Analyze and Perspectives of The Chinese Influence in Africa
A Way Out of Postcolonialism ?
Working
Paper Accepted to
The 6th Pan –European Conference On International Relations
“Making Sense of a Pluralist World”
Turin, 12th-15th of September 2007
Valerie Paone 1
Research Associate Pantheon-Assas, Centre Thucydides, Paris
Abstract:
China is emerging as one of the superpowers of the coming decades. It is currently described on
the global market as a neocolonial or neo-imperialist country, able to counterbalance worldwide
the rules of the economic markets, education, technology or the field of research, even in
developed countries. Since it became an oil importer in 1993, in order to support its internal
growth China has turned back to Africa. In the mid-1990s, the Chinese diaspora created local
networks of retailing in Africa, bringing low-cost products that were more competitive than
European goods had ever been. Moreover, Chinese Transnational Corporations (CTNCs) settled in
some African countries, a move which allowed these African countries to obtain loans from the
Chinese government. As a result, some major infrastructure projects are now held by CTNCs in
these countries. Whereas from the 1980s on little interest was shown in the continent, today Africa
no doubt holds a key geopolitical position and represents major resource and economic stakes for
the West and the East. Foreign Direct Investment (FDI) in Africa shows that the continent had
been considered as an open, unilateral provider of natural and human resources but never as a
potential developing market. Beyond these issues, could the Chinese model be a way out of
European postcolonialism or is China just another plunderer and colonizer? But China might also
be a worst predator of Africa than any other country never was. Colonization is under controversial
debates. Nevertheless one of these indirect effect of the colonization is that it stopped the Tribal
1
Contact details: e-mail: [email protected].
1
Wars and ethnic genocides. Does China have a positive effect on African growth and development
meanwhile China is indirectly supporting tribal wars ? Since few months many papers and reviews
have focused on the “dark” aspect of China in Africa and argued that China is enhancing the
weaknesses of Africa.
These questions have arisen from the focus of continuing research into the worldwide influence of
transnational corporations, research which examines the spread of the notion of corporate social
responsibility among Western Transnational Corporations (WTNCs) and Developing Country
Transnational Corporations (DCTNCs), in particular those of China and India. The second issue
springs from recent work on micro-financing.
This working paper represents the first part of an investigation that attempts to analyze the current
Chinese presence in Africa in comparison with the colonial or the postcolonial presence. Through
the use of further data, the next stage of research will attempt by combining micro and macro data
to quantify the distributive effects of the Chinese presence in Africa (ex-post and ex-antes) in
comparison with the French presence. It will attempt to reveal significant differences and effects.
How long will Africa remain marginal? 2
“To colonize means being in touch with new countries, profiting from their resources in every way,
putting these countries in line with our national interests; but it also means bringing to these
primitive peoples that are deprived of intellectual, social, scientific, moral, artistic, commercial,
and industrial culture which are the privilege of superior races. Thus, colonization is carried out
by superior races in new territories in order to achieve this double project.”
Merignhac Lawyer: Manual of colonial and economic laws, 1912
2
See Hale, D. (2005), “How Marginal is Africa?”, Resource Investor, 25 February.
2
Introduction
China is a country with huge spatial inequalities and social polarization. Despite this, its economy
is among the world’s top-five. In many ways, China seems to be able to change the rules 3 both
worldwide and in formerly colonized countries. In developed countries, China has bought or
attempted to buy subsidiaries (Unocal, IBM, Rover, among others) through state-owned companies
or “private” firms. The sell-offs usually involve Western subsidiaries, whose assets are considered
non-strategic or unprofitable. The situation has led to competition between national economic
champions from all countries as these corporations attempt to secure existing or new markets.
Some recent examples have underscored the heightened tension among Western and Chinese or
firms of developing countries. 4 However, China is also a tough competitor in developing
countries 5 .
Southeast Asian countries and today North-Africa are suffering today of its
competitive workforce, its harnessing of FDI and its increasing know-how. China is currently
experiencing exponential population growth; it continues to be a developing country with
economic specificities and major internal problems. 6
3
The most recent example is that of the definition of Chinese technology standards. Cf. Deloitte Research. (2004),
Changing China, Deloitte, London.. Linux, RFID, EVD, audio and video encoding, cellular networks, WiFi and
satellite are under review and being restructured by China, which is creating its own standards.. China holds 30% of
the American debt. The rate of savings in China is 45% compared with 12% in the US. The unproductive assets of
emerging countries amount to US $14 trillion, China :the figure of $ 4,7500 billion represents more than twice the
market capitalization of the firms listed on the CAC 40 (Challenges, no. 24, 23 February 2006).
4
France has recently witnessed an interesting example: Arcelor was in the process of buying the Canadian firm
Dofasco when Mittal attempted a takeover. Arcelor first said that it would only consider a Mittal cash-only offer. Then
Arcelor’s chairman separated Dofasco from Arcelor in order to protect the former from the takeover. Arcelor said it
might consider an increase in the cash offer, then attempted to form a partnership with a Russian firm. The objective of
all this was to raise the bidding. As a result, Arcelor and Mittal are merging and the French government is working on
a law to restrict unfriendly takeovers. In California, criminal lawyers, citing Burmanese litigation pending against
Unocal, requested the dismantling of Unocal before its sale to Chevron in order to avoid a CTNC bid. Another
example was offered in the Dubai Ports World controversy in the US, or when the Dubai company bought the UK
company P&O.”
5
Beausang, F. (2003), ”Third World Multinationals :Engine of Competitiveness or New Form of Dependency ? “,
Palgrave.Mc Millan.
6
China still receives food aid from U.N in 2004.
3
In order to support its internal growth since it (and to a lesser extent India) turned back to Africa 7 ,
this continent has aroused renewed interest. 8 Chinese FDI in Africa has strongly increased.
