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1. Negotiating Local Business Practices With China in Benin

Author:
Folashade Soule
Publication Date:
04-2022
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
Commercial negotiations between Benin and China demonstrate how both sides navigate the dynamics of Africa-China business-to-business relationships. In Benin, Chinese and local Beninese officials engaged in drawn-out negotiations on a deal to construct a business center aimed at deepening business links between Chinese and Beninese merchants. Strategically located in Cotonou, Benin’s principal economic city, the center aims to promote investment and wholesale businesses by serving as a hub for China’s business-to-business relations not just in Benin but regionally in West Africa, especially in the large and growing neighboring market of Nigeria. This paper relies on original research and fieldwork conducted in Benin from 2015 to 2021 and the author’s access to draft and final contracts from the negotiations, which allow for a side-by-side comparative textual analysis, as well as initial field interviews and follow-up interviews with key negotiators, Beninese businessmen, and former Beninese students in China. The paper shows how Chinese and Beninese authorities negotiated the establishment of the center and, above all, how Beninese authorities made Chinese negotiators adapt to local Beninese labor, construction, and legal norms and put pressure on their Chinese counterparts. This strategy meant that negotiations took longer than usual to complete. China-Africa cooperation is often characterized by speedy negotiations, an approach that in some cases turns out to be harmful—since this can allow vague and unfair clauses to be featured in final contracts. The negotiations over the Chinese business center in Benin is a good example of how well-coordinated negotiators that take their time and work in coordination with various counterparts throughout the government can help facilitate better outcomes in terms of high-quality infrastructure and compliance with prevailing construction, labor, environmental, and business norms, while also preserving a good bilateral relationship with China.
Topic:
Foreign Policy, Development, Bilateral Relations, and Business
Political Geography:
Africa, China, Asia, and Benin

2. What China Is Learning From West African Managerial Practices

Author:
Abdoulkadre Ado
Publication Date:
10-2022
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
Joint ventures have enabled Chinese companies to cultivate a presence in three West African countries—Ghana, Niger, and Nigeria. Investing in joint ventures has enabled Chinese cultural adaptation by emphasizing training programs in languages commonly spoken in West Africa, embracing local management styles, and assimilating some local practices. This has been especially true in three key economic sectors: free trade zone promotion and related services, transportation and aviation, and oil and gas. Chinese firms are also complementing these growing business arrangements with the use of local languages, social media outreach, and other forms of local engagement with West Africans. In doing so, Chinese organizations have responded to some of the demands of their African partners in local, state, and central government posts. It would be beneficial for African governments, businesses, and corporate managers to explore further ways to incentivize Chinese government decisionmakers and Chinese businesses to use joint ventures more often as the vehicle for their investments in Africa. To deepen the impact of such efforts, they should also encourage Chinese organizations active in West Africa, and across the continent in general, to embrace the use of local languages, especially for conducting business, and to train more Chinese expatriates to use African managerial philosophies that have proven to respect local values while being effective in African markets. Research on China’s engagement abroad and Chinese firms’ business operations in foreign countries often argues that Chinese organizations are not keen to adapt to local contexts. As a result, some analysts of China-Africa relations argue, or at least imply, that China does things as it wishes in Africa and that African countries have little agency in shaping how Chinese governmental and commercial players operate in their countries. Some analysts have even characterized African countries’ relationships with Beijing as the “Chinisation of Africa.”1 This line of thinking tends to assume that local contexts have mattered little for Chinese economic activities in Africa so far. But Chinese commercial engagement in Africa is increasingly adaptative to local contexts, conditions, and complexities. In Ghana, Niger, and Nigeria, Chinese actors are adjusting their ways of doing business to consider local realities with respect to both formal and informal institutions. For one thing, the Chinese players who are active in these three countries are acknowledging and mobilizing African practices and cultural traditions to support their own business goals and sometimes those of their local partners. The level of Chinese economic engagement tends to differ from one African country to another, with some places being more welcoming of a Chinese commercial presence than others. The specific patterns of Chinese adaptation also tend to vary between different parts of Africa. For instance, these adaptations may look different in a Francophone country like Niger than they would in a country like Nigeria. Niger is a nation where China’s adaptation differs from its adaptation in Ghana or Nigeria since language and managerial practices partly are derived from various French and British cultural traditions and colonial imprints in those three African countries.
Topic:
Business, Engagement, Management, and Adaptation
Political Geography:
Africa, China, Asia, and West Africa

