Doing business with China, timing is everything

China may be one of Africa’s largest trading partners, which means opportunities for those companies in sectors outside of just raw commodities to grow in China are becoming more complex and require careful planning alongside support.

Leading business solutions across the Africa-China trade corridor PKF Octagon notes that China quickly emerged as sub-Saharan Africa’s largest individual trading partner in the past 20 years, and this picture continues to change meaning businesses need to approach this market with their eyes wide open.

The IMF has reported about a fifth of sub-Saharan Africa’s total goods exports go to China, which is an indication of large amounts of imports from African countries supplying manufactured goods and machinery to China.

Metals, mineral products, and fuel represent about three-fifths of the Sub-Saharan exports to China.

Changing times

China’s economic engagement has cooled down according to PKF Octagon.

In 2021, at the China Africa Cooperation Forum, China announced its first financial support cut to Africa, from %60 billion to $40 billion over three years.

This was followed by a decision at the China Africa Economic and Trade Expo in June 2023, where about $10 billion of projects that were signed dropped when compared to the 2019 event.

This is due to the fallen precipitous loan disbursement to sub-Saharan Africa.

“China’s appetite for raw commodities will not be unlimited nor last forever, while trade patterns worldwide – not just in China – are changing fast, ” said Patlansky,

“There are many geopolitical shifts taking shape and so African businesses need to adapt. They must take a more strategic view, armed with hard facts and experience to ensure success,” says Lauren Patlansky, PKF Octagon Asia business services.

This will translate into more opportunities for those companies in sectors outside of raw commodities such as critical minerals or better solutions that can service the growing consumer market in China.

“…it’s not just the business landscape to navigate – those entering these markets must be equipped with the necessary cultural insights, language support, and technical expertise to realize their global ambitions.”

China may remain the world’s most fast-paced developing country with an investment environment attracting the world’s financial institutions, but navigating an exciting ecosystem with China appears to require considerable insight into the best investment vehicles coupled with the right timing.  After all, timing is everything.

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