IN PURSUIT OF A U.S.-CHINA-AFRICA ENTREPRENEURIAL BRIDGE
By Fritz-Earle Mc Lymont
The National Minority Business Council, Inc. (www.nmbc.org), a 40-year-old, New York-based resource and advocacy organization of which I am a co-founder, strongly endorses the China International Fair for Investment and Trade (CIFIT) as the place to be in China this year for U.S. small and medium-sized enterprises (SMEs). This endorsement of CIFIT coincides with the Council’s pursuit of its vision to build an entrepreneurial bridge spanning the United States, Africa and China for the small, minority, women- and veteran-owned firms businesses it primarily serves.
Held each year in September, CIFIT provides an excellent opportunity for U.S. companies and business leaders to grasp the policies and practices that are shaping relations between China and Africa. African government representatives and entrepreneurs will be among the more than 15,000 foreigners who will network and interact with the expected 50,000 business representatives from various provinces, autonomous regions and municipalities in China.
China is investing heavily in Africa, to the consternation of U.S. political and business leaders who still view Africa through a 20th century economic and political lens. We are in the 21st century, change is here, and we have no choice but to deal with it.
At the end of the 20th Century, business, financial and economic pundits around the world declared that the 21st century belonged to Asia and to Africa. And indeed, over the past decade, six of the world’s ten fastest-growing countries were in Africa. In eight of the past ten years, Africa has grown faster than East Asia, including Japan. The continent is flexing the muscle of its vast economic potential, creating waves through new relationships from Beijing to Rio de Janeiro. At the same time, China and India have become global economic powerhouses.
Given this new dispensation, U.S.-based Africans, African-Americans, and Asian-Americans must assume responsibility for the success or failure of our communities’ entrepreneurs. With their understanding of the changes that have taken place in Africa and Asia, particularly at the micro level, and their ethnic and cultural connections to those regions, we have a unique opportunity to forge successful business relationships within and between those regions.
Sino-Africa relations are on a fast track. At the Fifth Ministerial Conference of the Forum on China-Africa Cooperation, held in Beijing in July,Chinese President Hu Jintao announced that Beijing would provide a $20 billion credit line to African countries over the next three years to “support infrastructure, agriculture, manufacturing and development of small and medium-sized businesses.” At the Forum’s opening ceremony, South African President Jacob Zuma noted that Africa’s past economic experience with Europe “dictates a need to be cautious” when entering into partnerships with other countries. “We are particularly pleased that in our relationship with China we are equals, and that agreements entered into are for mutual gain. We certainly are convinced that China’s intention is different than that of Europe, which to date continues to intend to influence African countries for their sole benefit,” he said.
Africa’s political leaders increasingly are showing more interest in diplomatic and economic solutions to the challenges they face. The Wall Street Journal, in a report in July on the selection of Nkosazana Dlamini-Zuma, President Zuma’s ex-wife, as chair of the Africa Union Commission, the AU’s executive body, noted that South African officials lobbied aggressively for Dlamani-Zuma, an experienced politician who has held three ministerial positions in South Africa since 1994. “Their hope is that her victory will lend more diplomatic heft to the African Union, which has appeared divided and weak in recent crises in the Ivory Coast and Libya. In both cases, military force prevailed over diplomatic solutions,” the WSJ article said.
In this shift to diplomatic, and particularly economic, solutions, the U.S. government‘s declared priorities in Africa remain unchanged: democratic governance; sustained economic development and growth; preventing, mitigating and resolving conflicts; strong public health programs; and addressing “transnational” challenges such as climate change, narco-trafficking, trafficking-in-persons and arms, and the illegal exploitation of minerals and maritime resources.
For U.S. SMEs, however, the unwavering focus must be on economic development and growth, both here in the United States and abroad. SMEs must take advantage of every opportunity in the U.S., China and Africa, and in multilateral institutions, that can contribute to small-business growth, which, in turn, fuels the creation of jobs, wealth and social and economic stability. At the same time, our country must learn to rely more on the creativity and innovation of SMEs than on the greed and power games that many foreigners now associate with our multinationals, and even our government.
Innovation in how we approach and structure business deals and apply technologies today will determine our success in the long term. According to an April 2012 article in The Economist, we are now in a third industrial revolution – the first having been in the late 18th century with the mechanization of the textile industry, the second in the early 20th century with mass production. “Everything in the factories of the future will be run by smarter software…and the effects will not be confined to large manufacturers; indeed, they will need to watch out because much of what is coming will empower small and medium-sized firms and entrepreneurs. Launching novel products will become easier and cheaper,” the article said.
If the principle of comparative advantage holds true, as wages in China rise and the elements of productivity shift with new technologies, SMEs must skillfully pursue niche opportunities to compete and succeed. In doing so, they must recognize the value of relationships in critical labor and raw material regions like Africa and China. Sectors not to be overlooked are renewable energy and agriculture, where China has invested heavily. Africa is poised to be major producer and consumer of food and energy-related products and services as economic growth and consumer demand increase. Add the already strong demand for ICT and entertainment products and services in Africa and Asia and SMEs can be off to good times.
On this year’s CIFIT mission, the NMBC delegation will also visit Beijing, Solar Valley and Eco City for first-hand experience, and to establish business contacts that hopefully will result in solid business deals.
This is not a time for the United States to be revving up for energy or currency wars, or any other conflict with China in response to that country’s new global economic status. Rather, it’s a time to encourage engagement with Chinese SMEs for our mutual benefit. Let us keep our eyes on the prize of entrepreneurial development and growth, and not be distracted by sound bites and fast images, especially in this election season where talk is cheap and dangerous. Through our SMEs, let us begin to build the right relationships, to understand the people, the risks, the opportunity and the rewards of doing business with China and Africa.
Fritz-Earle Mc Lymont is Managing Partner of Mc Lymont, Kunda & Co. a New York based international trade and development consulting firm, and Managing Director of NMBC Global.
He may be contacted at Fmclymont1@nmbc.org