China using SA as springboard to Africa

Ernie Lai King, head of ENS China, says: "We have seen - especially in the past five to eight years - a significant increase of business into Africa and South Africa by the Chinese state-owned enterprises."

He says these SOEs - whether they are involved with energy, mining, vehicle manufacturing or telecommunications- are among the largest multinationals in the world.

"Surprisingly, perhaps, many of them have been in South Africa for up to 12 years. They have been low key about their involvement and South African businesses must get used to the fact that the Chinese conduct business in a different way, particularly when it comes to investing.

"China's growth is no longer at 13% or 14%, but it's still huge. We are doing deals in sectors such mining, energy, telecommunications, automobiles and property. We've seen Chinese companies using South Africa as a springboard for rest of the continent," says Lai King.

"The conversations we've had with Chinese enterprises confirm that doing business in South Africa is very different. Many of the African deals have been done on a government-to-government basis - but in South Africa it's done on a strictly commercial basis.

"After the Marikana mine incident, a palpable note of caution has been introduced - so instead of getting many e-mails a day relating to Chinese deals, these have dropped substantially as the Chinese assess what is happening.

"I believe there are opportunities in Africa such as beneficiation, smelting and refining minerals but what is South Africa doing to show that it is open for business? For example, where are the industrial development zones? South Africa needs to welcome foreign direct investment but there are still lots regulations. It take a long time to resolve these issues, particularly when dealing with government departments," Lai King says.

Kenny Chiu, general manager for business development with ENS, says: "The Chinese understand that diversification is important. They no longer import products exclusively but use local resources instead. Because South Africa's financial sector and justice system are still sound they use the country as a gateway to Africa."

Source: Business Day via I-Net Bridge