CHINESE IN ANGOLA: DOING BUSINESS AND SETTLING IN

UNCLAS SECTION 01 OF 02 LUANDA 000171 SIPDIS SENSITIVE SIPDIS FOR AF/S AND EAP/CM E.O. 12958: N/A TAGS: ETRD EINV PINR CH AO SUBJECT: CHINESE IN ANGOLA: DOING BUSINESS AND SETTLING IN REF: 06 LUANDA 1204 ¶1. (U) This is one in a series of cables on the Chinese business community in Angola. Previous cables have examined the Chinese line of credit. ¶2. (SBU) Summary: Chinese businesses, especially construction companies, are highly evident in Luanda. The Chinese are having an impact on the landscape of the city, and the cross cultural experience is having an impact on at least some of the Chinese. Chinese corporations, taking advantage of preferential contract awards under the Chinese line of credit, export their excess capacity to Angola, while higher earnings are the draw for most of the Chinese workers. While a few of the companies may eventually shape themselves into viable international concerns through their experience in Luanda, most still operate in a very provincial fashion. End Summary. Sticking (it) Out in Luanda -------------- ¶3. (SBU) Chinese workers and businessmen are a visible presence in Luanda, walking, riding, driving and working out of doors. Working in Angola is a chance to earn more money for Chinese workers. For example, a telecommunications worker earning USD 2300 per year in China works 10 months in Angola for an additional USD 7100 with a two-month break in China. Others will wait two years before going home. An independent Chinese entrepreneur, already in Angola for several years, confided to econoff that he would never have been able to earn several million dollars per year by staying home. ¶4. (SBU) Each Chinese company operates as a self-reliant group and its employees keep largely to themselves. Like many other expatriates in Angola, they look to their companies to provide certain services. Although workers build their own dormitories, one company imported a farm family to raise fresh vegetables in a two-hectare garden. Some companies also employ Chinese cooks. As a group, the Chinese in Angola are overwhelmingly, but not exclusively, male. The main interest is in acquiring a small fortune to take back to China, thus many office workers will watch DVD's at their computer on the weekend rather than go out on the town in Luanda, one of the most expensive cities in the world. ¶5. (SBU) Although the exact terms of Angola,s oil-backed bilateral line of credit from China have not been published, they reportedly include provisions requiring the Government of Angola to contract with Chinese firms for projects funded through the line of credit. For their part, the Chinese companies are required to hire at least 30 percent Angolan employees in their projects. Westward Bound -------------- ¶6. (SBU) Less well-known Chinese businesses such as the Guangxi Hydroelectric Power Company and the 20th Railway Construction Brigade have come to Angola. Angola offers a protected market for Chinese companies because of the credit line tie-ins. At the same time some of the Chinese companies are trying to improve their building and business techniques and prepare to compete head-to-head in the future with international construction firms now active in Angola and elsewhere. ¶7. (SBU) Near Viana, east of Luanda, the 20th Railroad Construction Brigade, a state-owned enterprise based in Shaanxi Province, is building the 467 kilometer rail line between Luanda and Malange. Roughly 75 percent of the company,s employees are Angolan, but none work in skilled or supervisory positions. In general, Chinese businesses have no interest in training Angolans for more responsibility. Further, most Chinese have limited Portuguese language skills, and very few Angolans speak Chinese. Quality of Workmanship and Excess Capacity -------------- ¶7. (SBU) Some Angolans have criticized Chinese contractors for shoddy workmanship. For example, the Panguila low-income housing project north of Luanda has come under fire. While cracked walls are a poor advertisement, the houses are painted, wired and have indoor plumbing. Many of the houses they are replacing had none. Criticism that the housing is isolated from jobs and stores is a greater problem, but one that resulted from a GRA decision and not blamable on the Chinese. Highly visible Chinese projects in central Luanda include the Ministry of Finance building completed in 2005, LUANDA 00000171 002 OF 002 renovation of the Luanda Provincial headquarters building, several schools and the railway line to Malange. To date there have not been many complaints about these works. ¶8. (SBU) Chinese firms in Angola also seek to use their excess capacity. The 20th Railway Construction Brigade,s manager, while trying to win the contract to build Luanda,s new international airport, also kept his deputies scouting for small projects, such as small apartment renovations ) completed over successive weekends. Cross-Cultural Misperceptions -------------- ¶9. (SBU) As with any mixture of cultures, stereotypes and misinformation cloud the perceptions of each group. Many Chinese see Angolans as lazy, and themselves as industrious for their willingness to work long hours and forgo weekends. Many also see Angolans as spendthrifts, while some note that they are generous. According to several Chinese drivers, they present an attractive target for Angolan policemen waving them to the side of the road to inspect documents but, in essence, requesting bribes. (Note: This is a common practice in Angola, though non-Angolans are especially likely to be pulled-over. End Note.) The more outgoing Chinese work actively to learn Portuguese and cultivate Angolan friends. Meanwhile Angolan rumors abound that there are hundreds of thousands of Chinese &invading8 Angola. Many Angolans also believe that the Chinese workers are former prisoners, released from jail in exchange for moving to Angola to work, although Mission's Chinese-speaking econoff has met no Chinese worker who fits that description. ¶10. (SBU) Comment: Embassy Luanda has noticed the demonstrable influx of Chinese over the past year, with many more presumably mid- and upper-level Chinese workers visible at local restaurants, at supermarkets or driving around the city. Lower level laborers tend to be seen working on road and other construction projects outside the city. Chinese businesses (restaurants, small shops) are also springing up to support the Chinese workers in Angola. While the majority of the Chinese are here for short term contracts to make their fortune and return to China, a few are putting down roots with long term intentions. Whether businesses will be able to turn into world class construction firms through their Angolan experience remains to be seen, but in the meantime, they will certainly return home with sizeable profits. EFIRD