According to a recent study 9 , China increased its investment of $20 million in Sub-Saharan Africa
in 1990 to $12 billion in the period from 1998 to 2002. Twenty-eight percent of this investment
went to extractive projects, and no less than 64% to the manufacturing and industrial sectors. 10 In
consequence, Africa seems to be experiencing its best and most durable economic performance in
the last twenty years. A study carried out by the OECD in 2005 forecasts 5.8% growth in Africa
for 2006. The export of oil and raw materials is the major reason for Chinese interest in Africa and
may be a major factor in Africa’s growth.
According to Fieldhouse 11 , growth represents the increased output of an economy over time.
Growth may come from raw materials, the labor force, the quantity or quality of goods. Growth
does not mean development. Development has mostly been used to describe where developing
countries are in their evolution and as they undergo transformation. However, the question of
development is a determining question to the rightfulness of colonization and a principal issue in
determining its effects.
China certainly sees Africa as a key source of energy and raw materials and as a market for cheap
Chinese products. Some have argued, however, that China’s presence in Africa represents a kind
of “red imperialism”, that its commitment to “non-intervention” 12 provides a legal excuse for
human rights abuses, and that its selling of cheap goods to Africans represents unfair trading
practices.
7
In 2002 imports ($6m) and exports ($17.8m) with Africa totaled $23,800m. In 2005 the total came to $60.5m
(imports $50.2m, exports $10.3m).United States Department of Commerce. International Trade Administration.
(2006), U.S.-Africa Trade Profile. United States Department of Commerce, Washington, D. C.
8
In May 2001, a landmark trade legislation ,the African Growth and Opportunity Act (AGOA)was ratified between the
US and 35 sub-Saharan countries. African Growth and Opportunity Act (AGOA).
9
Geld, S. (2005), “South-South Investment in Africa: The Case of Africa”, Africa in the World Economy – The
National, Regional and International Challenges, Fondad, The Hague.
10
The World Bank indicates that China controls 450 projects in Africa. Taiwan is also invested in Africa through
AGOA projects. Unlike China, India is present in the IT, banking, automotive, steel and pharmaceutical sectors in
South Africa.
11
Fieldhouse, D. K. (1999), The West and The Third World, Blackwell Publishing. Blackwell, Oxford.
12
China is an arms exporter with extensive involvement in Sudan, Nepal, Myanmar , “Amnesty International. Report
(2006), People’s Republic of China: Sustaining conflict and human rights abuses, 11 June.”).It has not signed any
multilateral agreement at the international level despite its UN membership. Its latest support in Sudan was
representative of its influence worldwide. The use of the death penalty, human rights abuses, 70,000 revolts in the
Chinese countryside for food aid were severely suppressed in 2005.
4
Beyond these controversial aspects of its interest in Africa, China has apparently chosen other
mechanisms to gain control of Africa. 13 . There are three levels to enhance its strategy. China
grants special rate loans 14 , oversees major infrastructure projects through its TNCs, and helps with
high-level educational programs. 15 Also driven by political or economic motives, the Chinese
Diaspora began in 1993 16 , at a time when other nationalities were no longer interested in the
continent. The Chinese Diaspora brought back very low-cost products to Africa. As a result,
Africa seems under a double economic trend: top-down with at the State and TNCs level and
bottom-up with the Diaspora. If the price-makers are Chinese today, does this bottom-up/top-down
dynamic really benefit Africa?
It is thus important to ask: Is China getting a grip on empire.
Colonization is under strong controversial debates. Historical and economic studies (Ferro,
Fieldhouse, Marseille)
17
have described and analyzed the aims and operating methods of
colonialism, neo-colonialism and imperialism. They have showed that the operating methods of
colonial countries have had specific consequences on local development and on populations both
currently and in the past. A political and economic system in which a nation takes the control of a
country (direct or indirect) has consequences in social, economic, political fields.
Other studies 18 have focused on the influence of the identity of the colonizer in the post-social and
-economic development of formerly colonized countries (Fanon, Said, La Porta, Cogneau) 19 .
13
Alden,C.(2005),”Leveraging the Dragon:Toward “ “An Africa That Can Say No”, on Yale Global on Line.
Between 1970 and 2002, Africa received $54bn in loans from the IMF institution . It has already paid back $55bn in
interest and principal. In 2002 it still had $29.5bn to repay. China has granted loans at zero interest.
15
Since the early 1950s China has carried out educational program assistance in twenty African countries. It has also
trained 10,000 African students. In her 2005 speech “Where was America?” California congresswoman Barbara Lee
said that Chinese influence was a natural result of decades of aid and political sympathy. Between 1955 and 1977
Africans were embroiled in wars of colonial liberation.
16
130, 000 Chinese live in Africa today (Source The Economist 2006).
17
Ferro,M,(1994),”Histoire des Colonisations:des conquêtes aux indépendances », Paris,Le Seuil.
Ferro, M,(2003), »Le livre noir du colonialismes :de l’extermination à la repentance »,Hachette, Paris.
Fieldhouse, D.K,(1966), »The Colonial Empire », « Economics and Empire 1830-1914” (1973), “Black Africa 19451980” (1986),London, “Merchant Capital and Economic Decolonization”(1994),Oxford.
Marseille,J,(1985), ”Empire Colonial et Capitalisme Français :Histoire d’un divorce,Paris, Albin Michel.
18
Acemoglu D., Robinson, J. A. and Johnson, S. (2001), “The Colonial Origin of Comparative Development: An
Empirical Investigation,” The American Economic Review, vol. 91, no. 5. .
19
Fanon,F.(1952),”Peaux Noires, Masques Blancs”,Paris, Ed,Le Seuil,Reed 1972.
Said,A. &SimonsL.R., (1975),”The New Sovereigns: Multinational Corporations as World Powers”,NJ,Englewood
Cliffs.
