Qingdao has Africa in its sights

City steps up economic, cultural exchanges with continent

Befitting a city with so many international connections, business leaders in Qingdao are now looking to Africa to drum up trade and investment.

The city is playing an increasingly important role in promoting relations between China and the continent, the Qingdao Federation of Industry and Commerce says.

The city's economic activities and cultural exchanges with Africa have become more and more frequent in recent years, it says.

Trade between the city in Shandong province and the continent rose from $2.5 billion in 2010 to $4 billion last year. Trade was worth $3.49 billion in the first nine months of this year, 10.8 percent higher than in the corresponding period last year. More than 2,500 companies in the city have trade ties with African countries, 8.7 percent more than last year.

"Qingdao has become an important trading partner for many African countries," says Xu Hang, president of the Qingdao Federation of Industry and Commerce.

Wang Jichun, president of the Qingdao Sino-Africa Business Council, says the city's ties with Africa called for more help for African countries. Companies, hospitals and schools in Qingdao then dispatched teams to the continent, laying the foundations for present ties.

Qingjian Group, a construction company in the city, has undertaken a series of foreign aid projects in Africa, such as building the offices of the ministry of defence in Ghana and the presidential palace in Mali.

Wang says his council and Qingdao Yewhing Import and Export Co, a foreign-trade company, plan to build a fishery and seafood park in Angola. The park will be the largest investment from Qingdao once it is completed, he says.

However, exports and imports account for most trade with Africa, and the amount of direct investment in Africa remains small, he says.

Qingdao companies are involved in 51 projects in 17 African countries with total investment of $20.2 billion, and South Africa, Tanzania and Nigeria are among the top destinations for investment from the city.

Most of the money goes to labor-intensive sectors such as contracted labor, textile and mineral resources exploration.

"Investment in high-tech, which has huge returns, is still rare," Wang says.

Mineral resources exploration and development is now gaining the attention of Qingdao companies, he says.

Many companies have completed field work on potential mines in African countries and are finalizing their investment plans.

Paul Siljeur, counselor at the South African Embassy in Beijing, says China is catching up fast in its investment in the country. Twenty-seven percent of Chinese direct investment in Africa last year went to South Africa, he says, and to attract more investment, South Africa has made efforts in improving its business environment.

"South Africa is one of the most sophisticated and promising emerging markets, offering a unique combination of highly developed economic infrastructure with a vibrant emerging market economy."

The country, which many regard as the gateway to Africa, is its largest economy, accounting for about 25 percent of the continent's GDP.

Mining is the top magnet for foreign investment. South Africa is the world's top producer of minerals such as gold, platinum, rhodium, chrome, manganese and vanadium.

The country's advantages for investors include good infrastructure and high living standards that are value for money, Siljeur says.

Energy costs in South Africa are still among the lowest in the world, and its unit labor costs are lower than those of emerging markets.

Nicholas Ella, economic and commercial minister at the Nigerian Embassy in Beijing, says his country has risen to be China's largest trading partner in Africa.

Aggregated total fresh capital inflow from China over the past three years reached $196.2 million, and more than 30 Chinese companies are operating in various sectors in the country.

"Given the investment-friendly disposition of Nigeria, there is no better time than now to invest in Africa's most profitable economy," Ella says.

Wang Li, vice-president of the China International Chamber of Commerce for the Private Sector, says more and more Chinese companies are looking at the African market, but some have underestimated the risks and lost money.

"There is an urgent need to build a platform to provide all-round service for companies that intend to go to Africa."

That should include government, insurance companies, commercial banks and legal services, she says.

Wang Xiaoyong, secretary-general of the China-Africa Business Council, a non-government organization dedicated to promoting economic ties with Africa, says more than 500 state-owned and private companies have registered with the council.

"These companies are either seeking investment opportunities or have already set foot in Africa."

The council has signed a memorandum of cooperation with Qingdao Sino-Africa Business Council, Wang says.

"The convergence of more and more companies targeting Africa will be a good start in sharing experience and avoiding risk."

Wang Xinyan contributed to this story.

xiechuanjiao@chinadaily.com.cn

Above: Qingdao-based Hisense's South African operations account for 16 percent of its total income in Africa. Below: Namibian President Hifikepunye Lucas Pohamba (left) and vice-president of Qinjian Group Shang Yongle at the launch ceremony for Namibia Road Work, a major infrastructure project, in May this year. Photos Provided to China Daily

(China Daily Africa Weekly 11/29/2013 page23)