Chinese investment in Africa is of considerable interest to the international community, and has received much attention both from governments and the news media. In the West, the popular conception of Chinese investment in Africa is that of a corrupt enterprise seeking only to extract profits and rob the people in a neocolonial enterprise. Of course, perception frequently diverges from reality, and our cohort was determined to experience with our own eyes the reality behind the narrative. Given the opportunity to investigate China’s business and economic influence, six members of our cohort chose to go to Nairobi, Kenya in order to see for ourselves the nature of Chinese investment in Africa and better understand its impact on the local economy. During our trip we met with representatives of five Chinese organizations, organizations that varied greatly in size, industry, purpose, and connectivity to the Chinese mainland. We met with representatives from the English language service of a major Chinese news organization in Nairobi, Fujian Construction Engineering Group subsidiary China Wuyi Construction, StarTimes - a Chinese-owned provider of digital and satellite television, China House - a Chinese-run social enterprise that brings volunteers from China to support social projects around Kenya, and Kilimall - a start-up looking to disrupt the e-commerce industry in Africa. We also took every opportunity to explore the Chinese community in Nairobi, speak with local Kenyans about their perceptions of China, and observe for ourselves firsthand the results of Chinese projects while traveling across the country.
Our investigation revealed a divide. This divide was not between Kenyans and Chinese companies, but rather was between two competing models of development. While the popular perception, at least in the West, of Chinese investment is that of the government’s hand pulling strings from afar and directing every piece of investment, the reality we found is that the companies interviewed appeared to be relatively operationally independent from mainland direction. The companies we interviewed strove to be apolitical, and seemed focused on simply conducting business in Africa. Even the largest said they strove to maintain a public view of neutrality in order to work with whatever government is in power.
Another common myth - that Chinese companies simply import Chinese workers to do everything, was not true - it was clear that the companies in Kenya sought to foster a local workforce where possible, whether that was office workers, construction employees, or high-speed train operators. The Chinese government’s contention has long been that, as a developing country, China knows how to foster development in other countries. The companies interviewed came closer to arguing that Chinese companies know how to work in developing countries.
A final theme from our interviews was the emphasis on differentiating Western ways of doing things with the Chinese way. Just as Western companies and NGOs often argue that Chinese companies don’t behave in accordance with international standards, we heard arguments questioning the motives of Western groups. This was especially true in the cases where there could be a tradeoff between development and the environment or local culture. The Chinese companies argued that Western NGOs will often not support needed development projects because of concerns about impacting local culture or the environment through expanded tourism and economic activity. This tension was brought up consistently, as the Chinese companies were adamant that alleviating poverty and promoting economic development should be the priority, not concerns about disruption of traditional culture. These interviews certainly shed a new light on many of the common criticisms that Chinese companies face.
On Tuesday, we interviewed three executives at China Wuyi, a subsidiary Fujian Construction Group. The Kenya Branch of Wuyi has operated in Nairobi for 15 years. Throughout the course of our meeting, they repeatedly shared their commitment to a “joint contribution for shared development” in the form of “corporate social responsibility.” They employ anywhere from 3,000+ local employees, and shared that they have consistently worked to improve the lives of the Kenyan population, providing water resources and building infrastructure. They emphasized that their objective is not just to seek profit, or to obtain immediate gains, but to adopt a long-term approach to their business model.
For the past seven years they have done so by fostering both inner and outer areas of focus. Internally they aim to develop a corporate culture that reflects their values. Western Media has criticized Chinese companies for bad business practices, and to answer that charge they have worked hard to localize their company and act as mentors to other local firms. Wuyi provides extensive local job training and management training, and are looking to foster a more highly educated work force. Externally, Wuyi aims to promote the Wuyi brand and further expand their reputation for being a highly credible company. Moving forward they aim to centralize their company structure, and to incorporate a diverse range of projects. In both of these, Wuyi has some considerable success. Some 20% of senior engineers are Kenyan, and more locals would have been employed in leading positions if there had not been a skills shortage. Other leadership positions were not mentioned, however.
