South Africa: Crossing Borders - China And Africa

Last Updated: 26 April 2012
Article by Rita Chen and Greg Nott

China's engagement with Africa is nothing new; it never left the continent in the first place. The noticeable impact on the performance of African economies is underpinned by the growing strategic partnership between China and Africa. According to Chinese official figures, China has invested $40 billion in more than 50 African countries till the end of 2010, benefiting over 2000 enterprises. In 2010, direct investment in Africa from Chinese firms' amounted to $2.11 billion, up by 46.8 percent year on year.

Africa's interest in learning from China's reported success

The 2008 crisis had a severe impact on Africa as it did on China. There were 670 000 closures of small companies with the loss of 6.7 million jobs in China. Clear signs of recovery were however evident by 2009. China's economy grew by 8.9 percent in 2009, foreign direct investment (FDI) grew by 30 percent and retail sales rose by 16.9 percent. This headline making recovery sparked Africa's interest in learning from China's success. This success is evident in its economic management, home-grown radical economic transformation agenda and visionary leadership.

China also promotes its economic interest in Africa by concluding bilateral investments treaties (BIT). By 2007, China had concluded BIT's with 33 African countries and double taxation treaties with four African countries to protect and encourage FDI to Africa. In order to create a more secure environment for Chinese investors in the continent and for African students wishing to study in Chinese institutions, over 20 Confucius Institutes have been established in African countries and African study centres have been established in China for the purpose of expanding cultural exchanges.

China's footprint in Africa

China's outward FDI into Africa is dominated by a few resource-rich countries, including South Africa. Between 2003 and 2007, more than half of Chinese FDI into Africa was absorbed by just three countries, namely Nigeria (20.2 percent), South Africa (19.8 percent) and Sudan (12.3 percent)1. China has positioned itself to capture the vast neglected African market and secure supplies of African oil and mineral resources that it needs to supply its rapidly emerging economy. Oil alone represented 71 percent of Africa's trade with Beijing. China National Offshore Oil Corporation (CNOOC), China National Petroleum Corporation (CNPC) and China Petroleum and Chemical Corporation (Sinopec) – China's three state-owned oil companies, have either acquired stakes in established African operations or have entered into prospecting and exploration deals with major oil producing countries such as Nigeria, Angola, Sudan, Equatorial Guinea, Gabon and Chad. Africa has an abundance of natural resources, oil and minerals which provides unlimited business opportunities for the continent. The position taken by Nigeria, the leading oil producer of sub-Sahara Africa, reveals the Chinese strategy in recent years of seeking energy independence. It weighed much less in 2003. According to the Financial Times, CNOOC is negotiating with Nigeria, to acquire one sixth of the rights to the latter's oil reserves.

Another investment by the Chinese in Africa is transportation infrastructure. Recent examples of infrastructure projects include roads and bridges in the Democratic Republic of Congo, railways in Angola and hydro power stations in Zambia. In the rail sector, China's largest deals include the construction of mass transit systems in Nigeria and the construction of new lines linked to mining developments in Gabon and Mauritania. The importance of this improved transportation infrastructure, not only provides regional integration between African countries, but it allows access to globalised markets and strengthens Africa's position in international negotiations.

Africa to strengthen its continental and national policies to secure longterm FDI

It is not unusual to hear investors criticise Africa's government services, disintegrated regional and continental strategy and incoherent national policies. Commentators argue that Africa must learn from its past failures and accept the recommendations that are pointed out by investors. By doing so Africa will maximise this enormous economic opportunity. African leaders must develop coherent national policies, integrated regional and continental strategy, reliable provisions of government services and expanded infrastructure investments including the support for regional trade. Evaluation and monitoring is an efficient tool to gauge compliance of trajected growth. It is in respect of these tools that Africa will fall short. Africa must seize the opportunity and create a coherent and transparent legal framework. It is this framework that will form the cornerstone for a long-term African strategic partnership with China as well as with its global trading partners.

Strategies for promoting investments in Africa

The law, the economy and the people of Africa are on the move. Plenty of stories are yet to be told in the unfolding of this exciting phase of Africa's rise. We at Werksmans Attorneys are fortunate to have our own African story. We are also privileged to be part of Lex Africa, a blue chip legal network that is pan-African in its composition.

Our business starts by first understanding our clients' needs and from feedback in dealing with Chinese clients in particular, including some of the challenges they typically face in South Africa; Werksmans co-hosted an International Forum on Risk Management for Chinese Global Investments with a select group of leading international mining advisors (Canada, Peru, Australia, Brazil and South Africa) in Beijing, March 2012. We discussed our experience in our dealings with global and local mining companies and how to manage the risks of acquiring finance, developing and operating mining projects in the various jurisdictions. We had over 100 attendees from over 30 different companies, including most of the important state-owned mining companies. We are privileged to have high-level support from the National Development and Reform Committee (who is a macro-economic management agency under the Chinese State Council which has broad administrative and planning control over the Chinese economy) and high-level management from both China Development Bank and Aluminium Corporation of China as our guest speakers at the conference to discuss their foreign investment experiences.

At the conference we identified that mining companies face an unprecedented level of risk. Traditional risks, such as commodity prices, increasing capital expenditures, labour shortages and engineering and technical challenges, are more difficult than ever. In addition, increased political and social opposition to mining, environmental regulations and demands for greater taxes and government royalties are creating even further challenges for mining companies today.

We discovered how Chinese companies are becoming more sensitive to corporate social responsibility and are starting to focus on the "triple bottom line" – profit, social and the environment. Overall, the conference proves to be a success and despite the label which has been attached to Africa as a high risk continent, Chinese investors are still eager to explore Africa as the returns are far greater.

Africa – the dynamic continent

South Africa, and Africa as a whole, is going through a major transformative and development phase and China's entry is seen as a mutually beneficial economic cooperation that is shared amongst "developing country" status.

Africa finds interest in China's domestic policy lessons and the role played by the Chinese state in steering the market in a positive direction by developing a series of institutional reforms, financial support and investment in vital infrastructures to unlock the prospective domestic producers. The Chinese recognise Africa's needs and priorities and is able to fill the gap by providing cheap, less bureaucratic and support services within a shorter time frame. Finally, contrary to the standard Americans and Europeans analysis of Africa as a landmass of disease, poverty, corruption, starvation and death; China holds the view that Africa is a dynamic continent with unlimited business opportunities.

The rise of China is a fact. China needs to understand the law in Africa as it needs to learn Africa's business. It is in this regard that we can, in the cultivation of business links, advise Chinese business on the business of law and the law of business. It's got to be a win!

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.