Research On Chinese Enterprises' Direct Investment In Africa

Since the "going out" strategy implemented inl999, the cooperation between China and Africa is increasingly deep. Due to the limited supply of domestic raw materials and energy, some sectors of the domestic market approaching saturation and other issues like the adjustment of industrial structure, more and more Chinese enterprises begin to expand investment in Africa. In terms of the motivation of FDI, resource-rich Africa has not only the mineral and energy reserves in the world, but the agriculture, the forestry and fishery resources, so our government introduced some incentive policies including liberalization of foreign exchange restrictions and rebate tax to promote Chinese enterprises to invest in Africa. In addition, due to the broad areas of Africa, a large number of the population, although the overall economy is in a backward state, the market potential is huge. In terms of factor endowments, technical, economic gradient or structure, China and Africa have a strong complementary investment. The higher ROI and the incentives policies implemented by the host government are very attractive for China’s enterprises in Africa, and china wound complete the transfer of the capital, products, technology and then open up a new market. In this context, a large number of Chinese companies began to take root in Africa, which among more than50African countries or regions, the industrial areas they have been involved in and the formation of Western and Japanese multinationals status of national coexistence of competition and cooperation.In this paper, firstly it summarized the recent progress of China-Africa Cooperation and the overall investment trends. Subsequently, it organizes and analyzes the current situation of Chinese enterprises in Nigeria, Tanzania, South Africa and Egypt, and the fields and industries. This article lists the stock and flow data of Britain, the United States, China, India and Japan over the years. After compares China and these countries from the macro view, it analyzes the investment trends in China and these countries from the perspective of mergers and acquisitions. Finally, it selects the industry factor among many comparable factors to longitudinal compare China, the U.S. and India. After compare the overall foreign direct investment enterprises in Africa, it has a conclusion, that is Chinese direct investment in Africa based mainly on mergers and acquisitions, compare to the investment patterns of Western countries, China is a country characterized by a combination of state-owned enterprises and private enterprises. In choice of industry, in addition to natural resources investment, each country has its own emphasis on industries, such as China’s textile industry, the U.S. financial industry and the Indian’s pharmaceutical industry, IT industry and etc., which is basically each country’s dominant industries.After the comparison of state-owned enterprises and private enterprises outward foreign direct investment, the paper detailed analysis the advantages and disadvantages of China’s direct investment. Finally, it put forward some policy recommendations at the government level and the enterprise level.