China's Risk Assessment in Post-coup Guinea

 The China-Africa Project posted on 15 September 2021 an article titled "Assessing the New Risks for Chinese Companies, Projects and Personnel in Post-coup Guinea" by Eric Olander.

The city of Shanghai's department of commerce recently posted a fascinating six-point analysis (in Chinese) of the risks confronting Chinese companies operating in Guinea following the recent overthrow of President Alpha Conde by a military junta.  

The city identified the following six risks:

--The new military government may face international sanctions that could have a direct impact on Chinese investments in Guinea.

--The new regime could pressure Chinese mining companies in Guinea to pay more regardless of any existing contracts.

--The coup could exacerbate ethnic and religious tensions, which may provoke conflict.

--Ongoing instability is leading to higher aluminum prices, which will impact downstream sales.

--The coup and its aftermath may adversely impact companies' solvency and their ability to abide by existing contracts.  

--For companies that engage in commodities futures trading, problems may arise due to market volatility brought on by the coup, which could lead to misjudgments and poor trading strategies.

China's Strategy to Protect Interests in Africa

 War on the Rocks posted on 4 August 2021 a commentary titled "Continuity and Change in China's Strategy to Protect Overseas Interests" by Andrea Ghiselli, Fudan University.

The author argues that China's overseas, including Africa, security strategy is to put the burden on Chinese companies and organizations to ensure the safety of their employees.  They can do this by paying more attention to risk management and using the services of private security companies.  The direct role of the People's Liberation Army has not changed.  At the same time, China will work with and support local security forces so that they can ensure the safety of Chinese interests.  Chinese decision-makers have been pragmatic and cautious, well aware of the risks and costs that a more active use of the military to protect their country's interests overseas would entail.  

Chinese Enterprises Overseas and Sustainable Development

The 151-page 2015 Report on the Sustainable Development of Chinese Enterprises Overseas is available online.  While it covers China's outward direct investment globally, it has useful information dealing specifically with Africa.  It was prepared by the Chinese Academy of International Trade and Economic Cooperation in the Ministry of Commerce, Research Center of the State-owned Assets Supervision and Administration Commission of the State Council, and the United Nations Development Programme in China.

As of the end of June 2015, China's cumulative, non-financial, outward direct investment stock (ODI) in Africa totaled $27 billion, according to official Chinese data.  This constituted only 3.7 percent of China's global ODI stock.  ODI in Africa was concentrated in construction (25 percent), mining/oil (25 percent), financial services (16 percent), and manufacturing (14 percent). 

Africa ranked second after Asia in terms of the value of signed and completed contracts won by Chinese companies.  The cumulative value of signed contracts in Africa at the end of 2014 was $472 billion and completed contracts $310 billion. 

The top three major risks confronting Chinese companies operating in Africa were the political and regulatory environment, labor issues, and employee security.