Showing posts with label Chinese Business. Show all posts
Showing posts with label Chinese Business. Show all posts

2.07.2011

China follows British footsteps to African wealth | BBC News

China follows British footsteps to African wealth

Chinese railway worker on Benguela track

By Justin Rowlatt
BBC News, Angola

Chinese investment in Angola is bringing back to life one of the greatest rail routes in Africa, the Benguela Railway. In return, China gets oil - but are accusations of a colonial-style scramble for resources fair?

The passengers squatted beside the railway tracks. It was impossible to tell how many there were.

In the darkness their bodies merged with great shapeless bundles of luggage, but there were certainly hundreds.

Then with the first flush of dawn, and bang on time, the bright beam of headlights appeared in the far distance.

The crowd immediately began to stir and jostle for position, even before the train had eased to a halt.

They threw up their boxes and bags into the open cattle trucks and scruffy passenger carriages, then scrambled after them.

Map of Benguela Railway route
The line stretches from Angola's west coast to the Zambia border

Tony, the railway official who was looking after us, urged us to get moving too.

"It will not wait for you," he warned.

He hurried down to the very last carriage, and gestured at us to board this battered old compartment.

"You can leave your things safely here," he said.

We did as he said and climbed up the steps, and into another world.

Teak-lined stateroom

The contrast with modern Africa could not have been greater.

We were in a teak-lined stateroom, the windows shaded by slatted blinds.

TV SERIES
Justin Rowlatt has embarked on a global journey to explore the effects of China's policy of "going out" into the world to secure the energy and raw materials its rapidly growing economy needs.
A two-part documentary series will air on BBC Two in early 2011.
He will also be reporting regularly for the BBC News website.

There was a table with a crisp white tablecloth surrounded by four heavy chairs and, in the ceiling, a big silver fan.

We had stepped back into Edwardian England.

Tony laughed at my astonishment. He had known we would be impressed.

"You should feel at home," he teased.

"This is one of the original British carriages, where the directors of the railway company would travel."

Our grand accommodation was a remnant of what was once one of the great routes of Africa - the Benguela Railway.

It was an engineering triumph, stretching 1,000 miles up from the Angolan coast, right into the southern Congo.

Some people mutter that it is really just another scramble for oil and other resources

The railway took almost 30 years to build and cost the equivalent of hundreds of millions of pounds - as well as the lives of many of the indentured labourers who worked on it.

But little remains of the glory of the Benguela now. Until very recently all but a tiny stretch of the line was closed.

The railway was one of the many victims of Angola's 27-year-long civil war.

Now it is being rebuilt. Not, needless to say, by the British, but by the Chinese.

Back in Luanda, the Angolan capital, I had heard a lot of anxiety about the Chinese move into Africa.

Some people mutter that it is really just another scramble for oil and other resources.

It is true that Angola has some of the biggest oil reserves in Africa.

But as I looked around at the expensive fittings in our state car on rails, it looked as if motives of the men who built this railway were pretty similar.

The Benguela railway was not a philanthropic project, but a business investment. It was built to ship out the incredible copper wealth of central Africa.

Rolling supermarket

As soon as the train pulled into the first station - a dusty stop in the middle of dry scrubland - it was clear that the recent Chinese work on the railway is providing economic benefits too.

Those huge bundles I had seen by the passengers were thrown open.

Our people have been fighting for so long, they don't know how to build anymore
Angolan woman

Inside were huge mounds of tomatoes, onions, greens, dried fish and great bloody lumps of meat.

The hundreds of people waiting surged forward, yelling and rushing from one carriage to another to barter for the goods on offer.

I realised that this train was, in effect, a rolling supermarket and the passengers were small businessmen and women.

"I couldn't do this before the railway was fixed," one large woman selling plump red tomatoes told me.

"Before, I had to travel by car which was much more expensive."

She giggled shyly and acknowledged that she was making better money now. "I am not rich, but a bit richer," she told me.

So how did these traders feel about the Chinese helping to refurbish the line?

They all agreed that the Chinese were very hard workers and had done a fine job.

But should the work not have gone to Angolans, I wanted to know?

"Our people have been fighting for so long, they don't know how to build any more," the woman with the tomatoes told me with a wry smile.

Fair deal?

Of course the Chinese labourers get paid - and their wages come out of a cheap loan which the Chinese government made to the Angolan government.

And that loan, in turn, is paid for in oil.

So in some sense oil money is still the motive.

BENGUELA RAILWAY
Opened in 1928 to transport copper deposits
It consists of 840 miles (1344 kilometres) of track
Twenty-seven years of civil war destroyed much of the railway

But, as the train grunted and clanked on through the savannah, with its occasional vivid red acacia tree, it seemed to me that what was happening now was very different from what the British had done here.

The Angolan oil which pays off that loan is now sold abroad at the prevailing market rate.

Very different terms from those of the British, who carted hundreds of millions of tons of precious African copper down this line without paying anyone a penny for it.

