Resources in 2016.

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But few Chinese people, even the most addicted boozers, would be aware that it was an African company that was behind the beer they drink the most.

The JV was actually a typical example of Africa’s investment in China.

While China’s massive investment in Africa has caught wide international attention and skepticism, mainly from western countries and Japan, investment by African enterprises in the Asian powerhouse remains unnoticed.

African companies “have made considerable investments in China” and Sino-African relations “isn’t a one-way street”, according to Africa Renewal in Aug 2015.

Unfortunately, little up-to-date statistics on Africa’s investment in China is open and available.

Yet by 2012, Africans had invested a cumulative $14.2 billion in China, a 43% increase from the $9.93 billion invested by 2009, according to a white paper published by the Chinese government in 2013.

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

ALSO READChina-Africa Relations: Things you need to know

The top African investor in China, South Africa’s total investment volume has exceeded $660 million, according to a recent article published on the official website of the Chinese Ministry of Foreign Affairs.

Other leading African investors in China came from Tunisia, Mauritius, Seychelles and Nigeria.

Compared to South Africa, Tunisia’s investment in China’s fertilizer production has a longer history.

Initially launched as a key project of China’s 8th Five-Year Plan (1991-1995), the Sino-Arab Chemical Fertilizers Company (SACF) was a joint initiative reached by the two countries when Tunisia’s late prime minister Mohammed Mzali visited Beijing in 1984.

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SACF was later founded in June 1985, jointly invested by China, Tunisia and Kuwait too. It is headquartered in the coastal city of Qinhuangdao, in north China’s Hebei Province.

“It was a crucial economic cooperation project between China and other developing nations of the third world back then, which has been praised as a ‘South-South cooperation model’.” SACF says on its official website.

In comparison, investments from Mauritius and Seychelles seem very dodgy. It’s hardly conceivable that there is any major enterprise from those Indian Ocean islands would have big appetite to invest in major projects in China.

Yet the amount of direct investment from Seychelles to China reached the $100 million mark in 2009, compared to $7 million worth of Chinese investments in Seychelles during the same period.

The two countries established diplomatic ties only in 2008.

The large number of offshore companies anonymously registered there could possibly be the answer to this puzzle, analysts say, according to Africa Renewal.

“Countries like Mauritius and the Seychelles are magnets for business entities and entrepreneurs around the world because of their relaxed taxation, lighter regulation of corporate activities and greater business flexibility,” it said.

On the other hand, their strict preservation of confidentiality for business transactions and individuals has made it almost impossible to track where the investments that are flowing out of these islands actually came from, it added.

This view is shared by Modern Weekly, a Chinese magazine which said in a 2017 article that Mauritius is from where overseas Chinese companies and merchants would invest back to China.

There is hardly any open statistics available on investment from Mauritius and Nigeria .

 

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