Illustration: Liu Rui/GT

Editor's Note:

In December at the sixth Forum for China-Africa Cooperation in Johannesburg, South Africa, Chinese President Xi Jinping called for a new era of win-win cooperation and common development between China and Africa. Jiangsu Province, known for its outbound investment in Africa, has been a leader in the country's economic cooperation with the continent. At the recent Jiangsu-Southern Africa Development Community Forum of Investment and Development held in Nanjing, capital of Jiangsu, a number of experts shared their views about the experience of Chinese investment in Africa.

Dai Bing, deputy director-general, Department of African Affairs, Ministry of Foreign Affairs

Despite the huge potential of China-Africa cooperation, it also has a variety of challenges. On the part of China, the Chinese government supports companies investing abroad, but top strategic plans and financial services are not complete yet. Chinese companies have a strong interest in overseas investment, but they have a low level of internationalization, lack management capability and are short of talent. They don't have enough understanding of Africa, either. They don't know where and how to invest.

Currently, most Chinese companies in Africa engage in low-end fields such as commodity trading, contracting projects and resource exploration. They are not able to develop at the high end such as operation management and independent investment. Problems such as being eager for quick success and vicious competition among a few enterprises have been prominent. Individual staff members even commit crimes.

On the part of Africa, it needs to upgrade both soft and hard conditions to welcome more cooperation. Basic infrastructure such as electricity, telecommunications, railway, port and airport remain at a relatively low development level. It lacks systematic facilities and tech-savvy workforces. Regional disturbances constantly occur and non-traditional security issues such as terrorism and pirate attacks are notable.

Many African countries hold a complex sentiment toward inbound investment. They need to improve their laws and government services. Some countries have high demands in terms of environmental protection and labor rights, which will reduce investors' confidence.

Wang Yong, vice president of China-Africa Development Fund

Our fund invested in 85 projects in Africa within nine years and met with many obstacles. First, Chinese enterprises are not ready. They don't have enough talent and lack overseas management experience and the knowledge of foreign investment environment.

They need guidance and assistance from African governments to link their funds effectively with local investment opportunities. They also hope local policies concerning foreign capital can be stable and consistent.

For instance, Chinese companies have a strong will to invest in energy and electricity. They have the capacity in funds, technology, operation and management, but the investment speed is far from expectation. To invest in an electricity program, the Chinese company needs to negotiate with various local government departments, while it is often the case that there is no single department that can coordinate all the others, thus failing to form unified policy plans.

Wang Yuan, consultant at the UN Development Program

From my research into the activities of Chinese companies abroad, I observed the following aspects. Most Chinese enterprises have achieved a win-win scenario with local communities. Their awareness of sustainable development has greatly lifted after many years of going out. They have integrated more into local societies and play a larger role in the improvement of people's livelihoods.

There are many aspects worth the attention of Chinese companies, such as cultural differences, environmental protection and labor's rights. As the companies have just started their investment overseas, they cannot invest enough energy and resources to engage in sustainable development.

Government guidance plays a vital role in the behavior of enterprises. In 2005, the Chinese government issued regulations on the safety management of overseas Chinese-funded projects. We found that 86 percent of Chinese companies overseas have set up safety production management systems and safety accidents are often prevented.

Meanwhile, investors from different regions see different challenges. Those from Asia and Europe believe the commodity prices in African countries are high and may lead to inflation. Environmental issues garner the most attention from North America and Oceania's moneymen. Chinese companies think the safety of employees generates the highest risk.

Last but not the least, the international stage needs more voices from China. Sometimes, Chinese enterprises have done well enough, but they still don't win recognition from local NGOs or media. They should learn to promote their own stories by making use of a fair international platform.