Association for Free Research and International Cooperation

Chinese: Investors or exploiters? A perpetual questioning on the continent.

Article from AFRIC Editorial
Having transformed its nation from a developing primary economy into one of the most advanced in the world, China has continued its growth aggression by expanding into other frontiers mainly poor countries of the African continent to do business. Unlike other institutional investors from Europe, United States and Canada, the Chinese have another model. They insist on maximum output with the minimum possible capital outlay. This has resulted in minimal infrastructural development in places they do business. Relative to Europe and America who develop the infrastructure and built up their business community, Chinese are widely regarded as exploiters than investors in this regard.

On another note, Chinese are risk taker -type-of-investors as is the West and America who usually insist on having the right economic fundamentals before doing business. Their model seems to suit very well under largely informal economies that characterize many African countries where the business environment is volatile and the political landscape is unstable. Such environments require a quick payback period to enable investors to recoup their capital before drastic changes obtain. But for an underdeveloped continent like Africa which is still behind in terms of infrastructure and technological development, how else could it be developed if the so-called investors are interested in maximum exploitation of its natural resources without giving back and developing the source of the resources? Who then will put their resources for the development of the continent besides the capital rich investors who are beneficiaries of the same resource base? Failure by the Chinese investors to develop the countries in which they do business spells doom for the under developed countries of Africa who are banking on their natural resources as the means through which they will catch up with the developed world.

In many instances, Chinese companies have been associated with different work standards compared to those of the West.  Chinese entities pursue profit maximisation objective at all costs. Some of their structures are not built to last. They improvise to the extent of weakening the structures taking advantage of the poor African governments who pay little attention to quality standards. Chinese products are popularly known as ‘Zhing Zhong’ a term widely used to insult the temporary and short-term life of the products. Thus, they regard Africa as a dumping grounds for poor substandard products from their infant industries. Rather, it has become apparent that products and services for African market is of low quality.

It is also important to note that most of the products that Chinese sell to African countries are not manufactured in Africa but in China. Some argue that they bring such products to Africa to hunt for US dollars thus imposing the risk of liquid challenges, Zimbabwe has been a victim of this. What a strategy?

From a corporate governance and regulatory perspective, Chinese companies have been found to be breaching regulations more when juxtaposed against other investors. Anjin, Jinan and Anhui, all Chinese companies were found to be at the center of externalisation and money laundering involving hundreds of millions of US dollars in 2017.

In Zimbabwe, the Chinese companies were at the center of looting diamond proceeds from the rich alluvial mines of Marange and Chiadzwa in Manicaland Province. Robert Mugabe the former president of Zimbabwe publicly acknowledged that more than US$15 billion went missing and could not be accounted for. This was done with the help of local politicians who also benefited from the masterminded corruption.

In terms of labour practices, Chinese have very ruthless management styles. Their desire to get the most at the least possible cost has seen them taking advantage of the desperate job seekers of Africa working them for long hours but paying them peanuts wages. They are reported cases where they go the extreme of beating workers to boost output.

Unlike USA and Europe, they also have strange cultural practices which in many aspects are divergent from the predominantly Christian countries in Africa. This has resulted in cultural fusion whose effects will give birth to controversial practices.

All in all, the African governments need to warry of Chinese investors. They should consider Chinese aid with a pinch of salt. They should put in place monitoring mechanisms to make sure that there is no looting and exploitation of resources. African countries should desist from accepting Chinese investment without understanding the underlying terms and conditions. African countries should also stop the practice of going after dubious Chinese investors but rather promote the right economic fundamentals that help to lure credible investors that will sustainably transform their economies.

African politicians that front Chinese companies must be closely monitored to make sure that there is no money laundering and externalisation of funds generated from Africa. The major pitfall of African countries is the issue of deals with Chinese entities negotiated by African politicians, come on, being a politician does not mean you know It all. Why not engage technocrats to scrutinize these proposed deals with Chinese and understand the spirit, intention and greater economic benefit of the nation as opposed to the current set up where only the political elite benefit whilst mortgaging their countries.

Article from AFRIC Editorial

Photo Credit : google image/illustration

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