African Investment in China

Africa is not just a recipient of aid and foreign funds. Although largely unacknowledged, it too invests, and has done so with considerable success in one of its greatest benefactors: China. China-bound investment from countries such as South Africa, Tunisia and Nigeria solidify China-Africa bonds and show the mutual benefits conferred by the two sides' bilateral exchange.

A two-way exchange

One of the most attention-grabbing features in China-Africa relations is the massive amount of Chinese investment that has poured into the continent. China now claims $9.3 billion worth of invested stock in Africa, most of which was acquired in a surge of activity that took place in only the last few years. Rarely mentioned is the corollary, the flow of investment from Africa to China.

Africa does invest in China. China's Ministry of Commerce places the foreign-invested stock of Mauritius alone, one of Africa's financial hubs, at $1.1 billion. This sum is greater than that of Canada. Other top investors in China include South Africa, the Seychelles, Nigeria and Tunisia.

South Africa, through its investment in China, produces the nation's most popular beer. In 1994, SABMiller (then just SAB) took a 49 percent stake in a joint venture (JV) with China Resources to create China Resources Snow Breweries. The JV has since rapidly expanded to operate nearly 70 breweries in China, and now has the capacity to produce 1.4 billion liters of beer each year. The brand 'Snow' enjoys a leading 20 percent market share in China and has an estimated value of $5.5 billion.

Tunisian investors entered China even earlier, in 1985, via the establishment of a joint venture called Sino-Arab Chemical Fertilizers. The company employs 520 people in China's Hebei Province and is one of the top 500 foreign-invested enterprises in China. Sino-Arab Chemical has the capacity to produce 1.2 million tons of fertilizer annually for the domestic market as well as for export to the markets of nearby Asian countries.

Nigeria's most visible investment in China was First Bank of Nigeria's opening of a representative office in Beijing in June 2010. The new office for Nigeria's largest commercial lender was only the fourth established by the bank outside its home country and was its first in Asia. Transactions with Huawei Technologies and China Metallurgical Group soon followed the opening of its new Chinese office. Although going relatively unnoticed, African investments in China such as these have nonetheless been successful, and are likely the harbingers of more investment from Africa in the future.

The ChinAfrica Econometer is produced by THE BEIJING AXIS, a cross-border business bridge to/from China in three principal areas: Strategy, Sourcing & Investment.

For more information, please contact: Barry van Wyk, barryvanwyk@thebeijingaxis.com

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