A Study On Political Risk Aversion Of Chinese Enterprises' Investment In Africa

In recent years, economic and trade cooperation between China and Africa isdeveloping rapidly, the African continent has become an important destination forChinese enterprises to invest overseas. However, while the China-Africa economicand trade cooperation have a new, larger growth performance, the political risk is alsoshowing a worsening trend. To avoid and deal with political risk is an important safetyassurance for Chinese companies in Africa. The research for Africa’s political risk willhelp Chinese companies achieve healthy sustainable development, but also helpbuilding a deeper level of economic cooperation and trade system. To avoid thepolitical risks requires the joint efforts of the government and enterprises.On the onehand, the government needs to continue improving the non-diplomatic strategy andtrade policy, further optimize China-Africa cooperation, and strive to create a goodbusiness environment for more Chinese enterprises entering in Africa, and to givelegal protection and policy support; on the other hand, companies need to continue tostrengthen their capacity for non-operating level, and improve the ability against thepolitical risk.The article studies the Chinese enterprises facing the political risks in Africa. Theresearch method of diplomacy, international political economy will be used, based onthe analysis of Chinese investment in Africa, focusing on the type, content, causes,research in political risks. And from multiple angles at two levels of government andenterprises is to avoid the political risk and present a series of countermeasures.The article is divided into four chapters in addition to the introduction.Theintroduction section explains the purpose, significance and structure. It points out thepoint of innovation of the thesis, and home and abroad reviews will be illustrated.Thefirst chapter summarizes the profiles of Chinese enterprises invested in Africa. Atpresent, China’s investment in Africa is expanding in scale,area,field and the numbersof enterprises, while investors is growing increasingly diversified. However, there aresome defects, such as a smaller proportion of total investment, significant regionalimbalance, and the industry is concentrated relatively. The second chapter focuses onthe characteristics of the political conflict in Africa and the types of political risks forChinese enterprises in Africa, as well as the risk incentives and new trends. Politicalconflicts represent a strong sense of tribal conflicts and a continued interests conflict,military intervention in political, turmoils national and so on. These politicalcharacteristics breed the political risks, combined with recent extraterritorial powersstruggle to compete for resources in Africa, disturbance from outside forces, all ofthese make the politics of Africa not optimistic. A wide range of political risks inAfrica, mainly comes from three factors: political instability, poor governmentcompetence and social problems. Political instability is mainly reflected unstableregime and policy. Poor government competence refers to low quality and lowefficiency of power. Social problems lies in both host country and internationalcommunity. Meanwhile, the political risk in Africa is worthy of attention on somenew trends and new appearances, mainly in the encroachment of the increased risk ofexpropriation. The Western media spoiler cause an increased the social risk, and newrisk of political violence would be seen. The third chapter emphasized on optimizingthe China-Africa relations to create a sound trade and economic environment for thetwo sides. So, the thesis mainly analyzed how to improve the policies and mechanismfrom the invest environment. The fourth chapter taking countermeasures combinedwith cases to avoid and cope with political risks from 3 stages: before, during andafter the investment in Africa. A risk assessment and business insurance should beassured before Chinese enterprises invest in Africa, lower the political risk ininvesting by structural arrangement, take measures to against risks. In addition, thelocalization management of ZTE Corporation in the Congo(DRC) and Angola, Chinasteel actively practicing social responsibility in South Africa, and Zhejiang Chamberof Commerce cooperative together will be as cases in point.