China’s Gung-ho Foray Into Africa Gets a Reality Check (Bloomberg)

Bloomberg is reporting that when it comes to investing in Africa, the Chinese are becoming a bit more cautious (China Swaps Gusto for Rigor as It Learns From Africa). Specifically, Libya gave China its biggest wakeup call, when the 2011 civil war forced Chinese construction companies to abandon billions of dollars worth of equipment and business, and 30,000 Chinese workers also had to be evacuated.However, there have also been other costly missteps as well.

Clement Kwong, whose Beijing-based Long March Capital Ltd. partnered with Citic unit Baiyin Non-Ferrous Metal Group Co. Ltd. and China-Africa Development Fund to complete their buy-out of Perth-based Gold One International Ltd. and indirectly acquire a stake in South Africa-based Sibanye Gold Ltd. (SGL), commented:

“There was a lot of enthusiasm and momentum. That momentum is definitely reined in by a new level of risk aversion and caution… We need to price in things like regime change and the cost of operating in a somewhat less than transparent environment.”

In addition, Jianke Gao, who was sent to build a South African mine as Chief Executive Officer of Wesizwe Platinum Ltd. (WEZ) which China based Jinchuan Group Co. Ltd has a 45% stake in, was also quoted as saying:

“Before coming to buy a project here, Chinese companies will now do more research before making a decision. When Chinese investors come to other countries to invest, there are lots of examples of failure.”

To read the whole article, China Swaps Gusto for Rigor as It Learns From Africa, go to the website of Bloomberg.

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