There are few ‘wholly foreign owned enterprises’ (WFOEs) African firms in China like mine — both relative to African companies in other jurisdictions and to other foreign companies. There are certainly no more than five hundred, the majority of which are concentrated in four big cities — Guangzhou, Yiwu, Beijing and Shanghai.
Over the past two decades, when it became legally possible to open WFOEs in China, most African business has been trade-related — facilitating and quality assuring ‘Made in China’ products for African consumers — from toys to tractors. These firms initially faced challenges when Covid-19 struck China, but they were resilient. Many are now benefitting from China’s continued export growth.
More recently, two new types of African companies have begun to spring up in China — advisory firms — including in finance, as well as firms selling ‘Made in Africa’ products to Chinese consumers. They are taking advantage of two new policy announcements.
First, a push for more foreign direct investment (FDI) from China to the continent, including via public–private partnerships in areas from transport to waste management. China’s commitment is to add $60bn of FDI to the continent by 2035, more than doubling its current stock and, all things being equal, making it the continent’s largest investor.
Second, an opening up of trade channels; both China and African countries are keen to diversify source and destination markets for African products.
These are complementary trends — more FDI could be invested into manufacturing for instance — and provide a key opportunity for African firms in China and on the continent to benefit from.
The challenge for African firms, however, is finding in-roads. The above-mentioned policy environment is somewhat more predictable than say, that of American or European firms affected by geopolitical rivalries. But with language differences, poor flight connections and Covid-19 having created further travel barriers, it remains much easier for Chinese firms to access government support, such as trade finance or even co-investment funds. And such support is hardly available from African quarters — particularly since China is such a new trade frontier.
Nevertheless, my prediction is many of us will flourish. Like our export-oriented forerunners, we are both resilient and are playing the long game.
Hannah Wanjie Ryder is the CEO of consultancy Development Reimagined and senior associate at the Center for Strategic International Studies Africa Program. E-mail: email@example.com
This article first appeared in the February/March 2022 print edition of fDi Intelligence. View a digital edition of the magazine here.