Chinese companies think twice about African investment - CNBC Africa

Chinese companies think twice about African investment

Special Report

by Trust Matsilele 0

Why are Chinese companies are unsure over African investments?

Chinese companies are unsure about the return for their investments into Africa, this is according to Gordon Orr, director of McKinsey & Company in China.

(READ MORE: China will not take path of "western colonists" in Africa -foreign minister)

Orr said there was a need for African companies to make Chinese businesses and individuals understand the value for their investments into the region.

Speaking at a roundtable meeting in Johannesburg on Monday, Orr also warned that with China facing the lowest income growth for at least a decade, the task of motivating investments into the region would not be a walk in the park.

“Unemployment for students is increasing at a time when there is an oversupply of college graduates in the market. This year the economy is expected to grow more modestly,” said Orr.

He added that there was a massive deceleration in the economy with notable examples of Unilever having experienced double digit declines in 2014.

Orr said due to economic pressures domestically, China’s rich were diversifying their wealth geographically, setting offices in leading cities like Hong Kong, London and New York.

He said due to these pressures, the country was set for populist actions going forward.

“The growth of jobs in big service industries is slowing down especially with the rise in online services,” he said.

Orr said there was increasing pressure for economic redevelopment due to heavy dependence on commodities, textiles and minerals.

He added that companies were starting to make offshore investments in Asia, Western Europe and North America targeting Chinese nationals.

(READ MORE: Is Africa selling out for Chinese investment?)

Orr said the global economic slowdown had seen some countries bartering citizenships and permanent residence permits in exchange for buying government bonds.