Companies working in Kenya have been encouraged to collaborate with local firms on at least 30% of their business projects. China Wuyi has gone beyond, helping to collaborate locally on around 40% of their construction projects. Wuyi does not fear local competition and has welcomed them as partners. Wuyi believes that Kenya was granted a complete legal and political system by the British, but that it requires a new way of doing things, or rather a new working culture, to bring them to their full potential. Wuyi hopes that through win-win collaboration, job training, and the cultivation of business partners, they can help bring about this potential. Their biggest challenge in this respect has been local county interests which clash with the national interest. Wuyi has cultivated a large number of Kenyan workers, but for local projects the leaders of the county often wish that new workers be taken on locally. Wuyi is working hard to redress local concerns through other positive projects, and by forming bonds with those communities.
Their business interests in Kenya have been expanding continually over the past fifteen years. Just recently they bought 370 acres of land to transfer overflow production to Mombasa. Thinking that Kenya’s situation is similar to China’s own rise in the past few decades, Wuyi has made several investments in real estate development as well. However, in addition to fostering local talent and business relations, they aim to ensure that their work is environmentally sound. While much of Wuyi’s machinery is provided by the global supply chain, most raw materials are sourced locally. Wuyi is sensitive to the potential friction this may cause, especially if the raw materials are taken in ways that disrupt the environment and livelihoods of the local population. In answer, Wuyi has taken on additional projects for wildlife protection, for green energy production, and has worked to disseminate technology that allow for safer, and more secure, living and business practices.
As our conversation reached its conclusion, the executives at Wuyi wanted to impress upon us that 600 years ago Zheng He visited Kenya. That act created an ancient bond between their two peoples. Now that bond has moved into the new One Belt, One Road initiative. Rather than simply being an investment, Wuyi has dedicated itself to fostering a shared future between China and Kenya, and a commitment to mutual development.
Our group next visited Kilimall, an online delivery store and app founded by ex-Huawei employee Victor Ma. Kilimall aims to be the “Alibaba of Africa” in its ability to connect sellers and buyers and revolutionize eCommerce in Africa. Kilimall is highly international - the company currently ships goods to Nigeria, Kenya, and Uganda, and plans expansions to Egypt and Tanzania. Kilimall’s business model is to facilitate B2C sales, and while there are some local African retailers on the platform, in reality most of the sellers are from China - the number of goods exported from China to Kenya outnumbers local sellers 10 to 1. Kilimall provides direct delivery services in Nairobi and Mombasa while utilizing partners in other cities to ensure timely delivery. Relying mainly on prepay, a contrast from most Kenyan apps which use cash payment on delivery, the app otherwise functions similarly to other Kenyan delivery apps. A benefit is that the arriving day is estimated, an idea Kilimall took from the Chinese company JD.
To encourage new customers and market growth, Kilimall offers a half-price coupon for beginners. However, it is impossible to become a new customer unless one can receive a phone call via Kenyan cell phone number. Government relations are smooth, and more bureaucratically refined compared to other countries. Mr. Ma praised the Kenyan government for its strong investment climate, at least as compared to Kenya’s neighbors. This was a consistent theme across our interviews, and the relatively robust legal system was a primary reason that Kilimall opened in Kenya first. Ma also described Kenya as relatively safe, and the local governments around the country as friendly. Almost everyone working there was from Kenya. The company provides career training and steady work, even for the delivery people - this has resulted in lower turnover compared to other companies.
The visit to Killimal confirmed the importance of a strong legal system and a robust local workforce in attracting investment by Chinese companies. Kilimall’s nature as a start-up, however, made it different from the organizations that we visited in its reliance on local employees and its disconnect from the Chinese market. While Kilimall’s business model is only possible because of the ease of exporting goods from China to Kenya, it is not strongly tied to any entities on the Chinese mainland and is simply a company looking to make its mark the fast-growing landscape of the Kenyan economy.
After visiting a state-owned construction firm building some of the largest infrastructure projects in Kenya, an international news conglomerate, and a start-up with visions of continental e-commerce domination, our group turned to a meeting with China House, a Chinese social enterprise established in 2014, on Thursday. Walking into the modest apartment building that serves as both the living quarters and offices for the four full-time staff members and four interns who serve as China Home’s staff, we expected the ambitions of the group to be similarly tempered compared to the flashier and more well-established groups we had already met. After talking with the passionate group of young women, we found their ambitions to be anything but tempered. China House’s mission, as they described it, was to “integrate Chinese into the Kenyan community,” no small task given the amount of business China does in Kenya.
