Chinese State-Owned Enterprises in West Africa This book investigates the globalization process of Chinese state-owned enterprises (SOEs) in West Africa, primarily in Benin and Ghana, based on ethnographical studies It challenges the dominant vision of a powerful China in Africa and argues that the so-called Chinese business advantages – the monolithic Chinese state and Chinese low-cost advantages – are not viable for sustaining Chinese business development in the continent Considering the Chinese SOE globalization process in a relational approach, this book examines how the triple embeddedness (Chinese, African and managerial) shapes the Chinese SOE globalization process over time and space, in diverse dimensions and among different entities – the Chinese state, Chinese SOEs, Chinese expatriates, the African government, African business partners, African staff and the African society It illustrates that the Chinese central state has “retreated” deliberately from its SOE globalization in Africa The Chinese SOEs and Chinese expats are the major actors in initiating and inventing globalization strategies, facing limited Chinese state support and the African neopatrimonial governance and social contexts Besides, the personal trajectories (from expatriation to social promotion) of Chinese SOE expats interweave with the globalization-turn-localization of their SOEs in Africa Rejecting the linear, static and binary vision of a powerful China in Africa, the present study thus emphasizes power dynamics in Chinese SOE globalization process that are organic and pluralistic Time and local relations are key elements that constitute real Chinese advantages for Chinese SOEs visá-vis their ultimate competitors – not Western companies, but other Chinese companies Katy N Lam, Assistant Professor, Department of Applied Social Sciences, The Hong Kong Polytechnic University Routledge Studies on Asia in the World Routledge Studies on Asia in the World will be an authoritative source of knowledge on Asia studying a variety of cultural, economic, environmental, legal, political, religious, security and social questions, addressed from an Asian perspective We aim to foster a deeper understanding of the domestic and regional complexities which accompany the dynamic shifts in the global economic, political and security landscape towards Asia and their repercussions for the world at large We’re looking for scholars and practitioners – Asian and Western alike – from various social science disciplines and fields to engage in testing existing models which explain such dramatic transformation and to formulate new theories that can accommodate the specific political, cultural and developmental context of Asia’s diverse societies We welcome both monographs and collective volumes which explore the new roles, rights and responsibilities of Asian nations in shaping today’s interconnected and globalized world in their own right The Series is advised and edited by Matthias Vanhullebusch and Ji Weidong of Shanghai Jiao Tong University Chinese State-Owned Enterprises in West Africa Triple-embedded globalization Katy N Lam Chinese State-Owned Enterprises in West Africa Triple-embedded globalization Katy N Lam First published 2017 by Routledge Park Square, Milton Park, Abingdon, Oxon OX14 4RN and by Routledge 711 Third Avenue, New York, NY 10017 Routledge is an imprint of the Taylor & Francis Group, an informa business © 2017 Katy N Lam The right of Katy N Lam to be identified as author of this work has been asserted by her in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988 All rights reserved No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging in Publication Data A catalog record for this book has been requested ISBN: 978-1-138-64042-9 (hbk) ISBN: 978-1-315-63662-7 (ebk) Typeset in Galliard by Apex CoVantage, LLC Contents List of figures List of tables List of abbreviations Acknowledgments viii ix x xi Introduction: a relational approach of Chinese SOE globalization 1.1 Triple embeddedness: a relational approach of Chinese SOE globalization 1.2 Countries of focus: Chinese SOEs in Benin and Ghana 1.3 Outline of the book Retreat of the Chinese state: history of Chinese SOEs in West Africa 15 2.1 Chinese SOE reform: