Chinese businesses urged to avoid mistakes made by Western multinationals in Africa

Chinese business leaders have been urged not to repeat mistakes committed by Western companies in Africa.

Secretary-General of the United Nations Conference on Trade and Development (UNCTAD), Dr Supachai Panitchpakdi, at a recently held 2012 China Overseas Investment Summit in Hong Kong, told the Chinese business community to avoid those mistakes and  take corporate social responsibility seriously in Africa.

“Simply adopting the right policies and measures may not be enough. Chinese firms must make sure that all stakeholders are positively aware of their commitments regarding environmental, social and governance issues”, Dr. Supachai said when delivering the keynote address at the opening ceremony of the event which saw more than 1,200 government officials, business investors, senior managers and experts from over 40 countries and regions, including leaders of China’s state-owned enterprises and top 500 private enterprises in attendance.

The theme of the summit was “Global Economic Transformation and New Approaches to China’s Overseas Investment”, in the context of accelerating implementation of the “go global” strategy under China’s 12th Five-year Plan.

Noting that China’s spectacular growth over the past decades has already made it a major trading power, as well as a favoured destination for inward investment, Dr. Supachai said Chinese overseas investment is now having a growing impact on today’s global economy.

The UNCTAD boss observed that Chinese firms have already acquired a range of assets and companies in developed countries adding that in developing countries, “their investments in the extraction of natural resources have in some instances given a much-needed growth impetus to domestic economies, which is especially welcome for the poorest nations in Africa.”

Dr Supachai advised that Chinese firms must leverage their accumulated managerial and technological competences to move into more knowledge-intensive activities and to develop or extend their own global value chains.

This, according to him, will sustain their (Chinese firms) competitiveness and to evolve into truly world-class players.

“For instance, as the Chinese economy becomes more knowledge and capital intensive, there may be advantages for Chinese firms to locate more labour intensive activities to other developing economies, particularly in Africa, which with an emerging population and a large market, could prove a real opportunity for Chinese manufacturing and services firms,” Dr Supachai said.

In this process, Chinese companies should seek to diversify their investments in Africa, extending from natural resources and construction industries to sectors such as automobiles, IT, electronics, and solar power, he said.

Dr. Supachai noted China’s recent $20 billion pledge in new loans to Africa, promising funding for infrastructure, agriculture, manufacturing, and small and medium enterprises.

But he cautioned that there are of course pitfalls associated with the extension of global value chains into Africa by Chinese multinationals.

By Ekow Quandzie

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