Today, the group focuses on doing this by researching and conducting community support initiatives with the support of both Chinese companies in Africa and volunteers who come from China. To promote understanding of Africa by Chinese, China House supports trips from Chinese nationals, who receive training on relevant issues before traveling to Kenya and participating in one-two week social projects. China House works with local Kenyan NGOs to identify areas of need, and recent projects include: The refurbishment of an old church in order to house local victims of female genital mutilation, a project to research the potential of exporting Masai handicrafts for sale in China, and engaged in fundraising in China to raise additional funds for outreach. In the summer of 2017 alone, China House hosted around 30 young people from China.
While China House has had some success, it has not been without its own issues. As with many social enterprises, funding is a constant concern - today funding comes primarily from a mix of grants from international organizations such as the WWF and the payments from Chinese volunteers coming on research trips. Funding from Chinese organizations has also been lacking, hampering China House’s ability to promote its core mission. Additionally, they have had some difficulty with engaging with the local Chinese community in Kenya, as Chinese businesses in Kenya are less concerned with supporting this type of social enterprise work.
All that being said, the future still looks bright for China House. Growth in interest from young Chinese has been strong, and the organization is still improving its fundraising capabilities. Most importantly, the recent success of their projects means that China House is making a difference in Kenya - success which will hopefully continue.
Our final visit was to the offices of StarTimes. StarTimes is a Chinese digital television provider operating in Kenya, as well as over 30 other countries throughout Africa. We were given a tour of the company’s offices by the CEO of StarTimes, Kenya Zhang Junqi, who also held a discussion with we to answer their questions on StarTimes’ operations and future development in Kenya and throughout Africa.
StarTimes entered the African market for cable television in 2007, but the company quickly discovered that cable television was a luxury good for consumers in Africa. The company’s goal then became making cable television affordable for more Africans. Evidence of this ambition can be seen in StarTimes’ construction of transmitters that made a significant contribution to the Kenya’s analog-to-digital communications transition. StarTimes’ service covers approximately 90% of Kenya’s population, and the company has a 50% market share. While physical cables laid underground to connect to households can provide the highest quality user experience, most areas of Kenya lack the infrastructure required for such a service and most of StarTimes’ customers access its service through digital satellite transmission. However, the company’s future goals are focused on the industry’s shift from cable television to online streaming, which is how younger consumers in Kenya primarily access the company’s service.
Localization of its workforce in Kenya is also a major priority for StarTimes. The company has over 500 employees in Kenya, of which all but approximately fifteen are local Kenyans. The number of Chinese employees was quite high during the initial phase of StarTimes’ operations in Kenya, particularly its requirement for engineers trained in using the newest technologies. However, as StarTimes transferred its technology to Africa, it was able to implement programs that allowed it to recruit and train local engineers to operate its systems. Chinese engineers are now generally only required in exceptional situations.
Kenya’s legal and regulatory system has created a fairly clear and consistent business environment for StarTimes to operate in. The Communications Authority of Kenya regulates all communications services and is responsible for issuing licenses for companies such as StarTimes to operate. Content regulations have been quite relaxed, although the government recently passed a law establishing a 30% local content quota.
Our visit to StarTimes provided an excellent introduction to both the challenges facing a Chinese company operating in Kenya as well as Kenya’s legal and regulatory system as it applies to the communications and entertainment industries.
A Chinese News Agency
On Jan 15, 2018, we held our first interview by meeting with Miss Zhang and Mr Peng, two Chinese journalists from the English language desk of a major Chinese news organization. Their names have been changed at the request of the organization. In a wide-ranging conversation, the two journalists talked about their opinions on bilateral relations between China and Kenya, the responsibility of this news organization in Nairobi, and their personal living and working experiences in Africa.
Miss Zhang, who had been working in Nairobi for about a year, began the discussion by introducing basic information about the organization. The bureau in Nairobi is in charge of reporting across all of sub-Saharan Africa. Chinese journalists from the bureau are dispatched from China based on 2-4 year rotations. While the Nairobi bureau is relatively less popular compared to some of the organization’s other overseas news bureaus, there are still some Chinese journalists, like Mr. Peng himself, voluntarily work here. The cozy climate is one of Kenyas attraction to foreign employees.