La Porta,R., Lopez-de-Silanes, F., Schleifer, A., and Vishny, R. W. (1998), “Law and Finance,” Journal of Politic
Economy, vol. 106, no. 6
14
5
Recently 20 , Alden, Marchal and Tull 21 have studied the principal Asian investor countries, which
have been overlooked for too long. They have gone beyond the controversies and tried to evaluate
the impact of these countries (China and India) on the African Continent. Yeung
22
has argued that
DCTNCs are more beneficial to host countries than the TNCs of Western countries. Furthermore,
Geld
23
has maintained that the strong, informal and less corporative model of DCTNCs is more
appropriate to developing countries.
Thus since China is becoming a major actor in Africa, does it affect Europe’s postcolonial
relationship with Africa? In the light of our survey, it certainly does. The Chinese presence simply
reactivates the old economic concept of competition in Africa.
Therefore, what might be the effects of the Chinese presence and investment on African
development?
The present working paper is structured as follows. 24 We will briefly look at the African context
and at the mechanisms of colonialism in Africa, using economic indicators. We will describe and
compare the concepts, methods, and objectives of colonialism, neocolonialism and imperialism and
look at their models and effects. We will analyze and compare the French and the Chinese
operating methods. The paper will conclude with a synthesis of these first findings.
Africa: a world apart in the Third World
From Settlers to Independence
Cogneau, D. (2002),”Afrique et Colonie:Une étude empirique”,Dial, Research unit CIPRE of French Institue For
development (IRD)
20
OECD report November 2005: China and India :What is in it for Africa”, Chen, Goldstein &al.
21
Alden, C(2005),”China in Africa”,Survival, vol 47,no.3.Marchal,R (2005),”Comment être semblable tout en étant
différent?Les relations entre la Chine et l’Afrique, Afrique-Asie .
Tull, D (2005) »The African Politic of the Chinese Republic »IIPS, study no 20.
22
Yeung, H.C(1999),”The Internationalization of the Ethnic Chinese Business Firms from South East Asia:
strategies, processes and competitive advantage.
23
Geld (2005).op. cit.
24
The present contribution is part of work in progress for Questions Internationales Publishing, Paris. The work will be
published in full in November 2006.
6
For decades Africa and the African people were included in the international economy only in
order to serve the interests of Western countries, Western consumers and certain African leaders.25
Laws and trade agreements 26 were drafted in order to serve the economic and expansionist
interests of the colonized countries and to keep “peace” in the countries. Colonization was
supposed to benefit both settlers and former countries. Retrospectively colonization seems a
doomed enterprise. If the rhetoric of colonization was humanistic 27 , the practice and laws of
colonization were toughly based on economic interests 28 , making the divergence between means
and ends glaring. The cost of colonization was determined by the accessibility to these new
countries and by the return on investment (ROI). Colonization represented an optimized “supplychain” concept before its time. In short, three economic strategies are in general identified to
describe colonial methods in Africa. 29 First, short cuts in the supply-chain guaranteed cheap or free
labor and raw materials, creating a competitive advantage and abundantly profitable markets.
Second, unsellable surplus goods were exported from the Metropole to Africa. Third, colonization
meant to open new opportunities for European corporations to carve out a share of Africa.
During the colonial period, FDI was mainly allowed to sustain the needs of the Metropole, despite
the British Colonial Development Act of 1930 the French Economic and Social Investment
Development Fund of 1938. The over costs to promote assimilation were too high and finally the
infrastructure, education, and investment served the colonial interests. 30 However, if raw materials
and the cost of labor were inexpensive or free, the cost of long-lasting investments in African
infrastructure, manufacturing or agriculture became too high during the recession and interwar
period for private or public sector investment. In 1957, six European countries signed the Treaty of
Rome, following which most African countries gained their independence. Upon independence,
most African countries were in every way under-equipped. After a long extractive period African
countries started acting in their own interests. During the 1960s, the whole continent suffered from
the breakdown and contraction of trade.The consequences of economic sanctions are still felt
today.
25
Maddison, A. (2001), The World Economy: A Millennium Perspective, Development Centre Studies, OECD, Paris.
Civil and social rights, commercial, pattern right, property, tariff barriers, etc.
27
Serving humanistic, economic and “civilizing” aims. Chamberlain, Ferry, Kipling, Leroy-Beaulieu argued that
settlers had a moral duty and obligation to preserve the interests of the colonized people.
28
Indigenous populations suffered enslavement, forced labor, unequal or a total absence of civil or property rights,
while settlers enjoyed exclusive trading and commercial rights.
29
Marseille, J. (1984), Empire colonial et capitalisme français: histoire d’un divorce, Albin Michel, Paris.
30
The United Kingdom had strong education and health programs in India. However, the total cost for 300 million
Indians was so high that the British government eliminated the greater portion of the Indian population from the
educational program.
26
7
We now summarize the main social characteristics and economics rules of the Colonization.
