7
On the question of whether Chinese enterprises in Africa
contribute to employment by localizing workforces,
Barry
Sautman
, Professor of Social Science at HKUST and HKUST
IEMS Faculty Associate, critiqued the myths surrounding
Chinese enterprises in Africa, in particular that these firms have
failed to significantly integrate themselves into local African
economies.
Contrary to much of the mainstream discourse on the subject,
Prof. Sautman’s field studies of dozens of Chinese enterprises
in various African countries such as Ethiopia, Zambia, Namibia,
and Kenya, as well as his in-depth analysis of over 400
Chinese enterprises and projects in Africa, all indicate that
Chinese enterprises in Africa are often highly localized, and are
becoming increasingly so over time.
While the vast majority of Chinese enterprises in Africa had
workforces comprised of at least 80% local workers, Prof.
Sautman cited a few standout industries on both sides of the
spectrum. Chinese enterprises with the lowest rate of local
African employees (with local employees comprising 50-
65% of the total workforce) were in the telecommunications
industry, where host countries suffered an acute shortage of
qualified engineers and technicians. On the other end of the
spectrum, Chinese enterprises involved in extractive industries,
manufacturing, and construction often had over 90% of their
workforces localized, with some even exceeding 99% such
as Kiluwa Mining Group in Tanzania, Akosombo Textiles in
Ghana, and Beijing Geophysical Prospecting in Nigeria.
To facilitate further localization, Prof. Sautman recommends
that African states further systematize their approach to the
localization of Chinese and other foreign enterprises, so that
these enterprises can more easily expand their businesses
Ever since Deng Xiaopeng initiated a decades-long process
of market reforms, China’s formerly Communist economic
system has gradually become more and more capitalist in
nature. Simultaneously, Chinese bureaucrats have also become
increasingly accountable for generating economic growth in
their jurisdiction, sometimes at the expense of social stability.
On this issue of emphasizing economic growth vs. social
stability,
Danqing Wang
, Assistant Professor of Strategy and
International Business at the University of Hong Kong, spoke
on her research into how a given bureaucrat’s career-level and
career concerns affects their choice of policies, based on data
she assembled from the resumes of all of China’s provincial
leaders serving as “Party Secretary” or “Provincial Governor”
during the years 2001-2008.
Prof. Wang analyzed their career trajectories in relation to the
performance of over 2,000 firms in their jurisdictions during
the same time period. She posits that when there are large
numbers of laid off workers, leaders pursuing social stability
will encourage local firms to acquire failing state-owned
enterprises, often in new industries.
The most intriguing finding of Prof. Wang’s research is that
retiring government bureaucrats prioritize social stability far
more than bureaucrats with a long career ahead of them,
indicating that promotion incentives for Chinese bureaucrats
favour economic growth far more than social stability. Another
finding is that a government official’s length of tenure has a
strong positive effect on his ability to mobilize businesses to
pursue activities leading to greater social stability. In addition,
Video recordings available at
Video recording available at
i n A f r i c a . C h i n e s e
enterprises themselves
s hou l d a l s o i nc rea s e
their labor standards
by increasing pay and
providing better working
conditions, in order to
close the gap with other
foreign enterprises in
Africa who can and do
o f f e r h i gh e r wa g e s ,
benefits, and working
conditions as a result of
their higher profitability
and longer experience
in Africa. Finally, African
governments can further
local employment by
encouraging Chinese
companies to increase their investment in labor-intensive
manufacturing and service sectors which currently enjoy the
highest proportion of localization.
private Chinese firms with executive managers who belong
to the Chinese Communist Party’s People’s Congress and/or
Political Consultative Conference are much more likely to enter
new industries unrelated to their core competency presumably
to help promote social stability.
Localization of Chinese Enterprises in Africa
HKUST IEMS Academic Seminar (2015.02.09)
Government Officials’ Political Incentives, the State’s Bureaucratic
Capability, and Corporate Diversification in an Emerging Economy
HKUST IEMS Academic Seminar (2015.04.13)