changing relationships with the Chinese state 16 2.2 Chinese SOEs in the construction sector in Ghana 17 2.3 Chinese SOEs in the construction sector in Benin 29 2.4 Telecommunications sector 33 2.5 Close down: Chinese SOEs in light industry 37 2.6 Conclusion: retreat of the Chinese state and globalization of Chinese SOEs in Africa 39 African embeddedness and vulnerable Chinese 3.1 3.2 3.3 3.4 African governance context for business 47 End of the so-called Chinese business advantage 49 Learning to play the game in Benin and Ghana 55 Cultivating government relations: politicians on the top 58 46 vi Contents 3.5 Local embeddedness and structural roles for business development 61 3.6 Everyday administration, everyday negotiation: officials from below 63 3.7 Conclusion: toward a reconceptualization of the real Chinese business advantages 66 African managers and workers: workforce localization and becoming a paternalistic employer 72 4.1 Labor issues of China in Africa: beyond the racialized stereotypes 72 4.2 Strategies of workforce localization of Chinese SOEs 74 4.3 Learning to manage African workers 80 4.4 Localization of management: Ghanaian managers in Chinese SOEs 88 4.5 Complete management localization in Chinese SOEs 91 4.6 Workforce localization: from a bottom-up strategy to a top-down discourse 94 4.7 Conclusion: African managers – another real Chinese business advantage 96 Chinese expats: social promotion and localization in West Africa 5.1 Dynamics of spatial-social mobility 102 5.2 Overview of Chinese SOE expats in Benin and Ghana 103 5.3 Expatriation in Africa and fulfilling social roles in China 106 5.4 Africa, the best alternative 109 5.5 Intersection with SOE globalization-localization and expatriation-migration in Africa 112 5.6 Globalization and expatriation: the limits of social mobility 116 5.7 Conclusion: the paradox of social promotion and localization 118 101 Contents Competing for the “Chinese community”: Chinese managerial agency vii 121 6.1 Imagined Chinese community in Africa: a stigmatized concept 122 6.2 Not the same Chinese: who are suzhi di (of low quality)? 123 6.3 Localized SOEs and Chinese expats: creating visible space and institutions for social differentiation 126 6.4 Building the Chinese community: dynamics between the Chinese Embassy and Chinese SOEs 132 6.5 Localized SOEs and expats: a new Chinese community leader 138 6.6 Conclusion: asserting (image) control and emerging power dynamics between the Chinese state and its SOEs 143 Conclusion: second-class Chinese globalizations in West Africa 148 7.1 A triple embeddedness approach 148 7.2 Reconceptualizing Chinese business advantages 151 7.3 Toward second-class Chinese globalizations in West Africa 153 Bibliography Index 156 166 Figures 1.1 1.2 1.3 4.1 Map of West Africa Map of Benin Map of Ghana Ghanaian workers and a Pakistani technician of Sinohydro 10 11 12 77 Tables 2.1 List of Chinese construction SOEs active in Ghana as of 2014 2.2 List of Chinese construction SOEs (active/used to be active) in Benin as of 2015 3.1 Business activities of some Chinese SOEs in Ghana 5.1 Minimum 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offices, types 93–4 adaptation, emphasis 46 Afede XIV, Togbe, influence 27, 61 Africa: alternative 109–12; China, economic relations 143–4; Chinese labor issues 72–4; Chinese people, arrival (refusal) 113–14; Chinese SOE globalization 39–41; embeddedness 6, 46, 149–50; expatriation 106–9; expatriation-migration, SOE globalization-localization (intersection) 112–16; governance context, impact 47–9; imagined Chinese community, stigmatized concept 122–3; internationalization bridges 40; market survival 34–5; second-class Chinese globalizations 148, 153–5; specialist ambassador 134–5; working, financial returns 114 African colleagues, Chinese colleagues (interactions) 82–5 African Development Bank, funding 57 Africanization 73 African managers 72; Chinese business advantage 96–7 “African style” 82 African workers 72; management, learning 80–8 aller en arrière 103 “American dream” 109 autonomy, level (increase) “bad Chinese,” target 128 bad enterprises, accusations 2–3 Baohong, Suen 134–5 Benin: Chinese SOEs 7–9; Chinese technicians, salaries 107; construction sector, Chinese