Model and specificities: Colonial, neo- or postcolonial, and imperial models
Models and Rules
Characteristics
Laws and economics rules
Colonialism
Presence in the country
Free resources
Direct or indirect
Unwanted people
Raw materials
Conflicts of interest among
Harsh labor policy
home country and settlers
Slavery
(colons)
Forced labor
Settlers and colonized
people unable to produce
Revenues from Former
National agreements and
country to support law and
national flag
order
Strong government system to
Monopoly on conversion
protect Settlers interests
industry
Obsessive fear of mixing
Minimum Taxes on import
races
Investments for exportations
Inequality between
Infrastructures for settlers’
colonizers and colonized
needs
Indigenous regime
Drainage of resources
Local government (UK)
Commercial monopoly
Humanistic rhetoric
Maintenance of artificial
Conversion
prices
Spread of Christianity in
Captive markets very
non-Christian areas
profitable
Assimilation
Annuity
Association (UK)
High tariff barriers
Centralizing (France)
Peremptory regimes
Decentralizing (UK)
Extensive territory
Special arrangements
Cost
of
assimilation
to
8
former
General costs
Neocolonialism
Colonialism without
Bilateral or specific trade
colonizers (Prime Minister
agreement
Nkrumah in Ghana, 1968)
National WTNCs
No flag
Monopolistic or oligopolistic
No conversion
markets
Independence and
Captive markets
sovereignty of the
Cooperation
developing country but
Aid to development
controlled from outside the
Loans with interest
country
Imperialism
National messianic
Geo-strategic domination
Overlap with colonialism
soft or hard ways to preserve
(Japan, US,UK)
its position
Presence in the country and
No real and clear aims
control from inside and
(Schumpeter)
outside
Soft or hard power thanks to
absence of counter power
Parasitic relationship
After Independence
The Accra conference established the inalienability of the borders of African countries and in a
roundabout way the economic interests of developed countries. Following the over-exploitation of
resources, the decline in imports, the deregulation and collapse of raw material prices created a
generalized African collapse. In 1950, the gross domestic product (GDP) in Africa was 4.2%. 31
Imports from the continent came to 9% of total European trade. From 1960 to the mid-1970s, the
average growth rate shows that during the period Africa experienced its most rapid economic
31
Hale, D. (2005).op. cit.
9
development. 32 This was mainly due to increases in oil prices from the three major oil exporters 22 ,
Nigeria, Cameroon and the Republic of Congo. Conversely, the period from 1980 to 1995 shows
that the GDP per capita (GPC) declined by 1.5% per year in Sub-Saharan Africa. Africa’s share of
international trade decreased from 2.4% in 1970 to 1.3% in 1987. 33 During these years Africa was
burdened by enormous debt, inefficient and corrupt governments, and economic isolation. It was
forcedly left out of the economic globalization process and, as a result, it returned to its GDP of the
mid-1960s. 34 Africa was not a potential consumer market for corporations. 35 European firms were
living on captive markets and trying to maintain their long-lasting monopoly on African revenue. 36
Most developing countries are former colonies. In a way, these developing countries are the
artifacts of the legal, social, ethnic, cultural, and religious traditions of the colonizers. 37 According
to an Organisation Exterieur du Commerce Français (OEFC) report 38 , Africa can be divided into
three major groups based on typology of trade but five groups are effective in Africa.
North Africa (NA): This first group is most closely linked to the economic space of the
Mediterranean. Despite Algeria’s withdrawal from the French economy, the close relationship
between this group and France means that North Africa remains connected to France and means
that the other groups necessarily pass through this space. Unlike the Sub-Saharan group, after 1970
the North African group was the less damaged economically. Despite the fact that Europe turned to
other countries, North Africa increased its involvement in African trade. In 1980, this group
represented 45% of trade between Europe and Africa.
South Africa (SA): This country forms a single group. The marginal model linked with its wealth of
raw materials and production capacity represents up to 50% of the wealth of Sub-Saharan Africa
and is today the main destination for FDI in Africa.
32
Size and growth of the domestic product are the only indicators
In 1984, Africa possessed 7.6 % of the global reserves in oil. Today it possesses 9.4%.
33
Cf.: OFCE report 1990, no. 18. Less than 4% of European imports came from Africa in 1990.
34
Contrary to received ideas, FDI inflows to North Africa totaled 152 versus 248 to Sub-Saharan Africa (South-Africa
included) in 1980 and 5,270 versus 12,821, respectively, in 2004. Outflows came to 87 for North Africa versus 1,002
for Sub-Saharan Africa in 1980 and 514 versus 2,310 in 2004. United Nations Conference on Trade and Development.
(2006), UNCTAD Handbook statistics 2005. United Nations Publications, New York.
35
Over the last decade the conflicts in Africa have represented around 75% of the total number of conflicts worldwide.
36
From 1989 and 1994 inflows came to $4bn; for 2000, to $8bn. FDI in Africa in 2004 was 2.8% of the total
worldwide FDI. UNCTAD. (2006), ibid.
37
Fieldhouse, D. K. (1999), op. cit.
38
See the OEFC report no. 18: Coquet, B, Daniel, J-M, and Forman, E. (1999) “Europe and Africa: Ebbing and
Flowing.” The report contains all the statistics for the period between 1960 and 1990 divided by zone.
22
10
Sub-Saharan Africa (SSA): Sub-Saharan Africa was mainly under the influence of France and the
United Kingdom in the period just prior to independence. 39 If all the groups have been affected by
decolonization, this last group has been the most affected by the contraction of trade and the loss of
European investment. According to the OEFC report, the Sub-Saharan group fell from 4.7% of
European imports from 1960 to 1965 to 1.8% from 1985 to 1990. The group lost about 60% of the
nominal weight in exports.
We will now look at the French and Chinese presence in Sub-Saharan Africa in the past and at
present.
France in Africa: Past and Last Days
France has been in Africa for centuries 40 , but it began planning its colonial project 41 as a massmarket concept as early as 1880. At that time, France was ready to invest heavily in Africa. Later,
the French Colonial Exposition of 1931 promoted colonialism as a nationalist project and meant to
obtain the approval of the French people. However, the decolonization process started during the
interwar years, although it only achieved noticeable differences in the colonies at the end of World
War Two. The French presence in Africa went through different stages: Following independence,
France maintained its economic interests in its former colonies in two ways. First, the
decolonization process involved cooperation between France and it former colonies, cooperation
which is often described as “neo-colonialism.” France attempted to secure its interests indirectly by
way of “networks.” The second link between France and its former colonies involved aid for
development. As a result, we might say that former French colonies were under French influence
even after they gained independence. Aid for development is generally not controversial, although
the methods of distributing this aid generally are.
Last Days
The globalization of the African economy brought about the dismantling of monopolies (in
pharmaceuticals, telecommunications, construction, public works, and banks). The withdrawal of
39
For domestic reasons and the decline of their international influence, Belgium, Italy and Portugal had for the most
part already left Africa. French ownership in Africa still amounted to 15% of total ownership in 1960 and accounted
for 80% of trade between France and Africa.
