A former researcher on investment attraction, now a practitioner on investing in Zambia, Mr. Xin WANG, ’03, CEO of Astor Investments Limited, will talk about his experience and opportunities in Zambia. His transformation is a symbol of the raising of China in the global playground.

Jackson: Could you give us a little background of yourself, highlighting your experience in Tianjin Economic-Technological Development Area (TEDA) and Zambia? 

Xin: I came from Jiangxi Guanfeng. I had my dual BS in Math and Management from Nankai University in July 1991. Later in July 1994, I got my MS of Economics from the School of Economics at Nankai University. I graduated from Lally School of RPI in August 2003, and was awarded Master of Science in Management.

I started working at Tianjin Economic-Technological Development Area (TEDA) Administrative Commission from July 1994 till October 2007. TEDA Administrative Commission, being affiliated to Tianjin Government, in charges of investment attraction, economy development, and some administrative functions. My job then was studying the regional development strategy, the industries policies, and so on.  From April 2001, I worked as Assisting Research Officer for the Ministries.

In October 2007, I was hired by China Nonferrous Metals Corporation (CNMC), and was sent to Zambia immediately as the Manager of the Department of Planning and Investment Attraction for one of CNMC’s Development Co., Ltd., or the Development Co., Ltd..  I held that position until November 2010. CNMC is one of， among 100 plus, the large SOE’s (State-Owned-Enterprise) affiliated to the State-owned Assets Supervision and Administration Commission of the State Council. CNMC’s main business is exploration and exploitation of nonferrous metals, while the Development Co., Ltd. works on investment attraction and industry development for the Zambia-China Economic and Trade Cooperation Zone (ZCCZ, similar to those Economic-Technological Development Areas in China ) established by CNMC.

On December 3^rd 2010, I registered for Astor Investments Limited in Zambia. We have two types of businesses: engineering machinery renting and construction contracting. Accidental causes definitely played a role in my coming to Zambia. At the same time, it seems inevitable considering the megatrends of deepening of China-Africa cooperation. Both Predient HU Jingtao from China and President Mwanawasa from Zambia attended the opening ceremony of CNMC’s ZCCZ. In order to develop the ZCCZ, CNMC needed someone who has management experience in development areas, with good English skills. They were seeking reference from those Chinese development areas. I was recommended to CNMC by an officer from TEDA who happened to be Director of the China Association of Development Zones (CADZ). He was also chief editor of the Master Plan of the ZCCZ. And then, I came to Zambia.

Jackson: Could you talk a little about the Astor Investments Limited, and what plan do you have for it for the next several years? 

Xin: Astor Investments Limited was register in Zambia in December 2010. It is a private limited company owned by my wife and me. Right now Astor Investments Limited has engineering machinery rending and construction contracting. The business was operated from February 2011. Roughly 300 thousand USD has been invested. We have yearly contract amount of about one million USD. We’ll focus on these two businesses and won’t touch mining industry in the near future.

Jackson: What are the opportunities out there in Zambia, other than mining? What does Zambia need the most? What policy do foreign companies receive? Any change after Sata took presidency? What are the Western countries, like the US, doing there to take these opportunities?

Xin: Zambia is one of the largest copper production and exportation, as well as the poorest countries, according to UN, in the world. It exists huge potential in almost all aspects of their economics. Recently, Zambia’s economic growth reached the 6%, among the tops in Africa.

Apart from the mining industry, Zambia is in urgent need of manufacturing and service industries.

National treatment is granted to both foreign and Zambian companies. Foreign companies can enter any industry, with few exceptions. Different industry has different preferential policies. Foreign companies are neither preferred nor discriminated.

Since inauguration in September 2011, Sata has been dedicated to fight corruption and to improve people’s living standard. Macroeconomic policies almost remain unchanged. Removing the road police checkpoints across the country was, according to my observation, a punch in the anti-corruption fight. This would increase cargo throughput and decrease logistics costs. In order to improve people’s life, Sata required major mining companies in Zambia – mainly foreign companies – to make larger contribution to Zambian fiscal income by imposing and increasing the Mineral Resource Rent Tax. Other measures include increasing the government’s ownership percentage in the big mining companies, and encouraging those big mining companies to list on Zambian stock exchange.