SOEs 29–33; cotton, export (absence) 56; fabric import 54; fabric market boom 54; game, learning 55–8; industrialization barrier 56; managerial agency problem 115–16; map 11; Ministry of Public Works Transport 59; People’s Republic of China, diplomatic relation 7; replacements, finding (difficulty) 113–15; workers, employment ability 80–2 Benin, Chinese SOE expats: age/ gender/marital status/family 105; entertainment 106; living conditions 104; numbers 103; overview 103–6; social-economic background 104–5 “bidding by invitation” 51 Bilateral agreements 27–8 Bui dam, Sinohydro (relationship) 25–7 business: African governance context 47–9; brokers, benefits 141–3; business-related transactions 117; development, embedding 112–13; development, local embeddedness/structural roles 61–3; events, organization 141–2; internationalization 93–4; localized business development capacity 61–2 Index CAD see China-Africa Development Fund career fulfillment, sense 110 casualization 73 central state-owned enterprise, failure 28–9 China: Africa alternative 109–12; Africa, economic relations 143–4; Africa work 107–9; economic advantage 51–2; economic comparative advantage, destruction 96–7; fraudulent associations 132; government support 35; low-quality Chinese 123–6; provinces, minimum wage levels 108; rural areas, traders 124–5; salary, low level 107–8; senior staff, employees/shareholders 117; shops phenomenon 2; social ascension, transferability (absence) 116–17; social capital, loss 116; social mobility 118; social roles, fulfilling 106–7; state, retreat 15, 39–41; urban areas, traders 124–5; wife, earning 108–9 China-Africa Development Fund (CAD) 27 China Civil Engineering and Construction Corporation Co Ltd 18 China Communications Construction Company Limited 28 China ComService 33 “China dream” 134 China Enterprises Chamber of Commerce in Ghana 130 China Export and Import Bank: infrastructure projects 26; loans provision 25–6 China Harbour Engineering Company Ltd 28 China International Water and Electric Group (CWE) 51; highway project 60–1 China Jiangxi Corporation for International Economic and Technical Cooperation (Jiangxi International) 24 China Mobile Communication Group Co 34 China National Complete Plant Import and Export Corporation 18 China Netcom Group Corporation Limited 34 167 China Railway 14th Construction Bureau 32–3 China Railway Construction Corporation Ltd 32 China Railway Engineering Group Ltd 32, 51 China Railway Group Ltd 24–5; contracting 28 China Road and Bridge Corporation 18 China State Construction Engineering Co Ltd 18, 22–3; partnership 19 China State Hualong Construction Engineering Co Ltd 18–19, 142; local medical products factory acquisition 115–16; subsidiary, losses 57 China Telecommunications Corporation 34 China United Network Communications Ltd 34 China Water and Electric group (CWE), Ghanaian market entry 75–6 Chinese Academy of Sciences 34 Chinese ambassadors, profiles/ discourses (change) 132–5 Chinese associations, recognition competition 128–32 Chinese business advantages 2; cessation 49–55; comparative/ competitive advantages 151–2; reconceptualization 66–8, 151–3; workers, replacement 78–80 Chinese Business Association, impact 132 Chinese colleagues, African colleagues (interaction) 82–5 Chinese community: building 132–8; internal construction 137–8; socially correct Chinese community, institutionalising 138–40 Chinese community, competition 121 Chinese companies, ambassadors (role) 89–90 Chinese competitive advantages, time/ local relations 152–3 Chinese construction state-owned enterprises (SOEs) 20–2; list 30–2 Chinese economic advantages 51–4 Chinese Embassy 9; Chinese SOEs, dynamics 132–8, 140; competitive 168 Index advantages, strengthening 141–3; “engagement” approaches 135–6; power relation dynamics, emergence 140–1; recognition 129; reference letter 130 Chinese embeddedness 6, 148–50 Chinese employers, usage (options) 93 Chinese Exim Bank, loan 58 Chinese exit 54–5 Chinese expatriates 101; age/gender/ marital status/family 105; contrast 126; empowerment, managerial embeddedness 150–1; entertainment 106; entrepreneurship 39; living conditions 104; non-expats, contrast 125; numbers 103; remuneration 108; return, impossibility 116; social differentiation, visible