40
Through trading post, slavery, during the French and Industrial Revolutions.
41
See de Tocqueville, A. (1999), De la Colonie en Algérie, Editions Complexe, Paris. His text was written in 1847.
11
French corporations from Africa began in 1980 and accelerated with the fall of Soviet Union.42
France and French corporations then turned to the countries of the ex-Soviet Union. 43 During this
period France and French corporations faced increasing worldwide competition, a domestic
recession and the consequences of the first Gulf War. Even if Africa was a favored trading partner,
aid for development was no longer a priority for France or a captive continent. The withdrawal has
recently been accelerated by events in the Ivory Coast. Today France remains the leading supplier
to Sub-Saharan African with a 28.2% share of the market. 44 There are 731 French subsidiaries in
Sub-Saharan Africa; half of the Sub-Saharan corporations involved in joint-ventures are under
French management. The French presence in the CFA zone today is comprises about twenty
transnational firms. 45 The withdrawal of these firms 46 , which have had a difficult history in the
host countries, has often provoked anti-French sentiment. The construction firm Bouygues 47 (Saur
and Sodeci) has ended its activities in Mozambique and Equatorial Guinea, will soon leave the
Ivory Coast, and currently intends to leave Mali. Veolia (water) ended its contracts in Chad after
three years of operation. Total (oil) must face confrontations with NGOs, which harms its
reputation, but its primary concern is tough competition coming from Chinese oil corporations. In
addition, French banks have to compete with Chinese banks 48 , and the French retail sector must
compete with Chinese retail corporations. Today the average competitive cost in Africa is 20%
higher than in the rest of the world due to the expense of exportation, transport and logistics, as
well as to instability in the region. 49
China in Africa: Background
Africa and the People’s Republic of China have no geographical or cultural ties that might favor
their doing business together. 50 China’s involvement with Africa began in 1955 during the
Bandung Conference. By encouraging those populations under colonial rule to resist, and by
supporting Nasser in the Arab world, China laid the groundwork for its future business. The “Third
42
Africa receives between 3% and 4% of worldwide FDI. French FDI for 2004 in Africa was 4% of total FDI in Africa
versus 13% for U.K and 8% for the US. UNCTAD, op. cit.
43
NGoupandé, J. P. (2002), L’Afrique sans la France, Paris, Albin Michel.
44
Council of French Investors in Africa, Study 2005-2006, “MOCI”, no. 1735-1736.
45
Bouygues, Vinci, CFAO, Total, Veolia, Air France, BNP Paribas, Société Générale, Accor, Rougier, Bolloré, among
others.
46
In Libreville for year 2003, FDI came to €87.7m from profits of up to €526m.
47
See appendix 2: French appendix dates from 2002.
48
Interview with Lionel Zinsou, May 2006. Rothschild Bank Associate and Capafrique sponsor.
49
Interview with Eric Dalhstrom, General Manager in Africa and the Middle East for Imperial Tobacco, which has
since purchased a Bollore subsidiaries.
50
See Aicardi de Saint Paul, M. (2004), “La Chine et l’Afrique, entre engagement et intérêt”, Géopolitique africaine,
no. 14.
12
World” is in large part the offspring of colonization. 51 The similarities between African countries
and China, resulting from a history of slavery and colonization, in addition to China’s enormous
population, has led China to proclaim itself the leader and defender of developing countries.
In 1978, the Chinese government, under the initiative of Deng Xiaoping, opened the Chinese
economy and carried out its first FDI. 52 The strategic decision taken by the Chinese communist
party aimed to give China a global role proportional to its demographics by creating global
”national economic champions” by 2010. 53 National leaders have been promoted in strategic
sectors , such as in the energy, university and business school sectors, and extensively, in the
service sector. This strategy was termed “market socialism” 54 by the Chinese government. After
developing FDI in low-cost Asian countries, 55 its rapid internal growth led China to restructure its
presence and operating methods at the global level. Africa began to occupy a strategically
important position for both the West and the East. 56 The amount of trade between China and Africa
came to $37bn in 2005 versus $10bn in 2000. The structure of the exchanges should be carefully
studied in order to understand how it affects or benefits Africa. In October 2000, China created the
first Sino-African forum, a move that has strengthened its relationship with Africa. Since 2000, as
China has increased its GDP it has also increased its presence worldwide.
China in Africa: Last Days
51
Moreau-Defarges, P. (2005), “Un Tiers-Monde en réinvention”, IFRI, Paris, Ramses, Dunod.
UNCTAD, (2006), op. cit. Outflow FDI for 1980 totaled $82m), for 2004 $4,1583m. Inflow FDI came to $797m
versus $9,5265m, respectively. Indian FDI outflow for 1980 amounted to $4m versus $2,222m for 2004, and inflow
came to $79m and $5.4bn, respectively.
53
Cf.: Appendix 1.
54
The oldest national firms, such as Huawei and Hutchinson Wampoa, founded in the late 19th century, were the first
to benefit from this strategic change. If China accounted for 1.5% of international trade in 1980, it had become the
fourth largest economic power by 2005, representing 10% of international trade. China currently accounts for 5% of
worldwide production and 20% of the world's population.
