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Reference for Chinese Enterprises' Overseas Investment - Based on the Research in African Countries

Mar 19-2025   



*This article is based on the speech of Wang Jinjie, Assistant Researcher of NSD and South-South Institute of PKU and Deputy Secretary General of the Centre for African Studies of PKU.

 

Changes & Current Situation of Chinese Investment in Africa

China-Africa relations have maintained enduring cordiality. Since the establishment of the Forum on China-Africa Cooperation (FOCAC) in 2000, bilateral collaboration has deepened over the past 24 years. After the Belt and Road Initiative (BRI) was proposed, the progress has accelerated. Beyond political considerations, market dynamics play a pivotal role. Africa is rich in resources, and according to the Extractive Industries Transparency Initiative (EITI), not only Chinese companies but also global companies are interested in Africa.

The actual volume of Chinese investment in the African region does not account for a high proportion of China's total outbound investment. In 2021 and 2022, China's large-scale outward investment was still concentrated in Asia, Europe, and Latin America. While the investment in the African region accounts for only 2.8 % and 1.1 % respectively.

In terms of industry type, the 2022 data show that the leasing and business services industry accounts for the highest share of China's outward FDI, nearly 30 percent. It is followed by manufacturing, finance, wholesale trade and mining.

From a business perspective, the biggest challenge for Chinese companies going overseas to Africa is the shortage of international business talent, followed by cultural differences and issues such as fierce competition from domestic counterparts.

 

Africa's Growth Curve & Investment Space

Africa's industrialization journey originated during the colonial era but gained momentum post-independence in the 1960s when nations began pursuing tailored development paths. The 1970s oil crises severely disrupted their industrialization efforts. By the 1980s, many African countries struggled to maintain autonomous industrial policies, and became increasingly reliant on external financial assistance.

 

The 2019 establishment of the African Continental Free Trade Area (AfCFTA) catalyzed new industrialization opportunities through market integration. However, economic disparities among member states risk creating uneven benefits, with stronger economies capturing greater advantages. Consequently, numerous African nations now actively study China's development model, prioritizing investment-friendly environments in strategic locations to attract FDI.

Going forward, Africa's ability to transfer global production capacity will depend on its efforts in building infrastructure, maintaining political stability, and promoting regional integration.

 

Strategies for Our Enterprises to "Go Overseas" Successfully

First, the experience of Chinese companies already established in Africa shows that in the early stages of entering the African market, these companies often build relationships with local communities through charity and public welfare programs. After gaining initial trust, Chinese companies begin to penetrate the African market through financial capital.

Then, with the gradual deepening of capital investment, Chinese companies pay more and more attention to the cultivation of human capital, and begin to devote themselves to the development and training of the local workforce. On this basis, Chinese companies are gradually promoting technology transfer, bringing advanced production technology and management experience to the African market.

In the end, through a series of measures to deeply cultivate the local market, Chinese enterprises have achieved a sustainable win-win situation with African countries. In the process, Chinese enterprises have gained stable income and long-term development opportunities, while African countries have achieved sustainable economic development through the benefits of technological progress, increased employment and industrial upgrading.

 

Three suggestions for Chinese enterprises going overseas

First, in order to expand the target market, enterprises should first truly understand the target market and be more willing to cultivate the market.

Second, export technology, but the technology should not go beyond the scope of advantageous industries.

Third, do a good job in localization. The key to localization is to provide effective solutions for local development.

Reference for Chinese Enterprises' Overseas Investment - Based on the Research in African Countries

Mar 19-2025   



*This article is based on the speech of Wang Jinjie, Assistant Researcher of NSD and South-South Institute of PKU and Deputy Secretary General of the Centre for African Studies of PKU.

 

Changes & Current Situation of Chinese Investment in Africa

China-Africa relations have maintained enduring cordiality. Since the establishment of the Forum on China-Africa Cooperation (FOCAC) in 2000, bilateral collaboration has deepened over the past 24 years. After the Belt and Road Initiative (BRI) was proposed, the progress has accelerated. Beyond political considerations, market dynamics play a pivotal role. Africa is rich in resources, and according to the Extractive Industries Transparency Initiative (EITI), not only Chinese companies but also global companies are interested in Africa.

The actual volume of Chinese investment in the African region does not account for a high proportion of China's total outbound investment. In 2021 and 2022, China's large-scale outward investment was still concentrated in Asia, Europe, and Latin America. While the investment in the African region accounts for only 2.8 % and 1.1 % respectively.

In terms of industry type, the 2022 data show that the leasing and business services industry accounts for the highest share of China's outward FDI, nearly 30 percent. It is followed by manufacturing, finance, wholesale trade and mining.

From a business perspective, the biggest challenge for Chinese companies going overseas to Africa is the shortage of international business talent, followed by cultural differences and issues such as fierce competition from domestic counterparts.

 

Africa's Growth Curve & Investment Space

Africa's industrialization journey originated during the colonial era but gained momentum post-independence in the 1960s when nations began pursuing tailored development paths. The 1970s oil crises severely disrupted their industrialization efforts. By the 1980s, many African countries struggled to maintain autonomous industrial policies, and became increasingly reliant on external financial assistance.

 

The 2019 establishment of the African Continental Free Trade Area (AfCFTA) catalyzed new industrialization opportunities through market integration. However, economic disparities among member states risk creating uneven benefits, with stronger economies capturing greater advantages. Consequently, numerous African nations now actively study China's development model, prioritizing investment-friendly environments in strategic locations to attract FDI.

Going forward, Africa's ability to transfer global production capacity will depend on its efforts in building infrastructure, maintaining political stability, and promoting regional integration.

 

Strategies for Our Enterprises to "Go Overseas" Successfully

First, the experience of Chinese companies already established in Africa shows that in the early stages of entering the African market, these companies often build relationships with local communities through charity and public welfare programs. After gaining initial trust, Chinese companies begin to penetrate the African market through financial capital.

Then, with the gradual deepening of capital investment, Chinese companies pay more and more attention to the cultivation of human capital, and begin to devote themselves to the development and training of the local workforce. On this basis, Chinese companies are gradually promoting technology transfer, bringing advanced production technology and management experience to the African market.

In the end, through a series of measures to deeply cultivate the local market, Chinese enterprises have achieved a sustainable win-win situation with African countries. In the process, Chinese enterprises have gained stable income and long-term development opportunities, while African countries have achieved sustainable economic development through the benefits of technological progress, increased employment and industrial upgrading.

 

Three suggestions for Chinese enterprises going overseas

First, in order to expand the target market, enterprises should first truly understand the target market and be more willing to cultivate the market.

Second, export technology, but the technology should not go beyond the scope of advantageous industries.

Third, do a good job in localization. The key to localization is to provide effective solutions for local development.