space/ differentiation (creation) 126–32; social-economic background 104– 105; social mobility 118 Chinese fabric traders 55 Chinese-financed projects: limitations 25–9, 49–51; privileges/failures 25–9 “Chinese in Ghana” term 135 Chinese integration, demonstration 64–5 Chinese labor: criticisms 72–3; issues 72–4 Chinese managerial agency 121 Chinese Ministry of Electronics Industry (MEI) 34 Chinese multinationals, corporate social responsibility 87–8 “Chineseness,” disadvantage 136 Chinese planned economy, return 143 Chinese prisoners, sending 72 Chinese products, retention 54–5 Chinese provincial SOEs, near shutdown 56–8 Chinese state-owned enterprises (SOEs): adaptive Chinese SOEs 149–50; administration/negotiation 63–6; business activities 50; charity work 137; Chinese Embassy, dynamics 132–8; Chinese expats, numbers 103; disappearance 37; engagement, diplomatic agents role 135–7; genetic code 5; Ghanaian managers, management localization 88–91; globalization 39–41; globalization, relational approach 7; history 15; light industry presence 37–9; local network 6; management localization 91–4; political party patronage implications 55–6; presence 17; reform, relationships (change) 16–17; team, building 74–7; triple embeddedness approach 148–51; workforce localization strategies 74–80; see also localized Chinese SOEs Chinese state-owned enterprises (SOEs) expatriates: educated traders, contrast 125; overview 103–6 Chinese state-owned enterprises (SOEs) globalization, process (control) 17–18 Chinese state-owned enterprises (SOEs) globalization, relational approach 1; triple embeddedness 3–7 Chinese state, retreat 148–9 Chinese state/SOEs: image control, assertion 143–4; power dynamics, emergence 143–4 Chinese supervisors, requirement 92 Chinese “unfair treatment” 133 Chinese vulnerability 46 clients, impressing 63 Compagnie Béninoise Textile (CBT) 56 comparative economic advantage comparative political advantage competitive advantages, strengthening 141–3 construction sector, Chinese SOEs 17, 29–33 Corporate Social Responsibility (CSR) records 138 Corporations for International Economic and Technical Cooperation 23 CWE see China International Water and Electric Group; China Water and Electric group de Sardan, Olivier 64 “eating bitterness,” quality 74 economic comparative advantage, destruction 96–7 educated traders, Chinese SOE expatriates (contrast) 125 Index embeddedness, types Engineering News-Record (ENR) 24 enterprises, local SOEs (equivalence) 115–16 established SOEs 60–1 European countries, large-scale colonization Excellent Chinese Enterprises Awards, presentation 138 “Excellent International Project Manager” award 115 Exim bank see China Export and Import Bank Exim Bank loan 26 expatriates: Chinese community leader 138–43; see also Chinese expatriates expatriation: Chinese expatriates 101–6; return, impossibility 116; social mobility, limits 115–16 external affairs 91; Chinese companies, representation 90 foreign direct investment (FDI) reform, marginalization 18–19 foreign environments, settling 90 foreign firms, legitimacy (absence) foreign workers, hiring/outsourcing 75–6 former expatriate traders, other traders (contrast) 125 Forum on China and Africa Cooperation (FOCAC) 1, 27; Beijing Summit 40 fragmented authoritarianism freebooters, accusations 2–3 Friendship Association see Ghana-China Friendship Association Fujian Construction and Engineering Corporation, stadium construction 29 Fujian Construction Engineering Corporation (SOE) 49 Gansu Hualong 18–19, 75 Gansu provincial SOE 66 Ghana: China Enterprises Chamber of Commerce 130–1; Chinese construction SOEs, list (2014) 20–2; Chinese construction SOEs, number (increase) 52; Chinese SOEs 7–9; 169 Chinese SOEs, business activities 50; Chinese technicians, salaries 107; construction sector, Chinese SOEs (presence) 17; construction SOE 18–19; cost considerations 88–9; game, learning 55–8; Huashan arrival 57; illegal gold mining 135; independence 7–8; labor law, impact 85; labor union, workers agency (relationship) 85–7; managerial agency problem 115–16; managers, management localization 88–91; map 12; political structure, description 48; public, active communication 134; replacements, finding (difficulty) 113–15; Shanghai