Rising China and Africa's development: oil
Rising China and Africa's development: oil

Start this free course now. Just create an account and sign in. Enrol and complete the course for a free statement of participation or digital badge if available.

Free course

Rising China and Africa's development: oil

4 Linkage development: are the Chinese different?

Chinese owned firms are somewhat different and so have distinct implications for linkage development and localisation. The ‘Angola model’ of financing means other Chinese SOEs get construction contracts and then bring labour and inputs with them. This is highly internalised and so creates limited backward and forward linkages, and Chinese firms tend to provide little support to would-be suppliers. But there are important differences between Chinese SOEs and private Chinese TNCs with the latter much more willing to enter into market-based supply relations. In terms of mineral processing, Chinese firms tend to refine and process in China, which also limits backward and forward linkages, whereas with oil we have seen a willingness to invest in refinery capacity in Africa.

However, there is a sense that Chinese firms’ procedures reflect a lack of experience, so as they gain knowledge and confidence they will behave more like Western firms. Evidence from Ghana shows that Chinese state-owned companies have gradually localised their workforce in a manner quite similar to the behaviour of companies from the West. With rising labour costs in China, the costs of importing labour and goods will rise.

Another case in point is that the Sudanese oil sector is largely dominated by one Chinese national oil company – China National Petroleum Corporation – but they seem to have been able to achieve relatively high levels of localisation and linkage development. This also definitely reflects the shift in the Chinese way of doing business abroad, but may also reflect a firmness of purpose in the Sudanese approach to promoting localisation, which may have been conditioned by Sudan’s unique economic and political context.


Take your learning further

Making the decision to study can be a big step, which is why you'll want a trusted University. The Open University has 50 years’ experience delivering flexible learning and 170,000 students are studying with us right now. Take a look at all Open University courses.

If you are new to University-level study, we offer two introductory routes to our qualifications. You could either choose to start with an Access module, or a module which allows you to count your previous learning towards an Open University qualification. Read our guide on Where to take your learning next for more information.

Not ready for formal University study? Then browse over 1000 free courses on OpenLearn and sign up to our newsletter to hear about new free courses as they are released.

Every year, thousands of students decide to study with The Open University. With over 120 qualifications, we’ve got the right course for you.

Request an Open University prospectus371