A Zambian View on Chinese Firms

A Zambian View on Chinese Firms
The Wall Street Journal, March 1, 2010, 4:08 PM HKT

Lu à http://blogs.wsj.com/chinarealtime/2010/03/01/a-zambian-view-on-chinese-firms/tab/article/  

It's been an active start to the year for economic ties between China and Africa.

In January, Chinese Commerce Minister Chen Deming visited Ethiopia, Mozambique and Tanzania, while Foreign Minister Yang Jiechi touched down in Kenya, Nigeria and Sierra Leone. And last week the foreign ministers of South Africa and Zimbabwe as well as a Zambian delegation headed by President Rupiah Banda all arrived in Beijing for visits.

Investors like China play a crucial role for resource-rich Africa as a way to get funds flowing, beyond the traditional donor money from multilateral agencies. In November, China Premier Wen Jiabao pledged $10 billion in preferential loans to Africa under a three-year action plan. Zambia, Africa's largest copper producer, is hoping to secure at least $1 billion of that sum, according to Zambian Trade Minister Felix Mutati.

But Chinese businesses still face headwinds in Africa. In Zambia, labor and mine safety issues plague several Chinese state-controlled enterprises, including China Nonferrous Metals Co., or CNMC, which operates some of Zambia's biggest copper mines, including the ones in Chambishi and Luanshya, and China's Sinohydro Corp. which is mandated to upgrade the Kariba North Hydro power station, Zambia's largest hydro power station.

Zambia's Mutati, in an interview last week in Beijing, offered some thoughts on the state of relations. He estimated Chinese investors account for about 15% of the investments in Zambia's copper sector, but in the small-scale mining industry the Chinese are a majority. Mutati said the very nature of small-scale mining means many miners cut corners and since Chinese firms dominate the sector, incidents more frequently involve the Chinese, which tends to hurt the reputation of Chinese firms across the board. But the case is different with the big Chinese firms, Mutati said.

Below are excerpts from the interview:

About 18 months ago the Chinese workers and Zambian workers had a big fight. And one of the reasons that they fought was that the Zambians felt they were being overworked. You guys can work 12 hours, 15 hours without complaint but they are used to eight-hour shifts. So when they were stretched beyond what they are used to, they rioted. But what that has done over the time is the fact that the mentality shift, the attitude shift is now taking place in the minds of the Zambians because they can earn a little extra by working over and above their normal expected standards.
We had a mine called Luanshya, which is also run by CNMC. ... When CNMC was purchasing this particular mine there was a lot of resistance by the public that ‘We do not want Chinese to buy it because our workers suffered from low pay and so on and so forth' - these perception issues. As government we're stuck...We eventually sold the mine to CNMC. Basic comparisons: For the workers, are they getting less than they used to get when they were under the previous owners?...They are not getting any less. Do they have safety [gear that is] worse than they had previously? The answer is no. Three, are the suppliers to the mine getting delayed payment compared to previously?...They found that the payment with the Chinese is even faster.
[The workers] had their misgivings about the Chinese. [But] for the first time they have seen real physical investment going into the mine. The previous guys were just scratching around. These are the people on the inside who are saying that what they are seeing now is much more what they have seen before. So these guys are happy. The guys on the outside of the fence keep singing the same song about the Chinese. So we think that over time as reality spreads itself...these perceptions obviously will not be eliminated, but its weight will be reduced considerably.
That is what is critically important. For our people to say, ‘I'm not getting any less money. I'm getting my uniforms. I'm going home in a new bus. I'm going to the hospital and there is medicine now' - those are the things that really matter to us.
You find that on average (the big Chinese companies) are generally above average within the [mining] sector when you compare company to company [in terms of pay]. Issues of safety-you get the statistics for the big companies and you find that there is nothing that distinguishes the Chinese investment with the others in terms of whether it's worse for safety.
The reason we come [to China] is because [China has] the liquidity. That's number one. Number two, the pace of decision-making is quite quick...when they are committed. They are not so much into scenario analysis...if they think it smells good, they move. I'm not saying there is no downside, but it's quicker and it's creating the jobs that we so desperately need.