Bell, business development inability 33–4; Shanghai Construction Group, business contract 28–9; society, development goal 25–6; workers, employment ability 80–2; workers/Pakistani technician, photograph 77 Ghana Association of Chinese Societies 141 Ghana Central-China Chamber of Commerce (small traders association) 131–2 Ghana-China Friendship Association (Friendship Association) 138–9 Ghana-China golf club 127–8 Ghana Chinese Chamber of Commerce 127, 129–30, 141 “Ghana Chinese Commodities Wholesale Town” sign 132 Ghana, Chinese SOE expats: age/ gender/marital status/family 105; entertainment 106; living conditions 104; numbers 103; overview 103–6; social-economic background 104–5 Ghanaian Immigration Department, working visa restrictions 79 Ghanaian Jubilee Oil Field 28 Ghana Investment Act 79 Ghana Union of Traders’ Associations, demonstrations 123–4 globalization: embeddedness/spatial embeddedness 5; history 15; social mobility, limits 116–18 170 Index globalization-localization, African expatriation-migration (intersection) 112–16 “global nomads” 102 Godomey overpass, construction 58 “going out” policy 94 government relations, cultivation 58–61 Hualong see China State Hualong Construction Engineering Co Ltd Huashan see Top International Engineering Corporation Huawei Technologies 33, 35–7, 76; dominance 34; internationalization 36; recruitment efforts 78; subcontracting 37 human resources management systems, development 95 “image control” 143 “imagined community” 122–3 “impression management” 123 industrialization barrier 56 information and communications technology (ICT) training 78–9 institutional instruments 17–18 internal structure, absence 93–4 International Contractors List 24 internationalization 27–8, 46; subcontracting, usage 19, 22–5 investment events, organization 141–2 Jiangxi International see China Jiangxi Corporation for International Economic and Technical Cooperation Jianzhong, Gong 133–5 Katanga, European entrepreneurs 60 Kerekou, Mathieu 38 Kufuor, John Agyekum 27–9, 33, 48, 60 labor union, workers agency (relationship) 85–7 language, uses (invention) 83 large-scale business organizations, managerial control 115 Latour, Bruno 73–4 legitimacy spillovers 5, 97; effect 123 light industry, Chinese SOEs (presence) 37–9 local advantages, importance 66–7 local context, functioning 67 local embeddedness 61–3; degree localization: degrees 94–5; discourse, promotion 94; paradox 118–19 localization (West Africa) 101 localized business development capacity 61–2 localized Chinese SOEs: Chinese community leader 138–43; managerial embeddedness 150–1; social differentiation, visible space/ differentiation (creation) 126–32 locals, locals management 90–2 local SOEs: enterprises, equivalence 115–16 local state corporatism local technicians/engineers, training 78–80 low-quality Chinese 123–6; definition 124 “low quality,” definition 124 main contractor license, possession 18 management, localization 88–94; trust 91–2 management, rotation 101–2 managerial agency problem 115–16 managerial embeddedness 5–6, 150–1 manual workers, team (building) 74–7 Mills, John Evan Atta 28, 60 Ministry of Commerce 18, 130 Ministry of Foreign Economic Relations and Trade 18 Ministry of Posts and Telecommunications (MPT) 34 Ministry of Railways 18 Ministry of Transport 18 miscommunication, impact 84–5 mise en dépendance 3–4 Mobitel 36 multinational corporation (MNC): experience 123; impact 95 National Democratic Congress (NDC) 48, 55; opposition 29; transition 65 neopatrimonialism 48 Index networks, contact points 62–3 New Patriotic Party (NPP): NDC transition 65; power 29, 60 Nkrumah, Kwame non-expats, Chinese expatriates (contrast) 125 outward foreign direct investment (OFDI) 9; policy 15, 40–1; reform, marginalization 18–19; right, absence 23; right, obtaining 17–18 overseas direct investment (ODI) paternalism, social responsibility (relationship) 87–8 paternalistic employer 72 “people heart winning” project 60 People’s Republic of China (PRC): Benin, diplomatic relation 7; Chinese nationality, absence 122–3 personal social relations, business development (embedding) 112–13 political assets, creation 58–60 politically passive ambassador 133 political party patronage, implications 55–6 political