55
UNCTAD report 1998/02/11 and the UNCTAD handbooks of statistics , Conference on Trade and Development
Geneva , 2005.. The total assets of the top 50 TNCs from developing countries have been rising much more rapidly
than those of the world’s top 100 TNCs. The increase came to 31% in 1996 alone, rising from $79bn in 1995 to
$104bn in 1996. Since UNCTAD first introduced the top 50 list in 1993, the increase has risen to 280%. The total
foreign sales of the top 50 TNCs from developing countries reached $137bn in 1996 ($120bn in 1995). The number of
their foreign employees rose by 17% to 1.24 million. TNCs from the US, Japan, the UK, France and Germany
accounted for three-quarters of the entries on the top 100 list in 1996, just as they did at the start of this decade when
UNCTAD began the ranking. Only two TNCs from developing countries rank among the world’s top 100, with
Daewoo Corporation ranked at number 43 and Petróleos de Venezuela at 73. Daewoo is by far the largest firm on the
top 50 from developing countries in terms of foreign assets, as it has been for some years. However, numerous
companies have appeared and disappeared from the list and overall mobility seems to be higher than on the world’s top
100 list. Nevertheless, the top 50 continues to be dominated by TNCs from Hong Kong, China, the Republic of Korea,
and, to a lesser extent, Brazil and Mexico.
56
The latest events in Darfour demonstrate that the security of China’s economic interests in energy resources remains
a central issue.
52
13
Through its economic aid and investment, China is today present not only in Sub-Saharan Africa,
but in almost every African country. China is currently the second supplier to Sub-Saharan Africa;
in 2004 its share of the African market was 11.2% (8.7% in 2003). Chinese corporations are
present in Algeria (Oil Adrar, Hospital Oran, the Hilton Hotel Alger), in Senegal (the Dakar
freeway, carbon power station, arts museum), Nigeria (a telecommunication satellite, oil
exploration at Port Harcourt), Angola (25% of the oil industry), and Zambia (farming). The
Chinese also invest in the fishing, lumber, and telecommunication sectors in which French
corporations have major interests. Chinese road and bridge construction firms have 500 projects
under way, 45 of which the Chinese government provides financial assistance.
China has also played a part in the Chinese diaspora through the development of micro-finance
loans, capital equipment, consumer goods and consumer durables. A study from the Consultative
Group to Assist the Poor (CGAP) is underway to quantify the effects of the micro loans and to
define a strategic approach in Africa. China also provides educational exchanges and supports
African students. As the other sector, China has determined to be see its university system ranked
among the top 10 by the year 2010.
Summary:
MODEL
CARACTERISTICS
CHINA MODEL
Presence in the country
YES
COLONIAL
Unwanted people
BOTH
Conflicts of interest among home BOTH
country and settlers
Settlers and colonized people
NO
unable to produce
NO of course
National agreements
YES
National flag
NO
Obsessive fear of mixing races
Not applicable but YES
Inequality between settlers and
Not applicable
colonized people
Indigenous regime
Not applicable
Political rhetoric
14
Humanistic rhetoric
NO
Conversion
Assimilation
NO
BOTH
Association (UK)
BOTH
Centralizing (France)
BOTH
Decentralizing (UK)
NEO-COLONIAL OR POST
Colonialism without colons
NO
(Prime Minister Nkrumah in
Ghana 1968)
No flag
NO
NO
No conversion
Independence and sovereignty of
Not applicable
the developing country but
controlled from outside the
country
IMPERIALISM
National messianic
NO (Political)
Overlap with colonialism (Japan,
US, UK)
Presence in the country and
YES
YES
control from inside and outside
Soft or hard power not due to
Not applicable
any other counter power
Parasitic relationship
NO
MODEL
Laws and economics rules
CHINESE MODEL
Colonialism
Free resources
NO
Raw materials
YES
Slavery
BOTH
Forced labor
BOTH
Monopoly on conversion
Not applicable
15
industry
BOTH
Investments for exportation
Infrastructure for settlers’
needs
Drainage of resources
Commercial monopoly
BOTH
NO
NO
NO
Maintenance of artificial
prices
Captive markets very
profitable
NO
NO
YES
Annuity
NO
High tariff barriers
Peremptory regimes
Extensive territory
Special arrangements
Neo-Colonialism
Bilateral or specific trade
YES
agreement
National WTNCs
Monopolistic or oligopolistic
YES
NO
markets
Captive markets
NO
Cooperation
YES
Aid for development
YES
BOTH
Loans with interest
Imperialism
Geo-strategic domination
YES
soft or hard ways to preserve
its position
No real aims (Schumpeter)
NO
A comparison between the French and the Chinese advantages:
16
CHARACTERISTICS
FRANCE
CHINA
In home country
Unprofitable market
Exponential Growth
Increased cost of competition
Transfer of technologies and
Eroded margins
accumulation of knowledge
Monopolistic markets available to
Immature domestic markets
competitors
Low-cost products
Small-scale, labor-intensive
technologies
Diversified sectors
In host country location
Raw materials, natural resources
Natural resources needs
Size and characteristics of the
Low-cost workforces
market
State-owned firms under
profitable
Private firms with management
problems
Last evolutions
Takeover bids from developing
Capabilities in regular
country TNCs
investments
Irregular investments
Huge savings
Low production capacity
Workforce supplier of the 21st
No employment growth
century
Mass layoffs by TNCs or sell-offs
Huge production capabilities
Accelerated mergers
Working on high-technologies
with local standards
Education programs in Africa
Troubles in China: food,
health, human rights, civil
rights, death penalty, forced
labor, etc.
Increasing internal instability
Conclusions
17
The rising power of China (and of developing countries) is inexorable and seems to be, despite
certain controversies, a alternative factor to the European presence, in African development.
Developing countries and China in particular, 57 after many years of gestation and accumulation of
knowledge, are today demonstrating their ability to evolve rapidly, to integrate and adapt new
concepts into their operating models. 58 The rising power of China is also reawaking at the state and
corporate levels interest in Africa that is apparently beneficial to the continent. Contrary to the
stagnating economies of industrialized countries, the dynamic Chinese economy enables China to
invest regularly in innovative sectors and in undercapitalized or lifeless firms. Even if China is still
very far from seeing its revenues ranked among those of the top developed countries, it has certain
competitive and uncompetitive advantages. Furthermore, China does not currently suffer from the
shareholder pressure yet. China is able to send, if Africa needs it, million of workers unskilled or
skilled, thousand of engineers or doctors and forced labor people.
