Chinese Telecom Companies Foray Into Africa

Abstract

China‟s Outward Foreign Direct Investment (OFDI) to Africa has been driven by its quest for natural resources not only to secure resources for itself but also ensure its modernisation and urbanisation (Shenkar and Luo, 2004). Like the traditional Chinese investments‟ sectors in Africa (infrastructure, mining, oil; etc.), the telecommunication sector also fits into China‟s central government policy rationale to boost Chinese companies ventures abroad. Beyond this, investments in the telecommunication sector illustrate a broader case of qualitative changes in China‟s African investments. Chinese investment‟s pattern in Africa is shifting slightly from an exclusive engagement in extractive industries to an increasing inclusion of services (finance, banking and telecommunication) and manufacturing. The boom of Africa‟s telecom industry, which is today one of the world‟s fastest growing, the liberalisation of the telecoms sector in many African countries and the willingness of their respective governments to improve the telecom environment have attracted more foreign investors. Chinese telecom companies‟ venture into Africa follows Beijing‟s “go out” strategy that wishes to see Chinese companies (State- Owned Enterprises (SOEs) at the central or provincial level as well as private companies) operating overseas. Chinese telecommunication companies‟ presence in the world market has been favoured by Beijing‟s policies for its companies to enter new markets, to acquire foreign technology and reinforce China‟s space and satellite programme (Executive Research Associates, 2009). The paper explores the political economy of Chinese companies with more focus on telecommunication companies. It looks at the globalisation of Chinese companies, the Chinese telecommunication companies‟ – mainly ZTE and Huawei – “go out” strategy and their presence in Africa.