John Kaninda
1 November 2007
Johannesburg — DESPITE a R36,7bn direct investment by the state-controlled Industrial & Commercial Bank of China (ICBC) in Standard Bank is seen as a sign of China's confidence in the South African economy, crime remains the biggest deterrent to an increase in Chinese investments in the country.
Zhou Yabin, director-general of the African affairs department in China's commerce ministry, said on Monday that Chinese businessmen interested in investing in SA, but were becoming "more worried" that an increasing number of their compatriots were being affected by rampant crime and insecurity in SA.
"When they read about that (crime) on the internet mainly, they are not willing to risk their lives by investing in SA," Zhou said.
He believed most of those reports were blown out of proportion and that the South African media should adopt a more responsible approach when reporting on security issues.
"I have been to SA several times and there is a real difference between what I have seen there (in terms of crime levels) and what the press usually reports," Zhou said.
Another reason there seemed to be little interest among Chinese companies in moving into SA was that most of those interested in breaking into the continent were still learning to find their feet in emerging markets, Zhou said.
"They are still young (in terms of experience in investing abroad), so they are going step by step.
"In comparison, South African companies moving abroad, like those present in China, have experience in international business and usually benefit from a favourable investment climate," he said.
But things could change rapidly as ICBC's entrance into the African financial scene would increase China's footprint on the continent -- including SA.
He says the deal will give Chinese investors -- especially ICBC's clients -- access to Africa's vast mineral resources market.
Zhou believes that the deal, which comes nearly a year after China launched the $1bn China Africa Fund, will make more financial resources available for those companies willing to invest in Africa, and that SA will benefit from such a development. "When ICBC, the biggest bank in the world in market value, decides to invest in SA, don't you think it is a good thing for that country?" he asked.
SA has become China's main trading partner in Africa over the past few years -- its trade with China accounts for more than 5% of total Sino-African trade -- and ranked 21st on the list of the Asian giant's trading partners worldwide.
There was no reason such trade flows could not be followed by investment flows, Zhou said. Trade between SA and China stood at $9,9bn last year, which represented a 36% increase on the previous year.
For the first nine months of this year, figures indicate that the value of trade reached $10bn, and that it will total $13bn by year's end.
" Chinese investments in SA, except for the ICBC deal, might not be big but you should now expect a steady increase," Zhou said.
When the ICBC deal was concluded last week, South African analysts said it would give Standard Bank access to the world's fastest-growing major economy.
For the Chinese bank, Standard would offer a chance to enlarge its footprint in Africa, a region of increasing importance to the resource- and trade-hungry Chinese economy.
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