In order for French corporations to maintain a major economic role in African countries, they will
have to invest financial resources proportionate to those of their Chinese unfair competitors. They
also need to form partnerships enabling them to enter or keep markets and consolidate their
presence efficiently. Today they are principally present in their over-competitive and decreasingly
profitable domestic markets. French corporations no longer create jobs in France, but less create
financial capitalization, which enables them to invest in research and development in order to
confront their competitors. The stakeholders’ pressure maintains them under the reputation risk
while Chinese’ corporations are extricated from an embrace . On the other hand, China and its
TNCs have their own set of problems (control of growth, internal risks, health, human rights
abuses, political and social troubles, internal ethnic conflicts, or management, cultural knowledge)
with negative consequences in the short- and medium-term that must not be neglected. However,
it seems that its rise in power and the rise lead inevitably to major changes. The internal pressures
exerted by the rise in social, healthcare, democratic standards and the external convergence of
57
Cf. Haier case. Liu, H and Kequan, Li.( 2002)”Strategic Implication of Emerging Chinese Multinationals: The Haier
Case Study”, European Management Journal, Vol-20, 6, p 699-706.
Shenkar, O.( 2004)”The Chinese Century” Wharton School Publishing.
Shenkar, O.(2005) »Can China Create Global Companies ? », The Chief Executive, Nov , n°213.
58
The most recent example is that of the definition of Chinese technology standards. See Deloitte Research. (2004),
op. cit. Linux, RFID, EVD, audio and video coding, cellular networks, WiFi and satellite are under review and being
restructured by China, which is creating its own standards.
58
In 1965, Japan and developing Asian countries (excluding China) accounted for 4% of global GDP. Today, they
account for 13%. The Economist, « Beyond The Great Wall » 25-31 March 2006.
18
financial markets 59 , regulations, and laws in China 60 or Africa are major aims but these both actors
might change the rules in many way.
So far, our work is progressing on economic data.
Appendix 1: Chinese corporations operating worldwide and in Africa
In 2005, among the top 500 corporations listed, 35 were located in developing countries: China 16,
India 5, Brazil 3, Mexico 2, Malaysia 1, Russia 3, Taiwan 2, Singapore 1, Thailand 1, and Turkey
1.
China: 16 companies are in the top 500, the first (Sinopec) of which ranked 31 with $75bn in
revenue.
Six Chinese companies (Sinopec at 7) and one Indian (Indian Oil at 33) ranked among the Asia top
50.
Among the newcomers to the list: three Chinese companies and one Indian company.
Name
Huawei
China
Privately-owned
Hutchison Whampoa
Limited
Hong Kong
Headed by Li Ka Shing,
the wealthiest Chinese
individual
Year of creation Number
of
employees
1888
34,000
employees
(around 3,400
foreign staff),
48% are
engaged in
R&D
a 177 year-old
company
200,000
Revenue
(2004)
Revenue
(2004) 3,827 M
Comments
10% revenue in
R&D
Established joint
Contracted sales
venture with 3Com
2005 : 8.2 billion
in 2003, Siemens in
USD, an increase of 2004
47% year
60% of sales came
from international
sales
$23bn
Hutchison Telecom
Revenue Growth (1 turnover increased
yr): 28.10%
64.1% in 2005
347 (2004 rank:
407)
59
Socially responsible investment (SRI) for high-risk emerging market US potential demand in 2005 went from $4.5bn
to $500m . SRI in emerging markets came to less than $400 million in 2003. Comparative figures for the US in 2004
give $2,340m in SRI asset management, $8m (+71% since 2003) for France and $400m for 8 European countries
(Euro SIF Lobbying) .
60
China is working on CSR as a legal component of Chinese Law. Lee J.(2006),”Converging or Diverging Legal
Aspects of CSR in Anglo-Saxon and Chinese models compared”, Nottingham University and Business School
Congress, Kuala Lumpur, April 2006.
19
Shanghai Automotive
Industrial firm (Group)
?
68,720 (2004)
Consolidated
revenue of $11.7bn
(2003)
government-owned
It entered the
Fortune Global 500
list on 12 July 12
2004
export of $700m
Strong R&D
Overseas M&A,
SAIC signed a
contract with
Sangyong Motor
creditors to
purchase 48.92% of
SYMC's stock, thus
becoming the
biggest stockholder
of SYMC
JV with GM and
Volkswagen
China First Automotive
Works
138,049
$13.4bn (0.4%)
Rank: 448 (2004
rank: N/A)
Industrial and
Commercial Bank of
China
375,781
23 Bn $ (12, 9%)
China Mobile
Communications
111,399
$24bn (15, 4%)
Rank: 224 (2004
rank: 242)
China Life Insurance
75,984
$25bn (13%)
Rank: 229 (2004
rank: 243)
21000 domestic
branches, 100
overseas branches
and up to a thousand
banks
Rank: 212 (2004
rank: 241)
1988: CNPC
China National
Petroleum Firm (CNPC) was created out
of the former
State-owned
Petroleum
Industry
1993: CNPC obtained
Ministry
operating rights for the
Banya block in Thailand,
the first time that a
Chinese oil company
had acquired oilfield
development rights
overseas. It has since
obtained rights in Peru
and Sudan
1,133,985
CNPC ranked 10th
among the world's
top 50 petroleum
In 2005, the
companies by U.S.
