By Chen Xiaohong, Jia Tao & Zhou Yan, Enterprise Research Institute of DRC

Research Report No 216, 2009

I. Research Purpose, Method and Process

Chinese enterprises' "going global" strategy and their investment and operation in Africa have attracted wide attention in Africa and around the world. Besides, their sustainable development and their corporate social responsibility in the broad sense have become a central reason why their overseas investment has attracted growing concern. For this reason, this task force has focused its survey and research on the following points.

1. The basic information about these enterprises and especially the information about their operations abroad and in Africa;

2. These enterprises' performance of social responsibility in Africa;

3. These enterprises' views over their performance of social responsibility in Africa.

The main method applied by the task force was to have face-to-face interviews with the senior management of the headquarters of these Chinese companies. The survey covered 22 Chinese enterprises that have business operations in Africa. In selecting the target enterprises, the task force has taken care to strike a balance between industries, corporate scales, ownerships and business durations in Africa.

The research took one year, from the fourth quarter of 2008 to the fourth quarter of 2009, to complete a research report after collecting, sorting and researching written data and conducting interviews and discussions.

Naturally, this research had some limitations. The number of sample enterprises was rather small due to practical difficulties; most of the interviewed enterprises were large and medium-sized enterprises, and no small enterprise was covered; the information mainly came from the interviews with senior managers at the headquarters of these Chinese enterprises and no field survey was made in Africa. Even though the information gathered may be incomplete, the corporate strategic decisions were all made by these senior managers in China rather than in Africa where these strategic decisions were executed.

II. Basic Information about Interviewed Enterprises

The 22 interviewed enterprises largely reflected the basic information about Chinese enterprises' investments and business operations in Africa. They included both the ultra-large enterprises such as the China National Petroleum Corporation and also the medium-sized enterprises such as the Yixing Mingyue Construction Ceramics Co., Ltd., and both the state-owned enterprises and also the non-state-owned ones. Their industrial distribution was also extensive.

Table 1 Basic Information about 22 Sample Enterprises

Corporate scale		Core business distribution		Corporate ownership
Assets or revenue exceeding RMB50 billion	8	Resource extraction (including petroleum & minerals)	7	State ownership	13
Assets or revenue ranging RMB 5~50 billion	5	Engineering construction	8	Private ownership	7
Assets or revenue ranging RMB1~5 billion	4	Machinery & equipment making	4	Joint-venture	1
Assets or revenue ranging RMB0.1~1 billion	5	Building materials production	1	Mixed ownership	1
Assets or revenue being below RMB0.1 billion	0	Textiles	1
		Development zone construction	1

Source: Statistical data made by Task Force.

Table 2 22 Sample Enterprises' Operations in Africa

Time of first investment in Africa	Geographic location in Africa	Ratio of African operations to total business operations (%)
Before 1980: 2 1980-1990：3 1991-2000：7 After 2001：10	1 country：6 2-3 countries：4 4 & more countries: 12	Under 20%：5 20-50%：6 Over 50%：11

Source: Statistical data made by Task Force.

The research findings indicate:

(1) The sample enterprises have been highly internationalized;

(2) The sample enterprises have begun global arrangement to become global multinational companies;

(3) Africa has become an important region for the development of the sample enterprises. In particular, some private enterprises which have just begun international operations in recent years, such as the Jiangsu Fantai Mineral Development Co., Ltd, the Nanjing Hanrui Cobalt Co., Ltd. and the Shandong Xinguang Co. Ltd., have all taken Africa as the starting point for their internationalization;

(4) Undertaking engineering construction in Africa has been the main business mode of Chinese companies in Africa.

III. Interviewed Enterprises' Understanding and Practice of Social Responsibility in Africa

The task force discovered through survey and research that the interviewed enterprises' overall performance of their corporate social responsibility in Africa has been fairly good. All these enterprises understood and emphasized their corporate social responsibility in Africa and did their best in this respect. Of course, these enterprises differed from each other in their understanding and management of social responsibility due to various reasons.

Specifically, the large state-owned enterprises have performed well in understanding and practicing their corporate social responsibility; the large private enterprises such as the Shenzhen Huawei Company also performed well in performing social responsibility; most of the relatively small private enterprises performed their corporate social responsibility mainly by contributing to charity activities.

1. Chinese enterprises have fairly comprehensive, full and proper understanding of corporate social responsibility

With regard to corporate social responsibility, the interviewed Chinese enterprises had different degrees of understanding and also different points of emphasis. But the connotations were basically identical: care about the interests of shareholders, society, customers, employees, communities and other stakeholders, emphasize resource and environmental protection and sustainable development, and comply with laws and ethics.

(1) Have fairly comprehensive understanding of corporate social responsibility. For example, the Guangdong Xinguang International Group Co., Ltd. (or Xinguang International for short) had a fairly comprehensive description of corporate social responsibility and reflected some typical views of Chinese enterprises: reward shareholders, increase asset value, become a state-satisfied enterprise; care about employees, grow together and become an employee-loved enterprise; serve customers, cooperate for mutual benefit and become a customer-trusted enterprise; protect the environment, conserve resources and become a nature-friendly enterprise; comply with laws, respect ethics and become a social-respected enterprise.

(2) Regard local economic development and people's life improvement as the best expression of corporate social responsibility. Unlike some countries or companies that pursued predatory extraction, colonized development and mass profit transfer, the interviewed Chinese enterprises such as CNPC and TZE Communications have all regarded the promotion of local economic development and the improvement of the people's livelihood as their own tasks.

For example, the Sudan entirely depended on import for oil consumption before the inauguration of its 1/2/4 zone project, which had seriously restrained its economic development. The CNPC started from the scratch and helped the country establish a complete modern oil industrial system, from prospecting and exploitation to refining and chemistry. As a result, the Sudan became an exporter of finished oil products from an importer of finished oil products, and its fiscal revenue turned from deficit to surplus. Now the country has a sufficient supply of aviation kerosene, diesel and chemical products which used to be in short supply. Sudanese President Omar Hassan El Bashir said that "China has made the greatest contribution to the creation of the Sudanese oil industry and CNPC has been the best operator!" Currently, the Sudan could get a total of US$4.5 billion of revenue from the CNPC-invested oil projects, which has greatly promoted the development of the Sudanese economy. The oil industry has become a pillar industry for the country's economic development. The CNPC-invested oil projects are offering over 20,000 jobs to the local people, greatly increasing their income and improving their livelihood.

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¹This research was part of the "policy research on promoting corporate acquisition and reorganization during economic adjustment period" and received the support from the World Bank and the funding of the British Development Agency. This article was prepared mainly in reference to the research report Corporate Social Responsibility in Africa: Chinese Corporate Leaders’ View on CSR Practice and Its Opportunity jointly prepared by the Enterprise Research Institute of the Development Research Center of the State Council and the British consulting institution AccountAbility.