sensitivity 60–1 politicians, political assets (creation) 58–60 “President Project” 58 proactive/communicative ambassador 133–4 prostitutes, traders (contrast) 125 provincial dominance 19, 22–5 Qingjian Group Co Ltd 24 qualified managers, availability 92–3 racialized stereotypes 72–4 Rawlings, Jerry 48 relational assets reverse asymmetry rural Chinese areas, traders 124–5 second-class Chinese globalizations 148, 153–5 “second-class,” meaning 153–4 second project, obtaining (inability) 28–9 171 Shaanxi Construction Engineering Group Corporation 23–4 Shanghai Bell, business development inability 33–4 Shanghai Construction Group, business contract 28–9 Shenzhen Energy Group 27; difficulties 61 “Silk Road” 63 Sinohydro Corporation: Bui dam project 25–7, 55–6; Hunan Provincial Bureau, Ghana arrival 58; local workers, finding 75; workers/ Pakistani technician, photograph 77 Sinopharm 37–8 skilled workers, team (building) 74–7 small traders associations (activities), Chinese Embassy (nonparticipation) 131–2 social ascension, transferability (absence) 116–17 social capital: creation 102–3; loss 116 social class repositioning 102–3 social differentiation, visible space/ differentiation (creation) 126–32 social interaction, relational effect socially correct Chinese community: building 143; institutionalising 138–40 socially superior/responsible Chinese community, building norms 126 social mobility, limits 116–18 social promotion 102–3; paradox 118–19; sustaining 103 social promotion (West Africa) 101 social relations, importance social responsibility, paternalism (relationship) 87–8 social space 126–7 social welfare, externalization 118 Société Industrielle du Textile (SITEX) 56 SOE globalization, relational approach 1; triple embeddedness 3–7 Soglo, Nicephore 38 spatial embeddedness spatial-social mobility, dynamics 102–3 State Assets Supervision and Administration Commission (SASAC) 16–17 172 Index State Construction and Engineering Bureau 18 state-owned enterprises (SOEs) 1–2; association (China Enterprises Chamber of Commerce) 130–1; directors, establishment 111; established SOEs 60–2; globalization-localization, African expatriation-migration (intersection) 112–16; international development, non-negligible influences 16–17; managerial agency problem 115–16; prolonged stay 112–13; replacements, finding (difficulty) 113–15 structural holes 62–3; benefits 141–3 structural roles 61–3; filling 62 subcontracting, usage 22–5 suzhi di (identification) 123–6 telecommunications sector 33–7; Chinese expatriates, remunerations 108; modernization 105 Tenth Five-Year Plan for National Economic and Social Development 25 “tips,” giving 64 Top International Engineering Corporation (Huashan) 23 totalitarian state 17 traders: Chinese fabric traders 55; educated traders, Chinese SOE expats (contrast) 125; former expat traders, contrast 125; prostitutes, contrast 125; urban origin, rural origin (contrast) 124–5 triple embeddedness approach 148–51 Union of Construction Labor, demands 87 urban Chinese areas, traders 124–5 Wenjie, Yu 133, 135 Wenzhou, traders 124–5 West Africa: Chinese exit 54–5; Chinese products, retention 54–5; Chinese SOEs, history 15; localization 101; map 10; social promotion 101 Western-style political system 47 wolf business culture 36–7 workers: agency, labor union (relationship) 85–7; dismissals 86 workforce localization 72; bottom-up strategy/top-down discourse 94–6; Chinese SOE strategies 74–80; top-down political initiative, absence 95–6 XinXing Group Co Ltd 59 Yayi, Boni 33, 58 Zhengfei, Ren 35–6 Zhongxin Telecommunications Enterprise (ZTE) 33, 35–7, 76; dominance 34; Hong Kong listing 36; subcontracting 37 .. .Chinese State- Owned Enterprises in West Africa This book investigates the globalization process of Chinese state- owned enterprises (SOEs) in West Africa, primarily in Benin and Ghana,... Tong University Chinese State- Owned Enterprises in West Africa Triple- embedded globalization Katy N Lam Chinese State- Owned Enterprises in West Africa Triple- embedded globalization Katy N Lam First... state- owned enterprises remains a key barrier in evaluating China’s role in Africa The only effort made in separating the Chinese SOEs from the Chinese state in the literature is for explaining