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In It for the Long Term? Governance and Learning among Chinese Investors in Zambia's Copper Sector*

Published online by Cambridge University Press:  10 September 2009

Dan Haglund
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Abstract

The literature on Chinese economic engagement with Africa reflects widely-held views that Chinese investment is strategic, politically motivated and therefore more stable and long-term than “Western” foreign capital. In contrast this article argues that various factors underpinning the governance of Chinese state-owned enterprises (SOEs) in fact serve to promote short-term strategies. It contributes to the literature by empirically exploring this proposition through a case study of a Chinese SOE operating in Zambia's mining sector, and by examining two sets of corporate governance characteristics of Chinese SOEs: investors' relationships with the Chinese state, and firm-level strategy, structure and norms. The article finds that these governance characteristics lead to short-term strategies, including excessive cost-cutting and segregated management practices. These short-term strategies reduce the incentives as well as ability of investors to address local environmental and social concerns, thus questioning the contribution of Chinese investment to Africa's long-term development.

Type
Research Article
Information
The China Quarterly , Volume 199 , September 2009 , pp. 627 - 646
Copyright
Copyright © The China Quarterly 2009

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79 Anonymous interviewee 2, NFCA, Kitwe, 25 August 2007.

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82 According to data from Mineworkers' Union of Zambia (from 2007), NFCA pays the lowest average wage (Kwacha 310.000 per month) among the large foreign-owned mining companies.

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87 Anonymous interviewee 2, NFCA, Kitwe, 25 August 2007.

88 Interview with Gao Xiang, NFCA, Chambishi.

89 Various interviews with relevant officials in Lusaka, Ndola and Kitwe, Zambia.

90 Interview with Charles Muchimba, director of information and research, MUZ.

91 At the time of the study, NFCA nevertheless remained the only foreign mining company not to provide medical coverage for all dependents of an employee. Anonymous interviewee 1, NFCA.

92 Ibid.

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