Regarding political topics, Miss Zhang and Mr. Peng were relatively open. With Chinese investment in Kenya covering more and more fields, Chinese-Kenyan relations are developing on a healthy track - they argued relations now at a high point. The Standard Gauge Railway (SGR) from Mombasa to Nairobi, constructed by Chinese firms, has pushed forward the nation’s modernization drive and benefited local peoples’ lives. In addition to the SGR, the biggest project since Kenya gained independence, Chinese firms have built infrastructure such as highways across the nation. Miss Zhang mentioned the local strict laws on environmental protection as a challenge to Chinese firms. She argued that local people in Kenya think highly of China-Kenya bilateral relations. Opposite to some rumors that Chinese firms do not hire local workers, Miss Zhang told us firms generally prefer to employ local labor instead - both for the cheaper labor cost and to improve the local employment rate to some extent. For instance, there are 28 local reporters working for the organization in Nairobi, far more than the number of Chinese reporters.
Next, Miss Zhang and Mr Peng talked about the organization’s mission in Nairobi. The organization maintains a good relationship with local media and often sells its stories for distribution in local papers. According to Miss Zhang the local media often prefers Chinese sources of African news over Western ones, as Chinese sources are viewed as more objective, comprehensive, and constructive than Western media. The Western style, on the other hand, often focuses on criticism of the Kenyan government and other negative stories, which can cause discontent among local media. Talking about the target audience of the organization, Miss Zhang said they prepare news in both Chinese and English, with news in Chinese sent to Beijing for editing for Chinese domestic audience. English language news, on the other hand, is edited in Nairobi mainly for African and international audience. She also said these two groups of news are slightly different, because news in Chinese is more China-related. News topics are found mainly by the organization’s sources in Africa, although editors in Beijing also provide some guidance on topics.
According to Miss Zhang, the organization tries to take a constructive media perspective, which includes covering social protests in Kenya and other African countries. The organization also holds good relations with Western media companies, although there are not few chances for them to work together.
Finally, Miss Zhang and Mr Peng shared their own living and working experience in Kenya. They both love the cozy climate here in Nairobi and the friendly local people. They have observed that more and more local people are learning Chinese today. The living conditions in Africa is not as bad as they used to expect - there is no malaria in most of Kenya, and they also have easy Chinese food in Nairobi. Miss Zhang pointed out the problem that African people were unrepresented now in the world, which needs to be solved urgently. As for Kenyan domestic politics and its economic development, Miss Zhang thinks its economic development and Chinese investment will lead to a more stable security situation.
Overall the discussion with Miss Zhang and Mr Peng imparted valuable knowledge on the organization’s operation in Kenya and across Sub-Saharan Africa, as well as on a basic understanding of the investment environment for Chinese firms in Kenya.
China in Kenya - Conclusion
While interviewing five companies is only the beginning of understanding Chinese business practices in Africa, our investigation was nevertheless enlightening. Certainly some of what we heard could be fairly described as ‘corporate marketing,’ but we were still able to learn some key things about the so-called “Chinese Development Model” in Africa. First, and most importantly, the companies we spoke with seemed to be relatively independent from Beijing - there was no guiding hand of the CCP weighing in on their every investment decision. Even the Chinese news organization - the English language version at least - had no direct censorship from Beijing and were free to pursue stories they thought were important. These companies seemed to be simply interested in making a profit by working in the local market, and were not the semi-governmental organizations that Chinese companies in Africa are often portrayed as. Second, contrary to what we had heard, the groups we interviewed largely employed local staff, especially below the highest levels of management. There were not Chinese workers being flown in from the mainland to carry out all the work at the company. Finally, the groups we spoke with were extremely aspirational - Kenya was a place that the people we spoke with was still full of opportunity. A startup looking to create the ‘Alibaba of Africa,’ a news agency looking to provide more comprehensive local coverage, a social enterprise bringing Chinese people to help solve Kenya’s social problems, a media company bringing entertainment to the masses, or a construction firm helping a country to develop. All these groups were in Kenya for a purpose, a purpose that they actively thought about and looked to carry out. Everyone we spoke with was keenly aware of the perception of Chinese organizations in Africa, and while they were eager to push back against such stereotypes, they were more eager to let their work speak for itself.