Western countries are mainly in Zambia for mining and agriculture industries. The big mining companies mainly come from Canada, Australia, and Swiss. The big agriculture companies are mainly controlled by England, South Africa. Interestingly, investment from the U.S. is very small. The only sizable U.S. company in Zambia, according to my knowledge, is the only cable manufacturer there, thanks to the privatization policies (The U.S. company bought up that cable manufacturer on the edge of bankruptcy). This is probably due to that U.S. is more risk-averse to the other Western countries.

Jackson: What are the challenges doing business there? Any culture shocks, security issues, lack of infrastructure, language problem, disease, corruption, or else?

Xin: I think the largest challenge comes from the Labor Policy. In order to protect its own labor market, Zambia has some restriction on hiring foreigners. Immigration Department has large discretionary power over work permit. This means they can decide whether or not to issue the permit and the number being issued. Some positions, like accountant, secretary, administrator, are very difficult to get work permit. Recently, the application fee for the work permit has been keeping increasing.

The Zambian Labor Policies provide relatively good protection to local workers. Labor contracts must been signed no matter for formal or contact employees. As for formal employees, employers have to provide allowance for housing, lunch, and traffic, as well as endowment and work injury insurance. For contract employees, there are formal procedures to follow, and the employers have to inform the Labor Department to keep a record.

Lots of Chinese companies are not familiar, or pretend to be, with the Labor Policies. Cases of violating the labor policies were exposed by media repeatedly, which contributed to the negative image of Chinese in Zambia.

As for the challenges you mentioned, here’s my comment:

(1)   Culture shocks: A little. The dominant value in Zambia is seizing the day rather than industrious and frugality.

(2)   Safety: A little. Zambia is one of the rare stable and harmony countries in Africa. Normally there is no safety concerns unless you make enemies, or show-off your wealth wittingly or unwittingly.

(3)   Infrastructure: Yes and no. The lack of infrastructure indeed increased logistics cost, but this phenomenon themselves mean great potential of Zambia’s economic development, especially to construction industry.

(4)   Language: A little. Lots of Chinese businessmen don’t have good English skills. This makes it difficult for them to communicate with employees and clients. However, it’s not difficult to find a proper English translator in Zambia.

(5)   Disease: Main diseases in Zambia include malaria, AIDS, cholera, dysentery, Tuberculosis, and typhoid. Normally, sanitation is good among Chinese communities. For most of the self-controlled Chinese, AIDS won’t find its way. This leaves only malaria, which can be prevented by hanging mosquito net and taking regular medicine.

(6)   Corruption: There exists a certain, but tolerable, degree of corruption among Zambian officers.

Jackson: Could you describe a typical workday and weekend? How often do you go back to China?

Xin: To me, the main activities in workdays are inspecting construction work site, buying construction materials, and coordinating. In weekends, I usually meet friends, read news on internet, chat with family and friends, and watch Chinese TV series or movies on TV or computer.

During my work in CNMC, I went back to China once a year and stayed there for no longer a month.

Now in Astor Investments Limited, I go back China for business or family reunion twice a year, and stay there for about a month.

Jackson: Who are the big Chinese players in Zambia? China Nonferrous Metal Mining probably is one of them. It had some issues with the workers recently. How are these Chinese firms viewed in Zambia? What are the relationships between those Chinese firms? Is there competition among these Chinese companies, or the cake is so big?

Xin: In the respect of investment scale, CNMC , with 9 branch companies and about 2 billion USD investment in Zambia, is the largest Chinese company there. CNMC has already covered the entire industry chain from exploration, exploitation, smelting, processing, construction, and trade.

At the end of 2011, several CNMC companies faced some large-scale strikes, which was finally settled after the interfering of Zambian government.

From the impression of lots of Zambian, Chinese companies are synonym of low wage, excessive work hour, and short in welfare. However, undeniably among Zambian people and government, Chinese companies have made important contribution to the employment and industry development for Zambia.

