A Study On Chinese Enterprises' FDI In Africa: Motivations, Modes And Effects

Chinese government has always made efforts to consolidate and develop friendly relation and cooperation with African countries for more than fifty years, which has provided solid political foundation for those Chinese enterprises who want to do operating abroad. China-Africa economic and trade operation has accessed to a comprehensive, rapid and stable development stage since the foundation of China-Africa Cooperation Forum, in 2000. Chinese government supports and encourages Chinese enterprises to build joint ventures or owned enterprises in Africa and to introduce mature technology, products and management experience to Africa country and people. Chinese enterprises have begun to invest Africa, but economic complementarities between China and Africa is very obvious and the potential for cooperation is huge.Secretary Zhou Yabin, Ministry of Commerce of China in Asia-Africa, has said Chinese enterprises should invest Africa because Africa is the first choice for Chinese enterprises. The newest research report from Barclay Bank demonstrated that China has become one of the most important foreign investors in Africa, more than 900 companies have invested in Africa and their investment programs have involved many fields, like energy, mining, communication, and infrastructure. Based on the purpose of enhancing the internalization of Chinese enterprises or looking for new object markets, Chinese enterprises should invest Africa market. Up to 2007, China has invested a total of more than 6.6 billion U.S. dollars and has involved agriculture, telecom, energy, processing and so on.This thesis tries to analyze the motivation, mode and effect of Chinese enterprises' investment activities in Africa and the difficulties that Chinese enterprises faced during the process of investment. Firstly, the thesis introduces the background and meaning of this paper, related research of other scholars, and the research method, framework and creation as well as limitation of this thesis. Secondly, the thesis summarizes some important theories about foreign direct investment from famous scholars in and abroad and analyzed the inspiration and enlightenment that developing countries could learn from those theories. Thirdly, the thesis analyzes the situation and specialty of Chinese enterprises' investment in Africa according to the research on the investment scale, growth rate and industries distribution. Fourthly, the thesis analyzes the motivation of Chinese enterprises who has invested in Africa. Fifthly, the thesis summarizes the four main investment modes of Chinese enterprises' investment activities in Africa. Sixthly, the thesis adopts Panel Data to build an econometric model to analyze the trade effect of Chinese investment in Africa. Finally, on the basis of previous analysis, the thesis points out some difficulties and problems that Chinese enterprises have faced in the investment activities. Then the thesis gives some suggestions in order to solve these problems.