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Profiting out of Africa comes with risks

Updated: 2013-06-24 03:12
By SHI JING in Shanghai ( China Daily)

Profiting out of Africa comes with risks

Chinese construction workers building the new African Union Buildings in Addis Ababa, Ethiopia. Provided to China Daily 

A Hangzhou-produced TV series will soon be broadcast in Africa so the locals can get a better understanding of the city, thereby nurturing an interest in products made in the Jiangsu province lakeside metropolis.

The Desire of the Old Daddy was shortlisted in the international promotion plan co-organized by China Radio International and local authorities of Zhejiang province. CRI will recommend celebrated actors in Africa to dub voiceovers for the TV series which will later be broadcast on mainstream TV stations in Tanzania.

In the meantime, makers of Hangzhou brands that are being exported to Africa and meet the needs of local customers will make TV commercials to go with the TV series, said Lyu Bingkui, office director of the Hangzhou Municipal Foreign Trade and Economic Cooperation Bureau.

"At present, three Hangzhou companies have made direct investments in Tanzania and two in Zambia. The total investment amounted to $15.75 million," said Lyu.

Fu Yang Jin Ding Non-ferrous Metal Material Co Ltd of Hangzhou started to test the market in Tanzania in 2007 with an initial investment of $500,000. The amount rose to $9.95 million in the following year.

"Usually, private Hangzhou companies won't start their investment with huge sums of money in their capacity as State-owned enterprises," said Lyu. "President Xi Jinping's recent visit to African countries is expected to help improve the investment environment in Africa, which is definitely good news for private companies," said Lyu.

Statistics provided by Lyu's bureau show the city's exports to Africa reached $1.6 billion in 2012, up 11 percent year-on-year. The growth was even more rapid in the first two months of this year, with the export volume reaching $320 million, up 42.09 percent year-on-year and accounting for 5.88 percent of the city's exports as a whole.

Although most Hangzhou companies started by exploiting mines in Africa, there has been little success so far and no mineral products have been brought back to China, said Wu Jian, director of the foreign economic relations office of the bureau, adding that there are also high risks in the mining industry.

"Therefore, most newcomers now are engaged in building power plants, roadworks, water treatment and other infrastructure projects. It can be seen as part of the economic restructuring of Hangzhou's private companies," said Wu.

Hangzhou Liangliang Electronic Lighting Co Ltd set up a sales office in Dar es Salaam, capital of Tanzania, in 2009.

"We have five Chinese management executives and three local staff working at the Tanzania branch that mostly sell energy-saving lights and cables," said Wang Zuping, chairman of the company.

The company set up its Kenya representative office last year. It generated sales of more than 40 million yuan ($6.53 million) in Africa in 2012.

"Products made in China are especially popular in Africa. We do mainly wholesale business there and managed to achieve an average annual sales growth rate of 30 percent in the past five years," said Wang.

Wu of the foreign economic relations office added that Hangzhou companies are trying to build their brands in Africa.

"Automobile brands, such as Geely, and some pharmaceutical products are expected to find a market in Africa. Some garment companies are also seeking opportunities there," he added.