African Business, Chinese Characteristics
By Margaret O’Connor
As Chinese investment into Africa diversifies, there is growing demand for a new generation of local business leaders with the right cultural, linguistic and technical abilities.
While China’s commercial ties with Africa are fast growing – it is the continent’s largest single trading partner, with bilateral trade reaching $160bn in 2011 – such flows might be higher still, but for the scarcity of affordable business talent.
This may be about to change. The Beijing Action Plan, announced at this July’s annual Forum for China-Africa Cooperation (FOCAC), will provide over 18,000 scholarships for African students and training for 30,000 African professionals over three years. Scholarships, technical training, and management programs offered by private Chinese companies operating in Africa could reach another 50,000 people; while African companies benefiting from China’s FDI have begun to develop more relevant human resource development programs.
A focus on technical training in agricultural and agribusiness is expected. China will build on its base of 20 agricultural technology demonstration centers already established on the continent. The expansion plays into China’s National Development Research Council’s five-year plan, according to Hannah Edinger, head of research at Frontier Advisory. Agriculture accounts for one-third of GDP and two-thirds of the workforce in many African countries, she says. “We urgently need to make labor and cultivation processes more productive. But Africans must first get over their fear about the Chinese land grab in Africa. Today, agriculture accounts for only 3 to 4 percent of Africa’s trade with China. We need to grasp this opportunity with both hands,” she argues.
Chinese sourcing
Sinosteel, one of the first Chinese state-owned enterprises to ‘go global’, has strengthened its human resource development strategy in Africa. Since establishing Sinosteel South Africa in 1997, the company has developed a better understanding of how to handle labor and trading relationships. “Many of the Chinese workers we initially employed didn’t arrive knowing the rules of the road in Africa,” Zhong Wei, deputy CEO of Sinosteel South Africa said at a recent conference at the Johannesburg Stock Exchange. “We’re not only looking for resources from the ground, but from people too.”
The company is ambitious – it employs 3,000 Africans and has invested $1bn to develop a joint venture mine and smelting plant with the Limpopo Development Corporation – but cites higher labor costs as one of the challenges it faces in trying to localize its labor force. Mr. Zhong claims compensation for blue collar workers in South Africa is 20 percent more expensive than in China and white collar employees in South Africa earn three times what their peers in China are paid.
Talent integration
The marketplace for African talent varies across the continent. Salary ranges differ, as do productivity standards. Huawei, the world’s second-largest telecommunications equipment supplier and a leading supplier of enterprise networking solutions to African governments, has developed methods for integrating African talent into its global operations to ensure a consistent corporate culture. The company employs more than 5,800 Africans, with locals comprising more than 60 percent of Huawei’s workforce on the continent. Technical staff from countries such as India and Brazil complement the contingent of expatriates from China. Huawei uses job rotations through its Chinese headquarters and specialized training programs at Huawei University in Shenzhen to integrate African talent into their global leadership. “Building truly global teams is vital for us to reach our international development goals,” says Christine Jiang, Huawei’s business development director for south-eastern Africa.
To meet growing demand for African talent, the company has established six training centers on the continent for employees and customers – in Egypt, Saudi Arabia, Morocco, Nigeria, Kenya, and South Africa- that graduate more than 12,000 communications and technology professionals each year. Huawei registered an 11.7 percent global annual increase in revenues in 2011 and grew its investment in staff training and development at a similar rate. The company extends the reach of its training investment by installing state-of-the art equipment in top-ranked university facilities across the continent. These partnerships enable cash-strapped African universities to acquire the latest hardware and software while helping the company build awareness about their commercial systems.
Alice Qi, head of public affairs and communications, Huawei Technologies South Africa, says on-the-job training and mentoring helps African staff climb the corporate ladder. “Trust is the elusive asset that people need to build if they wish to benefit from [Chinese companies’] surging investment on the continent. In our company, people build trust by delivering on deadlines and working together to meet shared commercial goals.”
The company says it places a higher premium on technical skills than Chinese language skills when recruiting. But knowledge of Mandarin has been one way for ambitious Africans to distinguish themselves in the labor market. South African Standard Bank, one of Africa’s largest banks, is one such employer seeking Africans with a Chinese academic pedigree. It has been hiring African beneficiaries of Chinese government scholarships from China’s top three universities since the company established its Shanghai representative office 13 years ago, and its Beijing office five years ago. Standard Bank deepened its long-term commitment to working with Chinese entities globally following The Industrial Commercial Bank of China (ICBC) acquisition of a 20 percent stake in Standard Bank in October, 2007.
“I look for people who are smart, had the nous to learn Mandarin, and possess a great attitude towards adventure,” says Craig Bond, CEO of Standard BankChina and chief relationship officer for the ICBC.
Thomas Orr, a graduate of the Confucius Institute program at Stellenbosch University, is one recruit. Before beginning his career at Standard Bank’s Beijing office, he studied at Beijing Cultural College and Peking University. Mr. Orr believes that spartan dormitory room conditions and intense academic pressure are important rites of passage for African students in China. “The Chinese government scholarship system aligns everyone’s academic experiences. This shared experience of personal hardship provides a solid foundation on which to build long-lasting friendships.”
Backpacking around China is another part of the African student experience. “It opens your eyes to the distinct cultural differences in regions throughout this vast country. Learning to appreciate regional food specialties, to hear different dialects, and to observe the relative state of economic development across the country rounds out what you learn in the classroom,” Mr. Orr says.
University programs can also reveal Chinese cultural norms to African graduates. Daniel Chevarat, a South Africa graduate of the Confucius Institute at Rhodes University, is taking an MA program in global economic journalism at Tsinghua University’s School of Journalism. He says one of the most eye-opening aspects of studying in Beijing has been watching how his Chinese classmates tolerate a pro-government bias in local news, although they have similarly high expectations of media freedom as his former African classmates. Mr. Chevarat has also learned a very different form of negotiation, less brash than in the West.
“The Chinese have a unique way of approaching interaction in social activities and business negotiation that is based on a keen sense of what the ‘relationship’ means between the parties involved. A meeting that might take five minutes in the West could take hours [in China], but if all parties have been heard and their concerns addressed, the meeting will be worth it because it has advanced the trust people feel towards each other.”
Martyn Davies, the founder and CEO of Frontier Advisory, has been involved in the development of education programs to prepare Africans to work with and for Chinese stakeholders, beginning with a partnership alongside the Chinese government to establish Africa’s first Confucius Institute at Stellenbosch University in 2004. The Confucius Institute model was designed to promote Chinese language instruction and culture abroad, in response to African universities’ demand for assistance in delivering support for language studies and research. But the concept has limits, he says.
“The funding model for the Confucius Institutes is too ‘one-size-fits-all’; what works in developed markets will not often work Africa,” says Mr. Davies. “Few Africans have woken up to the tremendous commercial importance of learning to speak Mandarin. The Chinese government will need to provide more than seed funding if they wish to see these institutions grow and prosper.”
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