A Private Chinese Textile Firm in Africa

The focus in Sino-African trade, which grew to nearly $107 billion last year, tends to be on the high-profile activities of big Chinese state firms on the resource-rich continent.

Associated Press But in fact, private enterprises run by Chinese nationals and the Chinese diaspora make up 80% of all Chinese companies in Africa, according to research from Standard Bank Group Ltd., the biggest African lender.

One such company is Touchroad International Holdings Group, a Shanghai-based private conglomerate, which is betting on Africa to drive its growth.

Africa now accounts for about 50% of the total revenue for Touchroad and affiliate Daheng Holding Group. Touchroad Chairman He Liehui, who spoke to us in Gaborone, Botswana, where he was looking over plans for a 500-hectare industrial park the group is building, is expecting that to grow.

Touchroad and Daheng, which had combined revenue of around $150 million last year, have businesses in textile manufacturing, foodstuff and textile trading, and resources development. The latter covers coal, gold, diamonds and uranium, though some of the mining explorations are still in an early stage, He said.

In the past 10 years, He estimated the group has invested about $100 million on the continent. It is active in about 20 African countries, but Botswana, one of the smallest, yet most stable and democratic countries in Africa, is where it has invested the most so far.

He said Chinese policy lender Export-Import Bank of China has been key in supporting his company??s ambitions in Africa but, in general, medium-sized Chinese firms like He??s group as well as smaller companies face a host of challenges in doing business in Africa.

Chinese Premier Wen Jiabao pledged $1 billion in loans to support small- and medium-sized enterprises under a three-year action plan unveiled at the triennial Forum on China-Africa Cooperation held in Sharm el Sheikh, Egypt, in November. But it isn't clear how the money will be disbursed.

"Who gets it? How do you access these loans?" He said. "The government's starting point is a good one to help SMEs in financing, but if the bank designs high barriers then no one can meet them."

Along with lack of access to capital, SMEs also face a tougher time compared with Chinese state firms, in getting hold of adequate information about investing in Africa.

Another challenge, He said, is finding cross-border human resources talent that can easily move between the culture, language and different business environments of China and individual African nations.

"China's reform and opening up has occurred only in the last 30 years," He said. "The history of companies " private companies " going abroad to invest likely doesn't exceed a decade." With that short a history, nursing talent " with cross-border, international operational abilities is pretty difficult," he said.

He said a listing in Africa is a possibility in the future because the company needs local funding. He declined to say when a listing could happen.