Over the past decade, Chinese companies have built bulging order books in Africa, cutting their teeth in a part of the world where Western competitors, when present at all, have not brought their A team. The Chinese astutely calculate that the wealth they accumulate in Africa and the lessons they learn will serve them well as they push into bigger, richer, and tougher markets. Examples of this strategy are particularly abundant in telecommunications, where companies such as Tecno (cell phones) and ZTE (000063:CH) (mobile phone infrastructure) have relied on Africa in part to launch themselves globally.
Boasting scores of already mature multinational corporations, Western countries would not be mistaken to think they had relatively little to learn from this aspect of China’s expansion into Africa. The third pillar of Beijing’s strategy, though, could well become the game changer. Understanding that, for the remainder of the century, the bulk of global population growth will take place in Africa, China is making a long bet on the emergence of vibrant, high-consuming middle classes there, and with each year this wager is looking smarter and smarter.
Although at a glance Africa still looks overwhelmingly poor, it’s recently become the fastest-growing region of the world, and its share of global gross domestic product has increased to 4.1 percent, from 3.4 percent in 2000—a trend that figures to accelerate. Africa already has a middle class larger than India’s, albeit a balkanized one. And as the economic emergence continues, it will benefit more and more from new technologies that will allow it to leapfrog communication and infrastructure hurdles.R