African adventure now a sightseeing tour as Chinese firms learn caution
Companies take more cautious approach after big projects on the undeveloped continent fizzle
China's gung-ho foray into Africa is waning. As trade with the continent surpasses an annual US$160 billion, its companies are avoiding risk by taking smaller stakes in projects close to making money.
Cowed by capricious commodity prices, political instability and a string of lost investments, Chinese financiers are not as gutsy as when state-owned giants used their heaps of cash to propel the nation's "Go Out" drive and whip up business abroad 15 years ago.
"There was a lot of enthusiasm and momentum," said Clement Kwong, whose Beijing-based Long March Capital clubbed together with other investors last year to take over a South African gold company.
"That momentum is definitely reined in by a new level of risk aversion and caution."
China surpassed the US as Africa's largest trading partner in 2009. Trade volumes soared 11-fold in the decade to 2013, according to data from the Geneva-based International Trade Centre.
The quest for profit now trumps the wider aim of creating a Chinese footprint abroad.
Smaller private companies are taking the lead from the state-owned giants that prepared the ground. After many African leaders doubled back on the initial fervour for China, the new players are less conspicuous and score quicker returns.