Networked Internationalization: Chinese Companies in Ethiopia’s Infrastructure Construction Sector

Abstract

Chinese companies have emerged as crucial players in Africa’s infrastructure construction sector. Existing literature largely views Chinese companies as state-orchestrated actors that undertake government-financed projects in Africa. There is insufficient attention to the concurrent internationalization of diverse construction actors, specifically subcontractors, material suppliers, and service providers who often have different ownership status, provincial origin, and overseas competitiveness. Employing a resource- and network-based perspective, this article uncovers the networked internationalization of Chinese construction players and investigates their capacities and constraints to operate in Africa. Empirical research was conducted with a group of Chinese companies in Ethiopia between 2016 and 2017. Findings indicate that the internationalization of Chinese companies is a hybrid process of leveraging central and local government support back in China, externalizing domestic industrial relations, and building up local credentials in the host country. Companies’ overseas competitiveness and performance are shaped by the amount and type of resources that they can mobilize, which is further implicated by their positions in the construction industry. Such positions are, however, subject to change and contingent on the assemblage of resources companies can pool together during their overseas ventures.

中国公司在非洲的基础设施建设中起到了重要作用。很多文献都认为, 这些中国公司是由中国政府主导的、在非洲实施政府资助项目。但是, 文献没有关注建筑商的国际化。特别是那些分包商、材料供应商和服务商的国际化, 常常具有不同所有权、来自不同的省、拥有不同的海外竞争力。从资源和网络的角度, 本文揭示了中国建筑商的网络国际化, 研究了这些公司在非洲开展工作的能力和局限。针对2016至2017年在埃塞俄比亚的一些中国公司, 本文开展了经验性研究。研究发现, 中国公司的国际化是一个复合过程, 包括中国地方政府和中央政府的支持、国内工业关系的外在表现、在当地国家建立信用。公司的海外竞争力和行为, 受制于公司能支配的资源数量和资源种类, 也与公司在建筑行业中的地位有关系。根据公司在海外生产中能整合到的资源, 这种地位也会发生变化。

Las compañías chinas han emergido como actores cruciales en el sector de la construcción de infraestructura en África. La literatura existente en gran medida ve las compañías chinas como actores orquestados por el estado para emprender proyectos de financiación gubernamental en África. Existe atención insuficiente a la internacionalización concurrente de diversos actores de la construcción, específicamente los subcontratistas, los proveedores de materiales y los proveedores de servicios, que a menudo tienen diferentes estatus de propiedad, origen provincial y competitividad en el extranjero. En escenarios extranjeros, ellos se comprometen con contratistas de proyectos en relaciones de proveedores, servicios o contractuales. Empleando una perspectiva basada en recursos y redes, este artículo muestra la internacionalización encadenada de los actores chinos de la construcción e investiga sus capacidades y limitaciones para operar en África. La investigación empírica se condujo con un grupo de compañías chinas en Etiopía, entre 2016 y 2017. Los hallazgos indican que la internacionalización de las compañías chinas es un proceso híbrido para tomar ventaja del apoyo gubernamental central y local en la propia China, externalizando relaciones industriales domésticas y construyendo credenciales locales en el país anfitrión. La competitividad y desempeño externos de las compañías se configuran por la cantidad y tipo de recursos que puedan movilizar, lo cual es implicado todavía más por sus posiciones en la industria de la construcción. Sin embargo, tales posiciones están sujetas a cambio y son contingentes al ensamblaje de los recursos que las compañías pueden concertar juntas durante sus emprendimientos en el extranjero.

Key Words:

• China–Africa relations
• firm internationalization
• infrastructure construction
• networks
• resources

关键词:

• 中非关系
• 企业国际化
• 基础设施建设
• 网络
• 资源。

Palabras clave:

• construcción de infraestructura
• internacionalización de las firmas
• redes
• recursos
• relaciones China–África

Notes

1 It is worth noting that resource-backed loans are by no means a Chinese invention but were developed by Western private banking institutions to mitigate the risk of lending to resource-rich African countries. China itself also used a similar financial mode to secure loans from Japan in the 1970s (Alves 2013b).

2 The data might not capture the actual number of Chinese companies in the construction sector. It can overcount companies because the same company might have multiple registrations for different types of businesses (e.g., as general contractor, specialized contractor, and machinery rental company simultaneously). At the same time, the data can also underestimate the actual number given the fact that some Chinese companies (especially subcontractors) might not register locally as independent investors.

3 Yet, this by no means indicates that companies only work on capital-based projects. Rather, my research shows that Chinese companies tend to have a central office in the capital city and send project teams to regional sites for construction work.

4 For unit price projects, the contractor will provide price quotes for each unit of construction; the client pays according to the actual number of units being constructed. This mode allows the client to ensure that the asking price for goods and services is reasonable and so minimizes the risks of inaccurate price estimates.

5 For example, large SOEs do not need to submit guarantees and certificates of bank deposit (typically an amount of no less than 30 percent of the project value) when applying for Chinese bank loans, whereas small SOEs and private companies must have these proofs.

6 None of the four subcontractors in the study were registered in the EIC at the time of this research.

Additional information

Notes on contributors

Ding Fei

DING FEI is a development and economic geographer who teaches at Arizona State University, Tempe, AZ 85287. E-mail: [email protected]. She is also a 2020 Early Career Fellow in China Studies Program at the American Council of Learned Societies. Her research focuses on the relationship among state, capital, and human agency in the uneven process of China’s globalization and its implications for industrial transformation and local capacity building in the Global South.