Mr Isaac Demuyakor, PhD, with a strong interest in trade and value addition was our guest on The Conversation. Speaking on the theme for February, “Unveiling the Symbiosis: African Startups and the Chinese Advantage,” the researcher revealed interesting things African startups can leverage to get Chinese investments.
Speaking on what areas African startups can focus on to gain investments and trade partnerships with the Chinese, Mr Demuyakor said while there are chances that African startups can attract Chinese investors, it is far less as compared to the same startups getting funding from the West. This he said is because Chinese investors prefer to invest in infrastructure projects to invest in startup ideas, unlike the West.
He said the focus of China is not about investing in business ideas or new products from startups. The main focus for China is to help improve infrastructure so they invest in projects that are geared towards infrastructure such as roads and energy projects. Because of that mentality, Chinese investors, he said are more eager to work with you when you are passing through the government of your country.
To that end, Mr Demuyakor said if African startups are offering services that they pass through the government it will be easier to attract Chinese funding. He thus encouraged African businesses interested in doing business in China and with the Chinese to consider passing through the established relationships between their respective countries and China.
Despite the low interest in funding startups outside of those leading infrastructure projects, he said there are also other interest areas for Chinese investors. He noted that Chinese investors would also be very open to investing in startups that can add value to the value chain of businesses owned by those investors. As an example, he noted that a fintech that facilitates payment between Africa and China would likely get funding from China easily because the service could easily be plugged into the value chain of the Chinese in Africa.
“If you come up with an idea of fintech on a payment platform between Africa and China, they will quickly tap into it because it serves the Chinese interest. Because you are finding innovative ways where you can pay money for the services and goods, they give to you.” He stressed that if your idea fits into the value chain of their [Chinese] company, they would be eager to fund you because you are offering something that would help their business grow.
Mr Demuyakor explained that the West says “government has no business doing business…. but the Chinese believe that government has business to do business because without government it will be impossible for business to strive.” He used that to buttress the point that the Chinese always prefer businesses that involve the government’s assurance of quality and trust.
Mr Demuyakor mentioned the Alliance of Belt and Road Business Schools (ABRBS) and the Asian Infrastructure Investment Bank (AIIB) which support businesses but noted that all of them involve government.
The Conversation is a monthly programme by Africansonchina where thought leaders, experts and industry players are given the chance to share their thoughts and views about certain topics in the Africa-China space. Previous episodes can be found on our YouTube channel while all stories that emanated from those discussions are available on our website. If you are in the Africa-China space and wish to make an appearance, you can reach out to us via editor@africansonchina.com stating your expertise or interest areas.
