Korea-Africa Economic Cooperation Conference declaration

October 19, 2012

The fourth meeting of the Korea-Africa Economic Cooperation(KOAFEC) Ministerial Conference  finished yesterday in Seoul, but its final declaration was circulated two days earlier — in a fashion reminiscent of Chinese conferences.

I don’t recall coming across news about the first, second and third KOAFEC conferences, which goes to show how little international interest there is in South Korea’s activities in Africa — or for that matter in Southeast Asia, despite the fact that in Cambodia, South Korea is a close rival of China in terms of investment volume. The visibility of Korean projects (mostly real estate) and restaurants, karaoke and massage parlours catering to Koreans in Phnom Penh probably surpasses that of their equivalents related to investment from China. The complaints about poor treatment of workers that one hears about Korean employers are close to that of Chinese, and sometimes worse.

The 4th KOAFEC declaration, in terms of its idea, structure, and contents, seems to copy FOCAC, but rather unimpressively and without the rhetoric of mutuality and equal partnership. Infrastructure development, ICT, human resource development, agriculture development, “green growth,” and knowledge sharing are identified as areas of cooperation, but without any specific targets. A short section entitled “The Way Forward” starts with the declaration that the “representatives from African countries expressed gratitute to the people and Government of Korea.”

The one seemingly specific commitment is that

Korea will contribute to the development of African countries by tailoring the Saemaul Movement, a rural development model of Korea, to suit country-specific circumstances and sharing the virtues of diligence, self-help and cooperation (point 25).

Just how this tailoring will happen is unclear, but “sharing the virtues of diligence” is certainly something that no Chinese government programme openly presumes to do (though, of course, many Chinese managers do). The New Community, or Saemaul, campaign (undong) for rural development, was a product of the Park Chung Hee dictatorship in the 1970s and seems like a highly problematic choice for international emulation — despite the Park renaissance taking place in South Korea at the moment.

Evaluations of Chinese FDI

July 17, 2010

David Kelly has recently called the attention of Minjian International members to the writings of Ma Yu, head of the FDI department at the research institute of the Chinese Ministry of Commerce. Ma Yu is a fierce critic of the overseas investments and acquisitions of state enterprises, which he dismisses wholesale as suffering from “state-enterprisitis” and unsuited to survive in a market environment. He is primarily interested in investments in rich countries such as the US and Australia. One representative piece from Southern Weekend is here.

A more official-sounding analysis, from the Center for China’s Overseas Interests at Shanghai International Studies University (Wang Duanyong, “The Assessment Report of China’s Outward FDI Risk: 2008-2009,” CCOI Working Paper No. 1, 2010), essentially confirms this pessimistic view. By 2009, China’s FDI outflow reached $200bn, but about 80% of this has been to Hong Kong, Macau, the Cayman Islands or the Virgin Islands, meaning a manoevre to reduce taxation for a company operating within China rather than actual investment. Of the remaining 20%, the majority remains in Asia, but investment in Africa and the Pacific Islands has grown rapidly, particularly in 2008.

Both Wang and Ma point out that the foreign assets “scooped up” by Chinese companies during the 2008-09 recession have largely lost value. While Ma discusses mostly resources investments, Wang analyses the reasons for the failure of Shanghai First Automotive’s acquisition of a controlling stake in the Korean carmaker Ssangyong, which, in 2004, was feted as the first overseas venture of the Chinese auto industry. After five years of losses and an unrelenting conflict with the trade union (which accused the Chinese company of siphoning away Ssangyong’s technology and reducing it to a low-price brand), a reorganisation resulted in the reduction of Shanghai First’s packet from 51% to 11%. This failure went unnoticed in mainstream Western media, obsessed as they are by China’s investments in African resources. Nor have we heard much about the television brand TCL since its equally unsuccessful acquisition by a Chinese company. Like Ma, Wang considers Chinese state enterprises’ lack of strategy the root cause of the poor record, and pleads for a greater role for private enterprises, which have learned more flexibility in their domestic operations.