So, while it may be tempting to see today's China as just another imperial power out to exploit the riches of Africa, it seemed to me that there is a big difference between the Chinese presence and the British one.

Though, sitting back in my state car as the train rattled on up the line, I had to admit those British railway pioneers did know how to travel in style.

How to listen to: From Our Own Correspondent

Radio 4: Saturdays, 1130. Second weekly edition on Thursdays, 1100 (some weeks only)

World Service: See programme schedules

Download the podcast

Listen on iPlayer

Story by story at the programme website

The Chinese have been wisely exporting their culture to the developing world in hopes of spreading their uniquely Chinese model for economic development, much the same way the west was able to export its model of free market capitalism to emerging markets post-WWII up until Reagan and the collapse of the Soviet Union. I have been blogging about this phenomenon for years, but the mainstream press is finally starting to wake up.

Posted via email from China Wakes

2.06.2011

Chinese family businesses: Dusk for the patriarchs | The Economist

Chinese family businesses

COMPANIES can survive for hundreds of years. Their founders cannot. Hence the problem that eventually faces all family-owned firms: how to hand over from one generation to the next. In Stanley Ho’s case, the transition is proving stormy.

Mr Ho is the gambling king of Macau: the founder of an empire that includes casinos, ferries, an airline, hotels and commercial property. He is also 89 years old, in poor health and less lucid than he once was. His four families are fighting like harpies over his assets, which are held within an array of complex structures.

It is messy: Mr Ho (pictured, with his third wife and their daughter) had four concurrent “wives” in a territory that does not recognise polygamy. Three are still alive, plus at least 16 children. Mr Ho apparently had a stroke in 2009, prompting his relatives to start struggling for control.

Their feud has become a YouTube sensation. Every few days, a wheelchair-bound Mr Ho issues a statement that contradicts his previous one: either accusing his relatives of robbery or exonerating them. Throngs of Hong Kongers have joined the journalists outside the family’s many opulent residences, straining for the latest whispers. Two photographers have had their feet run over by limousines.

The Ho saga has prompted fresh scrutiny of other firms that will soon face succession tussles. A major investor in two of Mr Ho’s Macau companies (one controlling casinos, the other ferries) is Cheng Yu-tung, 85, who runs his own swelling conglomerate, New World Development, with unresolved succession issues.

At Sun Hung Kai, Hong Kong’s largest property owner, the succession seemed settled in 1990 with the death of the founder and management passing to his three sons. But turmoil erupted in 2008 when the founder’s then 79-year-old widow, Kwong Siu-hing, emerged as the true power, pushing out her eldest son, Walter, who had been chief executive. On Sun Hung Kai’s board sits Lee Shau-kee, 82, who runs another property company, Henderson Land, with its own succession issues.

Any talk in Hong Kong about succession soon touches upon Li Ka-shing, 82, the territory’s richest resident, whose empire encompasses utilities and property. Much of his wealth has been pledged to charity, but no one knows who will run his firms when Mr Li dies. When he was abruptly hospitalised in 2006, shares in his listed companies immediately sank.

Many Hong Kong tycoons are getting old (see table). Typically, their fortunes date back to the early post-war years, when Hong Kong was a desolate rock, Macau was in decline and Singapore was a swamp. They built empires while keeping tight personal control, often using bewildering interlinked corporate structures.

Within a few years, dozens of publicly listed (but family-controlled) Asian companies will change hands. If history is any guide, the process will hurt, says Joseph Fan, a professor at the Chinese University of Hong Kong. A study he jointly conducted of 250 companies in Hong Kong, Taiwan and Singapore controlled by Chinese families found that successions tended to coincide with tremendous destruction of value (see chart).

There are exceptions. Sir Run Run Shaw, a 103-year-old media mogul, appears to be retiring in peace. On January 26th he announced that he would sell his controlling stake in TVB, Hong Kong’s largest television network, for more than $1 billion. It was the last public link to an empire that once included the largest private film studio in the world. Mr Shaw retired from active management on his 100th birthday, in favour of a much younger manager, his then 77-year-old second wife, Mona Fong.

Many patriarchs built their fortunes with risky bets: movies, the first casino, manufacturing. But many have shifted into merely collecting rents from property and related businesses (ports, hotels, retail) or from government concessions (electricity, telecommunications, gas, casino licences).

The simplicity of the underlying businesses may account for the ferocity of the family battles—it is not hard to make money if you own a casino near mainland China these days. However, in areas that are genuinely competitive, such as banking, Hong Kong’s family firms have been largely elbowed aside by multinationals.

Patriarchs add value in two ways that do not appear on balance-sheets, says Mr Fan. Their reputation ensures that banks will lend money to their companies. And their relationships with government are often lucrative. Alas, these strengths are hard to bequeath to one’s children. Which is why some Asian empires will struggle to outlive their founders.

Very interesting article on the tumultuous fall of Hong Kong's great 20th century tycoons, or the inglorious rise of the next generation of Chinese business leaders, depending on your perspective.

Posted via email from China Wakes