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By Lanbo Jiang
African officials, businessmen and experts, Africa’s rich resources, vast market and increasingly improved investment environment and the Chinese government introduced the policy in recent years to facilitate Chinese Investment in Africa, will attract more and more Chinese SMEs in Africa investment and achieve win-win development. At present, China’s small and medium enterprises investing in Africa gradually became boom.
Experts pointed out that China’s current investment in small and medium enterprises in Africa still lack a clear investment strategy, financial support and security system, imperfect, increased competition and other issues must be tackled.
More and more Chinese SMEs will “to Africa”
This year, the China-Africa trade to resume growth in the first half reached 61.2 billion U.S. dollars, up 65% year over 100 billion U.S. dollars is expected to again.
In recent years, Sino-African economic cooperation and trade to flourish. From 2000 to 2008, average annual growth of China-Africa trade, 33.6%, in 2008 the first time exceeded 100 billion U.S. dollars; in 2009, China has become Africa’s largest trading partner.
China-Africa economic and trade cooperation are highly complementary, Africa is a large population and great potential for development of the continent; China has a vast market, abundant development experience, as well as African countries needed capital and technology.
At present, Chinese enterprises actively to invest in Africa, more than 1,600 investment companies, investment projects across 49 African countries, including agriculture, mining, manufacturing, infrastructure, trade and circulation areas. In recent years, China-Africa economic and trade cooperation kept expanding, in addition to trade, infrastructure construction and other traditional industries, the two sides in agriculture, finance, tourism, transport, new energy, health, education and other fields have achieved satisfactory results.
African Heavy Industry Investment Co., Ltd. is a China First Tractor Group and the Africa Development Fund co-financing joint venture, launched, dedicated to investment in many African countries, the establishment of agricultural machinery and construction machinery assembly Marketing Center.
Africa’s low level of agricultural mechanization in most countries, poor infrastructure, leading to slow economic growth. In recent years, more and more African countries to strengthen the infrastructure of agriculture and the concerns of agricultural machinery and engineering machinery, growing demand for Chinese manufacturers to enter the African market opportunities.
At present, the Central African Heavy Industry Investment Co., Ltd. in South Africa, Cte d’Ivoire, Benin and other five countries established assembly plants and marketing service center for local agriculture provides the last million farm equipment, directly employ nearly 200 engineers, all local technical schools trained hundreds of students, resulting in better economic and social benefits.
Transnational Operation SME investment in Africa, said the lucrative enterprise in return for a more lucrative venture in Africa. Many African countries, low taxes, cheap labor, abundant and cheap energy, the present situation, the majority of investment in Africa good corporate performance, has been more generous reward.
Since the establishment of China-Africa Forum in 2000, further development of China-Africa economic and trade cooperation, investment and diversified African subjects, more and more private enterprises to Africa, the traditional act of state into corporate behavior, self-interest for business investment in SMEs in Africa made an unprecedented expansion of the scope of Chinese investment in Africa, currently covers 81% of countries have reached proficiency.
Trade was active, but most are small businesses. SMEs operate in the trade of African countries, nearly 900 manufacturing enterprises, mainly involved in the retail industry, operating flexibility, low-tech primary processing industries, small scale investment in total investment of more than one million U.S. dollars accounted for a tiny minority.
Traditional industries in Africa have more space for the survival and development. Africa’s rich resources and great potential market demand, but the industry is relatively backward economy. Processing capability of SMEs in China, the two sides are highly complementary, footwear, garments, handicrafts and other labor-intensive enterprises in Africa have a strong survival, development. Taizhou City, Zhejiang entrepreneurs Li Chuan-law invested in Egypt 2002 Egypt Brothers Shoe Corporation, now in possession of more than 50% of Egypt’s shoes market.
China-Africa Development Fund has accumulated more than 30 projects through the investment decision-making, the project total investment of more than 50 billion dollars, about 30 projects within the Fund has been established, a number of projects are tracking training. But this is clearly unable to meet the growing needs of small and medium enterprises to non-investment financing.
Own lack of funds for SMEs, credit, mortgages and so can not meet the banks requirements, resulting in foreign exchange from the poor intermediation and exchange channels, which limit its investment decisions in Africa and size, despite the introduction of a number of domestic encourage enterprise “, go out “policy, but the funding support is limited.
SMEs spontaneous investment, due to limited knowledge of Africa, the lack of a clear positioning on the investment strategy with no clear long-term investment plans, together with poor operational capacity of SMEs operating abroad do not have adequate human resources, lack of understanding in particular in Africa, understand the business, will manage, through a foreign language professionals, affected the growth of enterprises.
In addition, with the development of the world Jingji energy, raw materials and market demand continues to expand, Western countries of investment, aid, and so increase the control of Africa, some countries Zhize pretext of human rights in Africa, Chinese investment activities.
Solutions to SME financing, the Chinese authorities should increase concessional funds, the Africa Development Fund set up specifically for small and medium enterprises based on the support of funds investing in Africa; to encourage financial institutions in China to Africa, for the local Chinese SMEs financial intermediation, trade settlement, financial management consulting and other facilities.
Government agencies responsible for the establishment of specialized information on the African investment advice, assessment, master the relevant investment field or regional political, economic, cultural and other information, to help Chinese enterprises invest in Africa.
On the other hand, SMEs should adopt to increase, improve product quality, wide open market, and other means to improve their competitiveness in the African market, companies compete for the African countries in the current market situation and continually grows.
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