December 02nd, 2010 | Beijing Review Corporate Conscience
China calls on its companies in Africa to contribute more to social welfare
Recently, Chinese Vice President Xi Jinping, during a visit to Angola, requested that Chinese enterprises in Africa integrate into local society both economically and culturally through lawful operation. He said this while meeting with representatives of Chinese enterprises in the country.
Against the backdrop of economic globalization and China’s reform and opening up, as well as decades of development, Africa has now become an important stage for China’s “going out” strategy. In 2009, China surpassed the United States as Africa’s biggest trading partner with a trade volume of $91.2 billion. The number of Chinese enterprises in Africa has surpassed 2,000, with a total investment of more than $30 billion. Africa has become China’s fourth largest overseas investment destination.
But, amid the rapid development of China-Africa economic and trade cooperation, problems have also come to light. One of the most frequently discussed problems is corporate responsibility on the part of Chinese enterprises in Africa. This problem does exist, but should be regarded in a comprehensive and fair manner. In the meantime, both sides should actively seek solutions so as to strengthen the foundation of China-Africa relations.
In terms of economic and trade cooperation, which is an important part of China-Africa relations, China adheres to the principle of mutual benefit. In addition, it does not attach political conditions to its economic relationships. China has obtained political and economic benefits through its cooperation with African countries. At the same time, it is also concerned with the interests of African countries and helps them achieve real benefits.
Chinese enterprises have constructed a large number of roads, railways, ports and other infrastructure in Africa. To be specific, they have completed more than 2,000 km of railways and more than 3,000 km of roads. This infrastructure has greatly boosted local social and economic development.
In addition, China has begun building six economic and trade cooperation zones in five African countries—Zambia, Egypt, Mauritius, Nigeria and Ethiopia. These zones have injected new vitality into Africa’s industrialization. The success of China-Africa economic and trade cooperation has been widely supported not only by African countries, but also by greater numbers of politicians in Western countries.
This year, Jean-Francois Cope, head of France’s ruling party, the Union for a Popular Movement, said China’s success in Africa should prompt French people and even the whole Western world to reconsider their own practices, and they should eschew a stance of moral criticism.
Africa began to have an impact on the world stage beginning in the period 2002-08 when it enjoyed an average annual growth rate of 6 percent. China was responsible for one third of this total growth. Take Sudan for example. This oil-rich country has experienced long-term poverty. It lacked electricity and had to import refined oil. In the mid-1990s, the China National Petroleum Corporation (CNPC) set up operations in Sudan from scratch. Since then, it has helped Sudan establish a complete and integrated modern oil industry.
Sudan has changed from being an importer to an exporter of refined oil, and its former fiscal deficit is now a surplus. Currently, Sudan earns more than $4.5 billion each year from oil projects developed by the CNPC. This revenue has greatly promoted Sudan’s economy. These projects have altogether provided more than 20,000 jobs for local people, increased their incomes and greatly enhanced their standard of living.
Chinese enterprises have also made big contributions to Africa’s telecom industry. The two major Chinese telecom equipment manufacturers ZTE and Huawei are active in 50 African countries, providing communications services for more than 300 million African users. They have established more than 40 third-generation telecom networks in more than 30 African countries, and built national fiber-optic communications networks and e-government networks for more than 20 African countries.
The entry of Chinese companies into the market has broken the monopoly of Western telecom giants and dramatically reduced telecom charges. As a result, mobile phones have quickly gained popularity and ordinary Africans have benefited.
Problems can also be seen, however, amid these sound, cooperative projects. Obviously, they require proper handling. A prominent problem is Chinese companies’ social responsibility. Generally, this problem is evidenced in two ways.
The most common problem revolves around the quality of Chinese products. Many African people say Chinese products, although cheap, are of poor quality. For example, shoes might fall apart in less than a month and many mobile phones are counterfeit. In fact, this is the responsibility of both Chinese companies and African purchasing agents. They often focus on cheap products and even directly rush to Yiwu, a famous distribution center for small commodities in east China, to import products of very poor quality.
Conflicts are also found in the employment of local workers. In general, African countries expect Chinese companies in Africa to hire more local workers in order to increase local employment and improve the livelihoods of the people.
In addition, African countries expect Chinese companies to transfer more technology, better comply with local laws and protect the environment. Meanwhile, they hope Chinese companies can strengthen links with local communities and make greater efforts to promote public welfare so as to better repay local society.
Furthermore, some Chinese companies have treated African employees badly, as evidenced by severe labor disputes involving Chinese firms.
The Chinese Government does, however, attach great importance to the social responsibility of Chinese companies in Africa. It views this matter as crucial to the new China-Africa strategic partnership and China’s image in Africa. China has already taken a series of measures in this regard, including passing regulations, holding seminars and carrying out specific projects.
The Chinese Government, academic circles and companies have agreed on the importance of regulating corporate behavior and establishing a good social image.
For instance, in October, the Chinese-African People’s Friendship Association and China Radio International jointly launched the China-Africa Friendship Award in Beijing, selecting 10 Chinese companies that have made the greatest contributions to Africa. The winners will set up a fund of 5 million yuan ($753,000) to help needy African students.
The problems mentioned above should be treated comprehensively and fairly. But some Western media are deliberately magnifying these problems. Their actions reveal a desire to harm China-Africa relations. A few years ago, Western countries accused China of pursuing “neo-colonialism” in Africa. Recently, they have turned to talking about the corporate responsibility of Chinese companies in Africa.
The reason is they do not want to see the rapid development of China-Africa economic and trade cooperation. It has touched a nerve since Africa has traditionally been regarded as within Western countries’ sphere of influence. In addition, Western media want to attract interest for their own good.
Western countries have no grounds to criticize China in the area of corporate responsibility. They have an ignominious history of engaging in slave trade and colonizing Africa. Even today, their image in Africa is not good. For instance, the British oil giant Shell has extracted oil in the Niger Delta for decades and obtained huge profits. But the Niger Delta is still poor and people there are suffering greatly from the pollution caused by crude oil extraction.
Under the cover of protecting intellectual property rights, Western companies have ensured their monopolies and gained huge profits. They have barely taken the initiative to transfer technology to African countries. All these realities make their accusations toward Chinese companies pale and weak.
Chinese companies have made great progress in improving corporate social performance in Africa and have contributed greatly to African countries. Take Huawei, which entered the African market in 1997. Among its more than 4,000 employees in Africa, 65 percent are local people. It has six training centers in Africa, training 12,000 people each year.
China’s Sinohydro Corp. is another good example. It has more than 30 projects in Angola in the fields of water conservancy, agriculture, public health, schools and transportation, valued at more than $900 million.
In these projects, the company has sent top-notch technicians to offer guidance to local workers. To date, it has trained and hired more than 8,200 local staff, accounting for 70 percent of its total employment in Angola.
Chinese companies often do a lot and say little. They seldom publicize themselves. In this globalized world, they should change this practice and strengthen international exchanges on the issue of corporate responsibility.
The author is a research fellow with the Shanghai Institutes for International Studies
By ZHANG ZHONGXIANG