3. Hard Cash and Soft Power: When Chinese Firms Win EU Contracts

Author:
Allison Carragher
Publication Date:
11-2022
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
The European Union is a committed defender of open markets. This extends to its public procurement mechanisms, which remain open to all bidders. EU policymakers have developed tools intended to defend the bloc’s interests in the face of increased economic and strategic competition from the People’s Republic of China (PRC), but few policymakers understand how the European public views the debate. As the first major EU-funded, China-built infrastructure project, the Pelješac Bridge in Croatia provides a unique opportunity to conduct a thorough analysis of European public opinion toward EU tendering policy and Chinese companies. Brussels has labelled the PRC a partner for cooperation and negotiation, an economic competitor, and a systemic rival,1 but the nuances of this policy remain difficult to ascertain. Projects and policies presented by China as “cooperation” often contain elements of economic competition or are leveraged by the PRC for strategic gain. However, this dichotomy has not filtered down to citizens. Extensive polling reveals that Croatians share very few of the concerns of EU policymakers. Furthermore, the PRC state-owned construction firm enjoys more visibility than the EU, which provided hundreds of millions of euros for the project. In terms of soft power, which is here defined as the ability of a country to shape the narrative, the Pelješac Bridge has been a resounding success for the PRC. The Croatian public has largely embraced the PRC’s preferred image of itself as a reliable and trustworthy economic partner and a benign power that does not interfere in domestic affairs. This opinion diverges from official EU policy and glosses over evidence of the PRC’s unfair economic practices, environmental and labor shortcomings, and interference in European democracies. Notably, the PRC’s soft-power gains were achieved on the EU’s own dime. It is not in the EU’s interest to bankroll the economic and soft-power ambitions of its systemic rival. As a democratic institution, the EU has a responsibility to both respond to public opinion and educate its citizenry when EU interests are at stake. In this case, the EU should recalibrate its tendering policy to be fairer and better aligned with its own economic and strategic interests. This process is currently underway, but it should also be extended to co-financing arrangements like the Team Europe approach, which combines traditional EU assistance with support from individual EU member states and international financial institutions. These policies must also be paired with renewed efforts at visibility and branding. Lastly, there is a need to collect and publish better data on the end users of EU funds in order to evaluate successes and identify future issues.
Topic:
Infrastructure, European Union, Economy, Business, Soft Power, and Strategic Competition
Political Geography:
China and Asia

4. How Central Asians Pushed Chinese Firms to Localize

Author:
Dirk Van Der Kley and Niva Yau
Publication Date:
10-2021
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
There has been a sea change in China’s economic involvement in Central Asia. Large-scale transport and electricity projects funded by Chinese government loans have dried up. Hydrocarbon exports to China continue, but they are not the focus of most new projects. Instead, there are a growing number of industrial projects that seek to make value-added products that can be exported. These projects are increasingly staffed by Central Asians who receive technical training from Chinese firms. This change has been primarily driven by Central Asian states. The region’s governments have long pushed for industrial capacity building, including the upskilling of local workers. In addition, debt concerns in Kyrgyzstan in particular have made Chinese loans less attractive and less prevalent. This trend has coincided with Chinese policy banks’ embrace of more conservative lending policies globally for infrastructure projects. Chinese firms have begun adapting to these demands. They have steadily increased their proportions of local hires by training Central Asian workers both onsite and in China to address skills shortages. They have tried to engage local communities to earn a social license for their overseas operations. The Chinese government is now following suit. It is developing more formal cooperation agreements on industrialization and upskilling in addition to pre-existing, ad-hoc arrangements by individual companies. So far, the outcomes have been mixed. Many Chinese firms in Central Asia are employing more locals. Yet the more closely integrated these Chinese firms become with the region’s economies, the more they must deal with, or be co-opted by, localized corruption and political fights. Newly available polling data shows that public sentiments toward China are becoming more negative. Chinese companies are flexibly adapting to this environment of heightened expectations in a variety of ways. The views that outside observers in Washington and elsewhere harbor of China’s infrastructure investments through the Belt and Road Initiative (BRI) in Central Asia are outdated and do not reflect how much Chinese firms and eventually the Chinese government have adapted to meet local needs. Any Western-proposed alternative to the BRI needs to take these considerations into account.
Topic:
Economics, Business, Industry, and Job Creation
Political Geography:
China, Central Asia, and Asia

