The document discusses China's involvement in Africa's telecommunications sector. It notes China's significant investments in infrastructure projects and equipment sales to African countries, often in exchange for access to important resources. However, unlike in China, Chinese companies have not established telecom operations in Africa. The document also examines the differences between China's approach and the Washington Consensus model typically promoted in Africa, as China often supports state monopolies rather than market liberalization. It calls for further research into cultural differences, resource agreements, and other aspects of China's strategic engagement in Africa's telecom sphere.

1. Ewan Sutherland
LINK Centre, Wits University
13 February 2014

2. 
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Complex engagements
Chinese operators and markets
China in Africa - telecommunications
Conclusion
Further research
Ewan Sutherland, February 2014, LINK Centre, Wits U
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3. 
Ming dynasty Imperial flotilla
Political initiatives in Africa:

Extractive industries:

Manufacturing expansion:
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Beijing consensus:

Need to unpack:

◦ Countering Western Imperialists
◦ Countering Soviet hegemony
◦ Seeking recognition against Taiwan (Chinese Taipei)
◦ Oil and gas
◦ Metal ores (e.g., Copper and Cobalt)
◦ Sometimes offered barter of infrastructure for ores
◦ Dominant supplier of goods
◦ Counter to Washington Consensus
◦ Win-Win for China and Africa
◦ African countries
◦ Chinese players (governments, private firms, traders, etc.)
Ewan Sutherland, February 2014, LINK Centre, Wits U.
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4. 
Massive growth in markets for
◦ Mobile telecommunications
◦ Internet access
◦ Broadband
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Technology transfer by joint ventures
Has become a major location for manufacturing:
◦ Handsets
◦ Network equipment
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Growing role in standardisation
Massive investment in R&D
Present in most activities
Ewan Sutherland, February 2014, LINK Centre, Wits U.
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5. Ewan Sutherland, February 2014, LINK Centre, Wits U.
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6. Ewan Sutherland, February 2014, LINK Centre, Wits U.
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7. All mobile subscribers
(including 3G)
- Users (millions)
- Net additions (millions)
- Month on month growth
Of which 3G subscribers
- Users (millions)
- Net addition (millions)
- Month on month growth
China
Mobile
China
Unicom
China
Telecom
Total
759.27
275.86
183.41
1,218.54
4.09
3.10
2.27
9.46
0.54%
1.13%
1.25%
0.78%
UMTS
cdma2000
176.02
115.39
99.58
390.99
6.52
3.76
3.10
13.38
3.84%
3.37%
3.21%
3.54%
TD-SCDMA
-
Ewan Sutherland, February 2014, LINK Centre, Wits U.
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8. Ewan Sutherland, February 2014, LINK Centre, Wits U.
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9. 
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Very rapid in customer numbers
GSM operators admit overstated numbers:
◦ Suggest each African has two SIM cards
◦ Creates enormous space for them to grow
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Large trans-national groups:
◦
◦
◦
◦
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Etisalat (UAE)
Millicom (Sweden)
MTN (South Africa)
Orange (France)
Vodafone (UK)
Ewan Sutherland, February 2014, LINK Centre, Wits U.
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10. 
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Loans (e.g., Export-Import Bank of China)
Sale of network equipment (e.g., Huawei & ZTE)
Network construction and management
(e.g., CITCC)
Sale of handsets and smartphones
Exchange of voice telephony traffic and roaming
VPN services for Chinese firms (e.g., Gateway)
Absence of:
◦ Network operators (e.g., China Mobile)
◦ Internet content firms (e.g., Alibaba, Tencent, & Weibo)
Ewan Sutherland, February 2014, LINK Centre, Wits U.
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11. 
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Some handsets are from “leading” brands
Sold via recognised distribution channels
Also handsets with operator brands
Smaller scale and grey market importers
Enormous demand for cheapest handsets
Ewan Sutherland, February 2014, LINK Centre, Wits U.
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12. 2008
Global revenues
2009
2010
2011
2012
44,293
60,273
70,264
86,254 84,219
Of which from Africa
21.0%
11.4%
15.1%
12.4%
9.3%
Operating revenues from
9,311
6,861
10,639
10,678
7,821
Operating costs for Africa
5,241
3,189
5,870
5,696
5,509
Gross profit margin
43.7%
53.5%
44.8%
46.7%
29.6%
Africa
Ewan Sutherland, February 2014, LINK Centre, Wits U.
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13. Ewan Sutherland, February 2014, LINK Centre, Wits U.
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14. 
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One of the few remaining monopolies
Massive contract
Equipment from Huawei and ZTE
Installed and maintained by CITCC
No money from Ethiopian government
Substantial growth in customers
Without competition on market
Without good governance
Ewan Sutherland, February 2014, LINK Centre, Wits U.
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15. 60
Liberia
Burkina Faso
Mobile connections per 100 persons
50
Sierra Leone
Rwanda
Mozambique
40
Niger
Chad
Cent. Afr. Rep.
30
Comoros
Malawi
20
DR Congo
Burundi
Ethiopia
10
Somalia
Eritrea
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Ewan Sutherland, February 2014, LINK Centre, Wits U.
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16. 
Washington Consensus:
◦ Liberalisation
◦ Privatisation
◦ Regulation

China:
◦ Minimal market opening
◦ Three state-owned companies competing
◦ Coordination by ministry:
 But manufacturers have a loud voice

China in Africa:
◦ Ignore internal policies and Washington Consensus
◦ Supports monopolies
Ewan Sutherland, February 2014, LINK Centre, Wits U.
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17. 
Three space tracking stations outside China:
◦ Swakopmund, Namibia
◦ Malindi, Kenya
◦ Karachi, Pakistan
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Namibia:
◦
◦
◦
◦
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Intergovernmental agreement, 2000
Built by Windhoek Consulting Engineers
Estimated cost of NAD 12 million
Opened, July 2001
Otherwise China uses Yuanwang (远望) class
ships
Ewan Sutherland, February 2014, LINK Centre, Wits U.
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18. 
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The state is a strong and often dominant
influence across the value chain
Protects service industries behind Great
Firewall of China
Operators and content providers tightly
bound to censorship regime
Pursuing strategic goals overseas:
◦ Africa is a major market for low priced
telecommunications
◦ Africa is a source of important minerals
◦ Africa is a key market for manufactures
Ewan Sutherland, February 2014, LINK Centre, Wits U.
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19. 
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Governments have limited ability to influence
multinational operators
A lot of lobbying, but little litigation
Ineffective regulation
Nonetheless, telecommunications has been
transformed
Increasingly Chinese equipment
Often Chinese construction and maintenance
Even countries with little progress in
liberalisation show progress
Ewan Sutherland, February 2014, LINK Centre, Wits U.
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20. 
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Need to explain differences in Chinese
government pushing equipment but not
operators or services
Cultural differences on the ground:
◦ African and Chinese managers
◦ Lobbying with Chinese characteristics
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Relationship to resource contracts
◦ If any?
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Flows of money around equipment contracts
Value for money
Ewan Sutherland, February 2014, LINK Centre, Wits U
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21. 
Ewan Sutherland

Sutherla [at] gmail.com

http://www.ssrn.com/author=927092

+44 141 649 4040

Skype://sutherla
Ewan Sutherland, February 2014, LINK Centre, Wits U
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