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Strategic Entry and Determinants of Chinese Private Enterprises Into Africa

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  • Juan Zhang
  • William X. Wei
  • Zuanshi Liu

Abstract

The authors discuss the strategic entry of Chinese private enterprises (PEs) into Africa by analyzing their characteristics of host distribution and overseas companies' function and type. They find that Chinese PEs tend to invest in countries where Chinese investment has already concentrated, that more Chinese PEs engage in manufacturing and services than in agriculture and mining and quarrying, and that Chinese PEs take higher risks by choosing the type of subsidiary companies to enter Africa. They also make an empirical study of the determinants of Chinese PEs compared with state-owned enterprises in the period 2002--2011 and found Chinese PEs in Africa are driven mainly by the motivation of market-seeking, not by resource-seeking; China's imports from the host country also facilitate Chinese companies' investment in Africa; and Chinese companies in Africa are risk-takers. At the end of the article, they study the case of Touchroad and verify the results of their empirical study.

Suggested Citation

  • Juan Zhang & William X. Wei & Zuanshi Liu, 2013. "Strategic Entry and Determinants of Chinese Private Enterprises Into Africa," Journal of African Business, Taylor & Francis Journals, vol. 14(2), pages 96-105, August.
    • Handle: RePEc:taf:wjabxx:v:14:y:2013:i:2:p:96-105
    DOI: 10.1080/15228916.2013.804367
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    References listed on IDEAS

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    1. Hany Besada & Yang Wang & John Whalley, 2008. "China's Growing Economic Activity in Africa," NBER Working Papers 14024, National Bureau of Economic Research, Inc.
    2. Ivar Kolstad & Arne Wiig, 2009. "What determines Chinese outward FDI?," CMI Working Papers 3, CMI (Chr. Michelsen Institute), Bergen, Norway.
    3. Sumon Kumar Bhaumik & Catherine Yap Co, 2009. "Chinese state???s economic cooperation related investment: An investigation of its direction and some implications for outward investment," William Davidson Institute Working Papers Series wp966, William Davidson Institute at the University of Michigan.
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    Cited by:

    1. Xinming Xia & Wan-Hsin Liu, 2024. "Exploring the overlooked diversity of Chinese investments in Africa in the pre-BRI era," Economics Bulletin, AccessEcon, vol. 44(3), pages 1132-1146.
    2. Benfratello, Luigi & D’Ambrosio, Anna & Sangrigoli, Alida, 2023. "Foreign Direct Investments in Africa: Are Chinese investors different?," Journal of Business Research, Elsevier, vol. 155(PA).
    3. Simplice Asongu, 2016. "Reinventing Foreign Aid For Inclusive And Sustainable Development: Kuznets, Piketty And The Great Policy Reversal," Journal of Economic Surveys, Wiley Blackwell, vol. 30(4), pages 736-755, September.
    4. Simplice A. Asongu & Paul N. Acha-Anyi, 2020. "A survey on the Washington Consensus and the Beijing Model: reconciling development perspectives," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 67(2), pages 111-129, June.
    5. Christian NGUENA, 2014. "External Debt Origin, Capital Flight and Poverty Reduction in the Franc Zone: Does the Economic Consequences of Sino-African Relationship matter?," Research Africa Network Working Papers 14/016, Research Africa Network (RAN).
    6. Simplice Asongu, 2014. "Sino-African relations: a review and reconciliation of dominant schools of thought," Working Papers of the African Governance and Development Institute. 14/037, African Governance and Development Institute..
    7. Simplice A. Asongu & Jacinta C. Nwachukwu & Gilbert A. A. Aminkeng, 2018. "Lessons from a Survey of China’s Economic Diplomacy," Research Africa Network Working Papers 18/009, Research Africa Network (RAN).
    8. Simplice A. Asongu, 2014. "Reinventing foreign aid for inclusive and sustainable development: a survey," Research Africa Network Working Papers 14/033, Research Africa Network (RAN).
    9. Simplice Anutechia Asongu, 2014. "A Development Consensus reconciling the Beijing Model and Washington Consensus: Views and Agenda," AAYE Policy Research Working Paper Series 14_025, Association of African Young Economists, revised Dec 2014.
    10. Kenneth Kalu, 2021. "‘Respect’ and ‘agency’ as driving forces for China–Africa relations," Place Branding and Public Diplomacy, Palgrave Macmillan, vol. 17(4), pages 336-347, December.
    11. Simplice Asongu & Jacinta C. Nwachukwu & Gilbert A. A. Aminkeng, 2018. "Lessons from a Survey of China’s Economic Diplomacy," Working Papers of the African Governance and Development Institute. 18/009, African Governance and Development Institute..
    12. Simplice Asongu & John Ssozi, 2016. "Sino-African Relations: Some Solutions and Strategies to the Policy Syndromes," Journal of African Business, Taylor & Francis Journals, vol. 17(1), pages 33-51, January.
    13. Linda Calabrese & Xiaoyang Tang, 2023. "Economic transformation in Africa: What is the role of Chinese firms?," Journal of International Development, John Wiley & Sons, Ltd., vol. 35(1), pages 43-64, January.
    14. Qiyue Zhang & Zheng Wang & Godwin Okafor, 2022. "Understanding China’s Economic Engagement in Africa: An Exploration of the FDI-Trade Nexus," Sustainability, MDPI, vol. 14(23), pages 1-19, November.
    15. Amar Anwar & Ichiro Iwasaki, 2022. "Institutions and FDI from BRICS countries: a meta-analytic review," Empirical Economics, Springer, vol. 63(1), pages 417-468, July.
    16. Simplice A. Asongu & Jacinta C. Nwachukwu & Gilbert A. A. Aminkeng, 2014. "China’s Strategies in Economic Diplomacy: A Survey of Updated Lessons for Africa, the West and China," Research Africa Network Working Papers 14/036, Research Africa Network (RAN).
    17. Simplice Asongu & Jacinta C. Nwachukwu & Gilbert A. A. Aminkeng, 2014. "China’s Strategies in Economic Diplomacy: A Survey of Updated Lessons for Africa, the West and China," Working Papers of the African Governance and Development Institute. 14/036, African Governance and Development Institute..

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