Why China Is Entering Africa

In: Business and Management

Submitted By ssuiping
Words 2282
Pages 10
Chinese companies are winning over European multinationals in Africa

- Why have Chinese companies found the emerging markets of Africa less risky and a more attractive proposition than western multinationals?

- MSc BD7 Ping SUI

Introduction:

As an important global player and the main drive for economical growth, China’s massive investment in Africa has drawn the world’s attention. People can see European multinationals everywhere in Africa in the 80s, while now Chinese companies seem to take over the leading role. For example, in Angola, China helped to build the Angola Benguela railway, which is the longest railway Angola has had so far; in Nigeria, Chinese Telecom companies “Huawei” has a dominating presence both in fixed and wireless services by taking more than 90% of the market share. Not only can you find commodities made in China everywhere, but Chinese companies now build the infrastructures in many African countries too.

On the contrary, the presence of European multinationals is not as strong as the Chinese ones: the amount of the funds flowing from Europe to Africa has decreased from 70% to 17% since the 70s; Western Europe’s share of overall international trade with Africa has decreased from 51% to 28%, while China has taken the place and become the biggest trading partner Africa has by surpassing America in 2009. Why are European MNCs less and less preset in Africa? What are the difficulties they have encountered? Do Chinese companies have same barriers? Why do the Chinese companies find the African market less risky and more attractive compared to the European multinationals?

In this essay, the questions will be answered by analyzing the different situations Chinese and European companies have. The first part will discuss about the three main reasons why European MNCs find the African market risky and less attractive. The second…...

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