A 2017 Study Found More Than 10,000 Chinese Firms Operating in Africa

A McKinsey Global Institute report published June 28, 2017, found more than 10,000 Chinese-owned firms operating across Africa, a total the researchers said was two to nine times higher than the number registered with China’s own Ministry of Commerce. Until then, that government registry had been the largest available database of Chinese firms on the continent.

Researchers Kartik Jayaram, Omid Kassiri and Irene Yuan Sun reached the figure by extrapolating from on-site interviews with more than 1,000 Chinese company owners and managers and more than 100 senior African business and government leaders in eight countries: Angola, Côte d’Ivoire, Ethiopia, Kenya, Nigeria, South Africa, Tanzania and Zambia, together representing roughly two-thirds of sub-Saharan Africa’s economic output. The report, titled “Dance of the Lions and Dragons,” found that about 90% of the firms were privately owned rather than state enterprises, undercutting the idea of a single, centrally coordinated Chinese investment push.

The firms were concentrated in manufacturing, which accounted for nearly a third of them, followed by services, trade, and construction and real estate. McKinsey estimated that Chinese firms already handled about 12% of Africa’s industrial production, worth roughly $500 billion a year, and controlled close to half of the continent’s internationally contracted construction market.

At the Chinese firms surveyed, 89% of employees were African, adding up to nearly 300,000 jobs among the companies interviewed; scaled across all 10,000-plus firms McKinsey identified, the researchers estimated the total reached several million African jobs. Only 44% of local managers at those firms were African, though some individual companies had pushed that figure above 80%, and just 47% of the firms’ sourcing by value came from African suppliers.

The report also flagged problems alongside the growth. In five of the eight countries studied, 60% to 87% of Chinese firms said they had paid a bribe to obtain an operating license, and researchers documented cases of labor and environmental violations, including unsafe working conditions and illegal timber and fish extraction. McKinsey projected that revenue for Chinese firms in Africa, then about $180 billion a year, could reach $250 billion by 2025 under steady growth, or as much as $440 billion if firms expanded aggressively into sectors such as agriculture, banking and telecommunications.