5. How Argentina Pushed Chinese Investors to Help Revitalize Its Energy Grid

Author:
Juliana González Jáuregui
Publication Date:
12-2021
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
China’s modernization strategy integrates both domestic and foreign policy, especially through two complementary prongs—the so-called Going Global strategy and the Belt and Road Initiative (BRI). This push to internationalize China’s development strategy has ushered in a new era in Beijing’s relationships with countries and regions around the world. In Latin America, these policies have triggered a dynamic pattern of interactions between China and the region’s political economy. Being rich in fuels, energy, foodstuffs, and basic products, countries in Latin America have emerged as significant suppliers for China, but they also have become important destinations for Chinese-made industrial products, and, subsequently, Chinese investment and lending. For Latin American countries, China’s rise as an influential investor, lender, trader, and builder has created an array of new challenges and opportunities. While Beijing has harnessed its engagement in Latin America to support its own development, countries in the region have sought to direct some of China’s economic and financial resources to promote their own strategic sectors. Argentina illustrates this dynamic well, particularly in the energy sector. Argentinian government officials and business leaders have attracted Chinese investment and finance into renewables and other types of energy to promote Buenos Aires’s goals of taking a hybrid path to an energy transition. For its part, China has seized this opportunity to advance its own development goals and to participate in Argentina’s energy transition strategy. Though Argentina has not yet formally joined the BRI, Argentinian officials have reported publicly that Buenos Aires has already decided to endorse the initiative and is waiting for the right moment to do so.1 Argentina has been weighing the pros and cons of signing on to the BRI. On the one hand, signing on could enhance the presence of Chinese actors in the Argentinian renewables sector, as China seeks to intertwine its engagement in Latin America with the deployment of the Green BRI, the dimensions of the initiative that are framed in terms of environmental sustainability. More broadly, joining the BRI could attract new Chinese investment and finance in alternative energy and electricity transmission infrastructure, further contributing to Argentina’s goals for an energy transition. On the other hand, Argentina faces the challenge of designing and implementing a long-term national energy plan that complements its role in the BRI. This means devising an energy plan that, among broader objectives, seeks to help Argentina harness Chinese know-how on renewables and develop innovation and technological capacities of its own. In the meantime, Argentina’s lack of committed engagement with the BRI to date has not impeded the expansion of Chinese overseas investment and financing for renewables and other types of energy projects in the country. In a clear sign of political agency, the diplomatic outreach of key Argentinian national and provincial government officials, as well as corporate players’ push for local associations, has been central in the quest to increase Chinese engagement in Argentina’s solar and wind power sectors and in other alternative energy projects. These interactions have allowed Argentinian policymakers to help shape an adaptive partnership to strengthen the alignment between Chinese investments and Argentinian development objectives. Admittedly, this engagement has at times encountered resistance due to environmental and social risks in certain localities. Even so, these concerns are part of the learning process and set a tone for future cooperation on energy projects. Renewables and alternative energy will continue to be a magnet for global investment as countries around the world strive to address climate change. Thus, local tensions are pushing both Argentinian and Chinese actors to learn from the problematic impacts of some projects and do more to address local communities’ concerns jointly. Successful responses to such concerns would further enhance the basis of Argentina and China’s energy-focused adaptative partnership.
Topic:
Infrastructure, Economy, Business, Investment, and Energy
Political Geography:
China, Asia, Argentina, and South America