The Rise and Adaptation of Chinese Construction Firms in Africa
Over the past 25 years, Chinese construction companies have played a significant role in developing infrastructure across Africa. For much of this time, they benefited from substantial financial support from Chinese banks. Between 2000 and 2019, these funders committed nearly $50 billion to transport projects in Africa. Most of this funding came from Chinese development finance institutions.
However, around six years ago, a shift began as Chinese lenders started to reduce their support. Since 2019, the amount of funding committed has dropped significantly to just $6 billion. Despite this decline, Chinese companies continue to thrive on the continent, maintaining their position as market leaders in several African countries, including Ethiopia, Ghana, and Kenya.
To understand how these companies continue to expand despite reduced state funding, researchers conducted extensive studies into the factors contributing to their success. Their findings reveal key strategies that have allowed Chinese firms to remain competitive in African markets.
Key Drivers of Success
The first factor is the strong ties Chinese companies maintain with the Chinese state. These relationships have historically been crucial for entering new markets and establishing a presence. During the boom of Chinese-funded infrastructure projects, these ties provided a springboard for expansion. Even today, they are essential for projects aligned with African countries’ development agendas.
Second, Chinese companies build trust-based relationships with other companies, governments, and international organizations. This helps them secure projects across different regions and borders. By fostering these connections, they can navigate complex regulatory environments and gain access to opportunities that might otherwise be inaccessible.
Third, these companies rely on everyday interactions with local politicians, officials, business people, and intermediaries. These relationships help them understand local needs and expectations, allowing them to tailor their approaches effectively.
The ability to shift between these strategies—sometimes relying on the Chinese state, sometimes on multinationals, and sometimes on local elites—has been critical to their success. While state support was important for market entry, it did not guarantee long-term survival or growth. Instead, it is the flexibility of their expansion strategies that has enabled continued success.
Research and Fieldwork Insights
To gather data, researchers conducted fieldwork in China, Kenya, and Ghana between 2018 and 2022. They analyzed written sources, interviewed company staff, and spoke with government officials and other stakeholders. Additionally, they spent four months observing construction sites in Kenya and Ghana, gaining firsthand insights into operations on the ground.
One of the most notable examples is the China Road and Bridge Corporation (CRBC), a subsidiary of the China Communication Construction Company. CRBC established its local headquarters in Kenya in 1984, initially working as a subcontractor for other Asian companies. Over time, it became a lead contractor for major projects like the Nairobi-Mombasa Standard Gauge Railway, supported by state-backed loans.
Similarly, the China Harbour Engineering Company (CHEC) entered the Ghanaian market through a Chinese-financed agreement in the 2010s. The loan provided a foothold in the market and allowed the company to build long-term relationships. When projects stalled, CHEC used its regional networks to find alternative opportunities in West Africa.
Building Networks Beyond the State
Chinese firms also cultivate trust-based networks that extend beyond the Chinese state. These networks include other multinationals, both Chinese and non-Chinese, regional organizations, international financiers, and African state actors.
In Ghana, CHEC leveraged its connections with international partners to stay active during periods of project stagnation. It secured port projects in West Africa by partnering with a consortium involving Western multinationals. These projects helped anchor the company in the Ghanaian port sector and opened doors to contracts funded by non-Chinese actors.
In Kenya, CRBC expanded beyond Chinese-funded projects by winning international tenders. Its ability to redeploy equipment and staff from nearby projects lowered costs and made its bids more attractive. For example, machinery used for the Nairobi-Mombasa railway was also utilized in the Kenyan government-funded Lamu port project.
Embedding in Local Environments
Chinese companies also embed themselves in local political and business environments. They develop individual relationships with key figures, which allows them to anticipate infrastructure needs and present ready-made projects.
In Kenya, CRBC’s directors worked closely with politicians and ministries to identify infrastructure gaps. In some cases, the company conducted feasibility studies before tenders were issued, enabling it to submit well-prepared proposals.
In Ghana, CHEC relied on local intermediaries to navigate the complexities of infrastructure development. Young professionals with ties to both Chinese managers and Ghanaian elites played a crucial role. The company also hired foreign consultants to enhance its reputation with local officials.
Implications for African Governments
The shift in Chinese companies’ strategies means that they are no longer solely driven by Beijing’s priorities. Instead, they participate in public tenders, invest in public-private partnerships, and partner with other multinationals. This requires African governments to adopt new negotiation strategies, focusing more on regulation, standards, and alignment with industrial policies.
The next phase of Africa-China infrastructural engagement will likely be shaped by operational contexts, various alliances, and a competitive global market rather than large-scale loan packages.
