Chinese foreign direct investment in Africa in corporate social responsibility context

Olga Timokhina
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Olga Timokhina: St. Petersburg National Research University of Information Technologies, Mechanics and Optics

No 2014/29, Working Papers from Maastricht School of Management

Abstract: In the paper we review Chinese foreign direct investment in Africa, which have increased significantly in the last decade. So-called BRICS countries (Brazil, Russia, India, China and South Africa) are actively investing abroad, becoming leading FDI exporters among emerging economies, and China is dominating in BRICS outward FDI (the share of Chinese outward FDI in world outward FDI was 6.05% in 2012). China has become a significant FDI exporter in the late 1990-s and by 2012 Chinese outward FDI stock reached 121080 ml. USD figure. Chinese investments are held both by private enterprises and state-owned companies. Chinese OFDI challenges the classic internationalization theories, which are based on the observation of traditional FDI from developed economies that are historically, economically and institutionally different from China. Undoubtedly the Chinese government plays a critical role in encouraging Chinese companies to invest in Africa, providing direct and indirect investment policy regulation, subsidizing and promotion of FDI. Africa is still perceived as a risky direction for investment, though China is actively investing in this region. Since resource-seeking motivation for investment is especially relevant for China, resource-rich African countries are attractive for Chinese state-owned companies. Bilateral trade between China and Africa in 2012 is rapidly growing and accounted for about 5 percent of China's total trade and about 16 percent of Africa's overall trade. China's FDI outflows to Africa are also increasing (from 500 mln. USD in 2003 to almost 15 bln. USD by 2012). The paper analyses Chinese OFDI in Africa and focuses on corporate social responsibility (CSR) of Chinese companies. In particular, we review regulatory documents for CSR in China and their application for Chinese investment in Africa. The strategic importance of CSR is not always acknowledged in by Chinese enterprises, thus resulting in shortage of capacity to incorporate CSR into corporate management. China clearly has an important economic role to play in Africa‟s development. The Chinese government has established China Africa Development Fund to support Chinese investors in African projects and has invested in creation of six special economic zones across the continent. All these measures influence the perception of China as an investor in African economies.

Keywords: Foreign direct investment; corporate social responsibility; state regulation; BRICS; China; Africa; emerging markets; governmental policy; liberalization of investment (search for similar items in EconPapers)
Pages: 12 pages
Date: 2014-09
New Economics Papers: this item is included in nep-afr, nep-cna, nep-int and nep-tra
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