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Chinese corporations want to dominate world, Africa
November 10, 2009
By Mzwandile Jacks
Chinese corporations would want to “dominate the world and not only Africa” in the near future, benefiting South African banks with a global presence, a Cape Town-based analyst said on Tuesday.
Johan De Kock, the head of equity research at Metropolitan Asset Managers (METAM), said the Chinese companies’ aggressive expansion to other countries was reality which had once been practiced by corporations in Europe, the US, Japan and South Africa.
“In the past, we have seen Japanese companies like Sony and Toyota start operations in many parts of the world,” De Kock said. “South Africa’s SABMiller and Old Mutual have done a similar thing through acquisitive means.”
Chinese corporations would, according to De Kock, eventually move out of the Chinese market by making major acquisitions outside of that country. He said banks like Standard Bank would want to cash in on this expansion, particularly in Africa.
Chinese companies were interested in Africa because of the abundance of resources and energy in the continent.
De Kock was speaking shortly after Standard Bank, Africa’s biggest bank by assets, said it supported the new and enhanced initiatives announced at the Forum on China-Africa Cooperation (FOCAC) held in Sharm el Sheikh, Egypt, since this past weekend.
FOCAC highlighted the progress made over the past three years and also laid down new initiatives which would continue to drive cooperation, it was announced yesterday.
These initiatives included China’s promise of $10 billion (R74.4 billion) in government concessional loans to African countries over the next three years and support for initiatives addressing climate change challenges in Africa.
Craig Bond, the chief executive officer of Standard Bank China, said the bank would advise Chinese companies on the tremendous opportunities in Africa.
“We will help them mitigate the risks while offering a complete range of banking solutions to these companies… in African countries,” Bond said.
“The $10bn concessional loan initiative is highly commendable and I believe that the economic opportunities in Africa are tremendous and that much more than $10 billion of Chinese loan financing and investment will flow into Africa over the next 3 years.”
Much of this money would be Chinese commercial bank financing and it is understood that China’s commercial banks have both the liquidity and the appetite to step up their support for China’s trade and investment with Africa.
With almost 150 years of experience on the African continent and through its strategic partnership with the Industrial and Commercial Bank of China (ICBC), Standard Bank would facilitate these commercial transactions for trade, infrastructure and investment projects, Bond said.
This will expand the financing opportunities available to Chinese and African companies, large and small.
“For the next 30 years, China’s rapid industrialisation and urbanisation will require both resources and energy imports, and new markets for exports. Africa is not only a key source of China’s future resources imports but also a growing market for China’s increasingly high-tech exports,” Bond said.
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