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Chinese contractors in Africa turn to investment

By Li Jiabao  (China Daily)

08:21, August 24, 2012

Chinese contractors in Africa are now shifting to investment in areas such as infrastructure, agriculture, and mineral and energy products, a move to enhance their presence in the continent while profit margins narrow in the continent's market for contracting.

"It's now a trend for Chinese contractors in Africa to transfer their business to investment and project management. The investment mainly focuses on infrastructure, manufacturing and agriculture," Cao Jiachang, deputy director-general of the Department of West Asian and African Affairs of the Ministry of Commerce, told China Daily on Wednesday.

"Contracting of engineering projects is our traditional business, and now we are tentatively proceeding with rewarding investments in areas such as mineral resources, ports and transportation, and power stations," Ren Hongpeng, vice-president of China Road and Bridge Corp, said at a meeting in Beijing with a media delegation from Tanzania and Uganda.

"It's the company's long-term strategy to shift into investment. And I believe all the established Chinese contractors will unavoidably experience the transformation because the African contracting market is much more open now with global participants and intensified competition.

"Investment in Africa also helps us to strengthen our presence in the market as well as win franchise rights and resources from local governments."

China Road and Bridge Corp invested in a cement plant in the Republic of the Congo in 2004, which has been operating successfully since then.

In addition, the company has more than 50 pieces of land in seven countries, that it plans to use in the future for real estate or agricultural development. Ren did not disclose the investment involved as some deals are still under discussion.

A shortage of construction materials and expertise is challenging Chinese contractors in Africa, along with low government efficiency and social instability, according to Ren.

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