Research On The Local Content Requirements In Africa Investment And China’s Response

"Local Content Requirements" refers to a country’s requirements which require/encourage foreign investors,or require foreign investors to preferentially purchase and use local labor,local ownership,local products and other local elements.These are important measures currently taken by African countries to create and enhance the interests of local citizens and local companies.Important measures taken in order to benefit.The local content requirements in Africa came into being in the 1970s.After continuous development,the local content requirements has become a new trend in the legislation of African countries.The main content of the current local content requirements for investment is:Local Employment Requirements,including requiring or encouraging foreign investors to use domestic labor,restricting foreign labor through the visa system,and requiring or encouraging foreign investors to train local labor;Local Equity Requirements,including requiring or encouraging foreign investors and local investors into joint ventures and requiring or encouraging local investors to hold a certain percentage of equity in joint ventures;Local Content Requirements,requiring or encouraging foreign investors to purchase or use a certain percentage or amount of local products and services;Local Management Requirements,including requiring or encouraging foreign investors to use local managers and requiring foreign investors to train local managers;for compulsory local content requirements,various countries have stipulated penalties such as fines and imprisonment;for encouraging local content requirements,various countries have stipulated incentive measures such as tax reductions and exemptions.From a legal point of view,the provisions of local content requirements are conducive to safeguarding their national sovereignty,especially resource sovereignty,and are conducive to their sustainable development.From an economic point of view,the provisions of local content requirements are conducive to localize foreign investment to adapt to the local economy,to break the"resource curse" and to protect domestic infant industries.But at the same time,the local content requirements of the African region have had a certain impact on China’s current investment in Africa,and its impact includes both negative and positive impacts.From the perspective of negative impact,the local content requirements of the African region have increased the difficulty of investment access for Chinese investors,increased the various investment costs of Chinese investors,not conducive to the control and management of investment by Chinese investors and increased the investment risk of Chinese investors.From the perspective of positive impact,the local content requirements of the African region have reduced the labor costs of Chinese investors,improved the relationship between Chinese investors and local governments,improved the image of Chinese investors in Africa,helped Chinese investors to take the initiative in negotiations and helped Chinese investors to prevent investment risks under the Covid-19.Combining the impact of African local content requirements on Chinese investors and the current status of Chinese investors’ investment in Africa,Chinese investors should respond to African localization requirements from four aspects:actively choose localization strategies for business management,attach importance to the research,judgment and response to legal risks required by local content requirements,striving for stabilization clauses in investment contracts,and actively seeking ways to effectively relieve investment losses;and the Chinese government can respond to the requirements of local African constituents from four aspects:pay attention to the relevant legislative policy changes and timely warning;signing and entering into force of more China-Africa bilateral investment agreements;promote the development of investment liberalization and investment facilitation concepts;improve the investment guarantee mechanism for Chinese investors in Africa.