company rated 46th Petroleum
by the Fortune
Intelligence Weekly
Global 500 in terms in 2001
of revenue,
PetroChina was
compared to 73 in
publicly listed on
2004
the Hong Kong and
Total assets is
New York stock
CNY736.2bn
exchanges in April
2000, with CNPC
7 April 2000:
holding 90% of its
PetroChina was
shares
successfully listed
on the Hong Kong January 2003:
CNPC president Ma
and New York
Fucai put forward
stock exchanges
Revenue: $67.7bn
(20%)
20
Chinese Petroleum
15,089
China National Offshore 1982
Oil Firm (CNOOC) is a
state-owned oil company
24,000
See overseas listing and
acquisition: listed on the
New York and Hong
Kong Stock Exchanges
early in 2001
Nanjing Automobile
Group Firm
1947
State-owned
146,000
August 2002:
CNPC appeared on
Fortune magazine's
Top 500 world
corporations list for
2001, ranking 81st
(up from 83rd in
2000), with total
revenues of
$41.499bn. CNPC
also ranked 23rd in
terms of profit for
2001, with total
profits of $5.021bn,
highlighting its
position as one of
the most profitable
companies in Asia
and among all
developing
countries
$15bn (30%)
Rank: 402 (2004
rank: n/a)
Total assets and net
assets have reached
CNY153.26bn and
CNY83.06bn, a
28% and 21%
net profit of
CNY24.22bn, an
increase of 62%
Capital of
CNY12bn billion
Exports to
Argentina, South
Africa, Sudan,
Ivory Coast,
Namibia, Djibouti,
Tanzania, Cyprus,
Togo, Italy and
Spain
the company's goal
of “Building a
competitive global
multinational firm”
in order to
transform from a
domestic oil
company to a
multinational one,
and from a pure oil
and gas producer to
an integrated oil and
gas supplier
CNOOC announced
a bid to buy US oil
major Unocal for
$18.5bn cash,
trumping a rival
offer by
ChevronTexaco.
If successful, it
would have
represented the
biggest overseas
acquisition by a
Chinese mainland
company, dwarfing
Lenovo Group's
$1.25bn takeover of
IBM's global
personal computer
business
Joint venture with
Iveco Company of
Fiat Auto
Listed as one of the
520 National Key
Enterprises by the
State Economic and
Trade Commission
in 1999
Buys Rover in 2005
(probably for $87m)
CITIC
See
2004, CITIC’s total
21
development
file
Lenovo
1988
assets stood at
CNY701.411bn
with an after-tax
profit of CNY1.782
bn
19,000 (2004)
Hong Kong
Haier
1984
50,000
Present in 165 countries;
240 subsidiary
companies
Revenue
$13bn (2005)
2003: turnover of
$9.7bn, with an
increase of 13%
over the previous
year
Lenovo is
committed to
environmental
leadership in all of
its business
activities, from its
operations to the
design of its
products and use of
its technology
2004: 4th largest
producer of
electrical
appliances:
ranked 95 among
the 100 most
famous global
brands worldwide
2005
$12.8bn
Shanghai Baosteel
Group
94,231
$19.5bn (34%)
Rank: 309 (2004
rank: 372)
State Grid
729,327
$71bn (22%)
Rank: 40 (2004
rank: 46)
Sinopec
774,800
$75bn (36%)
Rank: 31 (2004
rank: 53)
Appendix 2 : French Corporations in CFA Zone in 2002
Les entreprises françaises représentent l'essentiel de l'activité économique du secteur formel en
Zone franc.
Les pays africains de la Zone franc représentent une destination d'implantation importante en Afrique pour
les entreprises françaises
22
Nombre de filiales d'entreprises françaises par zone d'implantation en Afrique en 2002
Afrique
2.637 filiales d'entreprises implantées
Afrique subsaharienne
1.260 filiales d'entreprises implantées soit 48% des implantations en
Afrique
Zone franc
731 filiales d'entreprises implantées soit 27 % des implantations en
Afrique et 58% des implantations en Afrique subsaharienne
Source: Enquête filiales DREE
Pour 2002 et par rapport à l'année précédente, le nombre de filiales d'entreprises françaises progresse sur
l'ensemble du continent africain avec une hausse de 13 %.
En Afrique subsaharienne et en Zone franc la tendance est inversée, avec des baisses respectives de 17%
et de 9%.
Traditionnellement, s'agissant de filiales de grands groupes, les intérêts français dans les PAZF sont
notamment bien représentés dans les secteurs des infrastructures tels que :
• l'énergie (Total, Edf, Norelec, Alstom),
•
le BTP (Bouygues, Colas, Spie, Fougerolles, Dumez, Sogea, Razel, Jean Lefèvre),
•
la grande distribution (Cfao),
•
le transport (Air France),
•
les services (Accor, BnpParibas, Société Générale, Crédit Lyonnais, groupe Bolloré, Véolia,
Ondeo, Saur )
•
l'agro-industrie (Cfdt, Saupiquet, brasseries du groupe Castel, Cemoi, Lesaffre)
•
l'industrie (Lafarge, Air Liquide, Vicat, Dagris),
•
•
les télécommunications (France Télécom, Alcatel, Satom).
Les parts de marché françaises reflètent la prédominance de ses entreprises dans l'activité
économique des pays de la zone.
En effet, la moyenne des parts de marché de la France, sur la période 1998-2001, est supérieure à
30% au Cameroun, aux Comores, au Sénégal, et au Tchad, et comprise entre 20% et 30% au
Bénin, au Burkina, en Centrafrique, au Congo, en Côte d'Ivoire, au Gabon et au Niger.
•
Cameroun, 141 filiales d'entreprises françaises emploient près de 35 703 personnes,
•
Sénégal, 121 filiales recensées emploient 14 424 personnes (pour un total estimé entre 800 et
1000 entreprises formelles; on peut estimer globalement qu'au moins la moitié du chiffre d'affaires
généré par le secteur formel est lié à des intérêts français).
•
Mali, la France a une présence économique forte et en progression : en 1993, on dénombrait 16
filiales d'entreprises françaises implantées au Mali et 72 à la fin 2002. Les entreprises françaises
sont présentes dans la plupart des secteurs de l'économie malienne et elles constituent l'ossature
du secteur formel.
•
Gabon, les 81 filiales d'entreprises françaises recensées emploient 14159 personnes dont 620
expatriés.
23