Hong Kong: Maritime CEO came across an interesting statistic recently: trade between the southern Chinese province of Guangdong and Africa has surpassed the total trade between the whole of China and France.
Much of this trade is in breakbulk form, a big boom for members of the China Logistics Club. Bo Drewsen, chairman of CLC Projects – CLC stands for China Logistics Club – is a very close watcher of this nascent, but soaring tradelane.
China’s Ministry of Commerce has noted recently that Africa will surpass the European Union and the United States as China’s largest trading partner in the near future.
“Chinese companies are increasingly being encouraged to invest abroad and now it is not only the larger corporations such as Chinalco and ZTE, but also more and more middle sized companies,” comments Drewsen.
Africa is already a huge market for Chinese contractors especially in road, power plants, airports, railways and wind turbine plant constructions. By providing soft loans on favourable terms to African countries, China gets more easy access to the continent’s vast mineral wealth.
Infrastructure demands for Africa remain enormous, with Chinese contractors to the fore in tendering. For instance, the continent needs to spend over $52bn on 4,000 km of railways in order to exploit planned African iron ore projects, according to International Finance Corp (IFC). The IFC estimates that up to $13.6bn needs to be spent in Guinea alone to develop two railways and a port.
South America is another growing market for Chinese businesses.
“This all means a big demand for project cargo shipping out of China to Africa and South America in particular,” says CLC’s Drewsen.
Shipowners are introducing bigger breakbulk tonnage to Africa to cater for this demand. One project alone requires some 1m freight tons for all the equipment and mining wagons, railway cars, sleepers, camps for housing for the big China Aluminum/Rio Tinto project at Simandou in Guinea. Recently some 600 railway wagons, in total five charter vessels with some 12,000 tons in total, were shipped from China to an iron ore project in Sierra Leone.
“China will continue to be the big dragon in 2013 when it comes to sourcing of machinery, steel, infrastructure equipment, not only by foreign companies but also by Chinese contractors,” Drewsen says.
Concluding, CLC’s Drewsen has some advice for local project firms. Chinese companies need to make a greater impact overseas, Drewsen urges.
“Chinese forwarders need to gain an international foothold,” Drewsen says. “Chinese forwarders have been slow to realize this and that is a big weakness.”
CLC Projects is a network founded just over a year ago, which now has nearly 90 members, who are generally small or mid-sized companies. CLC Projects nominate one member per province in China and one per country abroad only. [04/04/13]