Chinese business leaders show how far they have come to contribute to SA’s economic & social progress. Thoughts on getting to the next level.POSTED ON: December 2, 2018 IN Blog
China – South Africa Commercial and Social Cooperation – taking our relationship to the next level
Keynote address to the South Africa-China Economic Trade Association (SACETA) Corporate Social Responsibility Launch
CSIR Convention Centre, Pretoria
Dr. Miriam Altman
Nov 28, 2018
Thank you for the opportunity to share some thoughts on this important occasion. Today, SACETA is launching its first Corporate Social Responsibility Report of Chinese-funded Enterprises in South Africa. It is a great honour to speak to you today. I will do so in my personal capacity, and this will enable me to speak from the heart.
I would like to recognize the presence of the Chinese Ambassador to South Africa, HE Mr. Lin Songtian, the Chairman of SACETA, Mr. Zhang Jinguo, and Ambassador Genge from DIRCO. Further, I would like to express appreciation for the presence of so many leading representatives from the business sector.
I take a great personal and professional interest in China-South Africa relations.
There is little doubt that strengthening mutually beneficial commercial relations with China will be an important ingredient in achieving the National Development Plan’s Vision 2030.
We have a wide gap in our culture and ways of doing things, so if we are going to achieve great things together, we will all need to invest in building relationships beyond simple transactional activity.
I have had enriching engagements with Chinese government and business over the past 15 years from which I have learned much. For example…..
At Telkom, where I was Chief of Strategy guiding its turnaround, we were the largest buyer of Huawei products in Africa and began discussions on partnering in joint product development.
In various public sector roles, I have supported Ministers in their approach to China, and have more recently developed close relations with China’s NDRC and a number of top SA businesses who are active in China, and Chinese businesses in SA.
Over recent years, I have had the honour of offering special lectures to Chinese graduate students in economics and in public management at Fudan and Tsinghua Universities.
This engagement has given me new insights into China and how it is evolving.
The CSR report shows us how far the China-South Africa relationship has come in recent years. We are now celebrating 20 years of diplomatic relations, but there has been especially significant growth in commercial relations over the past decade. This report gives us really useful information on the range of Chinese investments, with the 130 SACETA members having invested $13 billion, and creating about 30,000 jobs. The report further gives us a picture of a significant deepening of relations aimed at localization, employment, training, capacity development and also contributions to social needs in the communities where Chinese companies are operating.
We have great mutual interest in stepping up to the next level in our cooperation. Already SA is China’s biggest partner for trade and investment in Africa and China is SA’s biggest trade partner. And we welcome recent commitments by China as announced at FOCAC by entities like the CADFUND and the Bank of China.
This report demonstrates great progress in stepping up. I would like to share thoughts on how we can do more.
- More balanced trade must be a top priority for both parties. Chinese investments intended for export are one solution, such as that by FAW, Hisense, and Beijing Automotive Group. Increasing access to Chinese markets will also be important.
- We receive only 0.065% of Chinese outbound tourists, or about 95,000 Chinese visitors out of a total of 100 million that travel overseas. Consultation with the tourism sector shows that there is potential and interest to dramatically multiply the number of Chinese visitors. This could have an important impact on job creation, especially for youth. We should also encourage South Africans to visit China. There is great commercial opportunity to partner in tourism and related sectors such as aviation, hotels, vehicles, and food products. Tourism has the added advantage of building awareness and personal relations, which in turn can contribute to further trade and investment between our countries.
- Education is central to the success of the National Development Plan.The SACETA report shows many areas of cooperation in this regard, such as that by Huawei, the State Grid Corporation, Hisense, the CRRC Corporation and a number of mining companies. Gold One has done impressive work to lift basic education of its mine employees. Chinese companies could be further encouraged to partner with TVETs to develop capacity and curriculum for skills development.
- Together we could build deeper cooperation in areas of innovation.
- In terms of work practices, Huawei is the world’s most impressive employee owned company, and with significant R&D is already bringing new capabilities in IoT and in spectrum optimization to telecoms operators in SA.
- China is making great advances in green energy, and we could learn much from this experience given our significant reliance on coal.
- The Chinese public sector has been adept in introducing public policy innovations and we could learn from their approach to continuous learning.
- The deepening of the partnership between South Africa and China should extend beyond our borders to promote regional development.
Intra-regional cooperation is critical to the success of its member countries. To this end, South Africa is the biggest source of foreign direct investment into the rest of Africa, totaling more than $40bn between 2003 and 2016, with 80% invested in the past decade. Our main capital investments have cut across many sectors from oil and gas, to communications, metals, financial services, construction, chemicals, hotels and tourism and consumer products.
From a low base, China has rapidly become Africa’s largest economic partner. Since 2000, trade has grown in nominal terms by 20% a year and foreign direct investment by 40% a year. There is also significant growth in Chinese aid and concessional infrastructure and construction finance.Chinese companies are involved in about 12% of the estimated $500 billion a year manufacturing activity in Africa, while they may account for up to 50% of Africa’s internationally contracted construction market.
The largest portion of the activity takes place through public sector investments — often through State-owned enterprises, development and multilateral financial institutions — to fund mega projects in railways, ports, airports, water, and related activities. This has had a profoundly positive impact on the African landscape.
There is also extensive presence of private Chinese investment in Africa, mostly aimed at serving domestic markets. Mckinsey has forecast that Chinese enterprises in Africa could potentially multiply their revenues from the current $180 billion to $440 billion by 2025. As already mentioned, we hope there will be growing focus on investment with the aim of exporting.
ICBC’s purchase of a 20% stake in Standard Bank for $5.5bn in 2008 is still the single largest investment in Africa by a Chinese company. Together they have invested $8.5bn in 35 projects across Africa, and have plans for a potential investment of $9.8bn. More such partnerships and joint efforts will help realise greater results in this complex environment.
No speech about this cooperation can be made without consideration of the Belt and Road. While much is said about a 1 billion plus population in Africa, the demographic dividend will only be realized if our markets are better integrated. Belt and Road is a great opportunity, whether we are thinking of Maritime, an Economic Belt or Digital connectivity.
This CSR report is welcome, with extensive information on how far we have come together. There is so much potential, and it is clear that we have just scratched the surface of what is possible. These are some thoughts on how we might deepen our relationship and achieve both of our 2030 goals for development and shared prosperity.
I thank you