Busting powerful and persistent myths about the role of Chinese state-owned enterprises (SOEs) in Africa, Katy N. Lam's Chinese State-Owned Enterprises in West Africa: Triple-Embedded Globalization is an important contribution to the growing body of literature on Chinese investment overseas. Lam answers questions that many observers have long pondered. What is the relationship between Chinese SOEs in Africa and the central state? How much autonomy do overseas SOE managers enjoy? And what are the incentives for these firms to localize their workforce and business strategies?
One of Lam's key findings is that support and preferential treatment from Beijing is no prerequisite for a flourishing business in Africa. Instead, it is the degree of localization that makes or breaks the success of Chinese SOEs overseas, at least in the long run. Ties between Africa-based SOEs and Beijing have evolved ever since the first firms set foot on the continent as competitive contractors in the 1990s. One of the drivers of this changing relationship, Lam shows, is competition on the ground. Price wars among Chinese firms in particular have forced SOEs to adapt to the local circumstances and cultivate relations with West African elites in order to strengthen their position and secure their survival.
While the Chinese state concentrates resources on central and strategic SOEs, most provincial-level SOEs are left to fend for themselves. Despite the limited support they enjoy, some of these firms have proven highly competitive and gained firm footholds in Ghana and Benin, Lam's case-study countries. Some provincial SOEs have become development-oriented project investors. Proactively obtaining loans from Chinese-led development banks, they carry out socially significant projects, such as the installation of electricity networks in rural regions. Through these initiatives they not only win the hearts of local Africans but also please political leaders, for whom they win votes. Cultivating relations with chiefs and the national-level leaders of both the ruling and the opposition party is an important avenue to success in Africa.
Lam uses the concept of “second-class globalization” (pp. 153–155) to describe the internationalization of Chinese SOEs. Even for central SOEs that enjoy preferential treatment, the Chinese state's role in their long-term survival or development in African countries is limited. These firms, too, are forced to accumulate assets on the ground in order to make their move to Africa successful. The reader is, however, left to wonder what first-class globalization would entail, and how exceptional this “second-class” type of outward investment is. Is it unique to Chinese enterprises?
Drawing on rich material from interviews with SOE managers, local staff and other members of Chinese communities in Ghana and Benin, observations made through shadowing interviewees in their daily activities, and discourse analysis of policy statements and media reports, Lam reveals the multidimensional nature of the globalization of Chinese SOEs. She distinguishes three types of embeddedness that mark this process (pp. 3–7; 148–151). First, societal or Chinese embeddedness reflects the company's “genetic code” and its social and political ties to the home country. The second type, territorial embeddedness, captures the extent to which the company is anchored in the African host country. Managerial embeddedness, lastly, highlights the actors’ interaction with other actors in local networks and processes of trust-building. The extent of a company's triple-embeddedness determines its trajectory and success in Africa.
An unexpected contribution of the book lies in its documentation of the role of SOE managers, who prove to be key actors in developing globalization strategies. Lam provocatively uses the concept of “expat” rather than “migrant” to describe SOE managers in Ghana and Benin. She finds that these expats – many of whom have lived in Africa for over a decade – embody the tensions of the process of localization. Getting together at the golf course on Sundays and residing in fancy suburban villas, these managers live comfortable lives. However, their wealth is localized. The social and cultural capital they have accumulated in West Africa over the years is not transferable to China. They lack the social etiquette and connections to integrate with the business elite at home. While these managers are upwardly mobile in Africa, they prove spatially immobile. Many opt to extend their stay in Africa, which has led to a paradox: the Chinese managers who are the strongest advocates of workforce localization also constitute the main barrier to it.
The breadth of material and the depth of analysis of Chinese State-Owned Enterprises in West Africa are rare in the young field of Africa–China studies. Given the major achievement of the author, it is regrettable that the publisher does not live up to this standard. This should, however, not deter the reader. Providing unique insights into the changing face of Chinese SOEs in Africa, the book is a must-read for students and scholars working on Chinese involvement in the developing world.