On the whole, the companies in Zambia cooperate more than compete with each other. Structurally, more than 80% of the Chinese companies in Zambia are private companies. These companies cover industries of mining, construction, agriculture, and service. However, competition remain fierce among industries like construction and catering.

Zambia has a population of only about 13 million, among which only 10% have consumption ability. That means the volumes for all the industries are limited. Hence, competition is inevitable among those crowded industries. Statistics show that 80% of the market shares in construction industry are occupied by Chinese companies. However, in each bidding, undercover activities and price war are normal and has no signs of ending.

Jackson: Talking about the strike incident, it seemed like Zambian government’s attitude was important. What forces are strong among Zambian? Government, religion, or else?

Xin: The Zambian government’s attitude was indeed very important in this strike incident. However, the Unions are the ones behind such strikes. Since the Privatization Policies in 1991, Zambian government is losing control over the economy and society to the Unions.

Zambia is a Christian country, but there exists clear borderline between politics and religion. It’s rare for religion to interfere with politics. Here’s a good example of the force of religion to people’s daily lives. In Zambia, most of the companies only operate from Monday to Saturday morning but close on Saturday afternoon and the entire Sunday, following some instruction from the Bible.

Jackson: Let’s say I want to start a business in Zambia, how should I start? What approvals do I need from China and Zambia? How to find partners and employees there? What resources can I use?

Xin: If you want to start a business in Zambia, you can first register a private limited company with Patents and Companies Registration Agency (PACRA) using your passport, and then open an account in the bank. After finishing the procedures like tax registration, you can start doing your business.

If you want to register a company under the name of a Chinese company, according to regulations from China, the Chinese company must obtain the Qualification Certificate for Foreign Economic Cooperation from related department. This certificate is the important proof of the management of foreign exchanges, labor export, and policy implementation. In order to legally operate foreign trade, the company must follow the procedures of Ministries of Commerce, Foreign Exchange, as well as the Custom.

Management of private limited companies is not stringent in Zambia. You can find partners or hire employees from any country. However, you must apply for work permit to Immigration Department in case you want to hire foreign employees.

China has some supportive policies for exporting companies. However these policies, with miscellaneous procedures, are hard to implement.

Jackson: The investment from China to Zambia soared in the recent decade. What’s the Chinese government’s role and attitude?

Xin: Indeed, during the recent decade, China’s investment in Zambia has increased substantially, thanks to the continuous increasing of copper demand among the international market, which triggered the development of other industries in Zambia. This brought Zambia more attentions from China.

Encouraging Chinese companies to invest in Zambia, the Chinese government has signed Agreement for Promotion and Protection and Agreement on Avoidance of Double Taxation with Zambia, as well as provided help to various aspects of Zambian economy and society, which played a key role in increasing Chinese investment in Zambia. Zambia is a mining country, the supportive policies of our country for the exploration and exploitation of overseas mineral resources, to some extent, lead many Chinese companies and investors dabbled in the mining industry in Zambia.

Jackson: I found some of the articles you wrote when you were at TEDA. Many were about exporting and its impact to Tianjin. Now your role is different? How do you compare these two jobs? Do you see the change of roles China is playing in the global playground?

Xin: The TEDA I used to work for was an important window of our country’s opening-up efforts. Out of the demand of my work, I published lots of papers regarding investment attraction and increasing exportation.  Time flies, now I have transformed from some researcher who studied investment attraction to a practitioner on investing in foreign countries. I believe such transform was out of the need of the economic development of our country. This experience has also enriched my life. I have to say that studying investment attraction broadened my horizon, which made me obey the Zambian laws spontaneously when operating my business in Zambia. This has saved me a lot of troubles. During the five years in Zambia, I became increasingly aware of the raising influence of China in Zambia in Africa, as well as the rest of the world. In Zambia, no matter government officials or civilians, China-lover or China-hater, none of them can survive without China’s products and service. As a Chinese, I feel very proud.