Comparative Study of East Asian Companies Strategies in Africa

Abstract

Chinese, Japanese and Korean firms are increasingly looking to Africa for business opportunities. This trend has been reinforced by the pro-active policies their governments are shaping for Africa, through aid packages and economic cooperation. However, the specificities of the strategies those firms implement in the African continent has not been studied so far. East Asian firms may be looking for access to natural resources to fuel the growing demand in their home country. They may also secure early advantages in untapped consumer markets in order to gain a leadership position and benefit from the future growth in those countries. This thesis aims to draw patterns in the way companies from East Asia are investing in Africa. It turns out that Chinese, Japanese and Korean investors each have a specific way to approach the continent. This research is not made easy by the cruel lack of reliable data from Sub-Saharan countries. To offset this, we used Foreign Direct Investment data as a tool to measure and analyze the objectives and agendas of Asian investors. This study suggests that Chinese firms are sensitive to economic development, stability, infrastructure and mineral resources rather than oil, gas and economic growth. As most Chinese firms are content with export strategies, they can create ties with the Chinese diaspora already settled in Africa. Japanese companies are sensitive to economic development, stability, infrastructure and the ease of doing business rather than natural resources and economic growth. In an effort to secure long-term advantages, they are likely to partner with other Japanese investors, such as the Sogo Soshas. Korean companies are sensitive to GDP Per Capita, oil reserves and economic growth rather than political and economic stability. Korean engineering and construction companies are pioneering their countrys representation in Africa, replicating the successful strategy their peers led in the Middle East during the oil boom of the 1970s.