Tuesday, August 30, 2011

Lessons From Europe: Africa Needs to Be China's Equal Partner

While it seems South Africa is stuck in old debates on whether doing business with China is a good idea and many keep on raising the issue of Chinese human rights abuses, it seems certain European countries have gone far beyond that debate. They have decided to do business with China and it’s not a case of China moving its structures to Europe and getting business out of the Eurozone – these countries want business to be a two way process and they too are moving their products to the massive Chinese market.

Europe is a small market and while Eurozone countries know they are to be reckoned with as one unit, some companies from this continent now realise they will never make the kind of profits they want if they just stick to their over saturated small continent despite its economic might. Finland is one continent that has realised its isolation and small population will hinder the country’s business progress. Many other companies are trying to follow in the footsteps of Finnish big brother, Nokia, who came from this little known country while it was going through an economic depression in the early 1990s and dominated the mobile phone industry. Nokia Chairperson, Jorma Olilla, believes that it’s important for certain countries to do it alone as economically struggling parts of the Eurozone hinder progress. He believes Greece should have been allowed to fall and crumble rather than be granted a loan that has caused Finland to demand collateral as it seems it would be difficult for Greece to repay this loan. He says maybe Greece should not have been in the Eurozone to begin with in order to recover properly on its own. “They could devalue their currency and if countries devalue their currency then they are able to recover properly,” explains Olilla.

F-Secure is another company that is looking for new methods of reaching ultimate success in the financial times that see much panic and have resulted in the USA losing its AA A rating. The security company is probably best known for its anti-virus software. Its Finnish founder, Riisto Siilasmaa, says although operations predominantly take place in Finland F-Secure does 75% of its business in Africa and Asia. “There’ll be a reverse in economic power from Europe to Asia and Africa,” believes Siilasma.

With this he would encourage most companies to shift their focus to these regions too.

Siilasmaa says already this change has shown signs as America’s economy has suffered a great deal over the past few years. In 2007 we saw American banks cause a huge economic shake up which resulted in the worst recession of our time. This time around we are seeing a shift as the USA is now asking for money from China. The business sector in Europe believes this is the reason we should realise that America is no longer the super power it used to be and China should be welcomed and successful companies should exploit the Chinese market too bearing in mind that doing business there would be slightly different from how it’s done in the west.

Ole Johansson, President and CEO of Wartsila Corporation, says his company has started doing business with the Chinese and prefers their methods to American methods. “In the USA they would bring you lawyers with a lot of text and it ends up dragging for a long time. Sometimes the language barrier with the Chinese isn’t so much of a problem,” says Johansson.

He believes that some companies fail to produce their products in China for that market as it is a specialised market different from Europe and the Americas. Johansson says the current economic shift from the USA to China is taking things to the way it used to be at the turn of the last century as China was an economy to be reckoned with.

Even many young European economists and economics students are now moving to China and realise that it’s an economy that cannot be ignored. One Hungarian students says she has completed her studies and has just accepted a scholarship to learn Chinese in Beijing. “I want to be a negotiator working with European companies planning to do business with China, not a translator but a negotiator.” She says China will continue being a dominant force during our lifetime and wants to exploit that in her career.

A young American studying in Europe says he wants to work for a Chinese company doing business in Africa on his completion of his economics Master’s Degree.

We live in a capitalist society and European companies, students and business people realise that business comes first and China is a force that should be embraced if one wants to continue succeeding in these new economic times. They are showing the Eastern powerhouse they will not be dictated to and will be an equal partner in business. Finnish businesses are moving into China and recently the Dalai Lama was in Finland without the country being told it wasn’t allowed to host him to continue good relations.

I was left thinking that African businesses need to exploit the opportunities that come with the need China sees in operating on the continent. They too need to start negotiating as equal partners and governments should stop just thinking about the infrastructure that comes with China and maybe do the work that governments should do in the first place – ensuring that people’s lives are improved. China will continue dictating to Africa if the continent’s leaders do not realise that they need to do their part for their people and let China negotiate with big business in order for everyone to win in this situation. They can’t expect China to improve infrastructure that should be improved by government and then take resources in return.

Maybe there are a few lessons for Africa in the way Europe is negotiating with China.

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