CLOTHESPINS TO CEMENT - PORTRAIT OF A CHINESE

UNCLAS SECTION 01 OF 02 LUANDA 000287

SIPDIS

SENSITIVE
SIPDIS

FOR AF/S AND EAP/CM

E.O. 12958: N/A
TAGS: ETRD EINV AO CH
SUBJECT: CLOTHESPINS TO CEMENT - PORTRAIT OF A CHINESE
ENTREPRENEUR IN ANGOLA

REF: A. LUANDA 171


B. 2006 LUANDA 1204 (NOTAL)

LUANDA 00000287 001.2 OF 002



1. (U) This is one in a series of cables on the Chinese
business community in Angola. Previous cables have looked at
the social impact of Chinese expatriates in Luanda and the
Chinese line of credit.

Angola ) Land of Golden Opportunity
--------------

2. (SBU) Working in Angola provides most expatriate Chinese a
chance to triple or quadruple their earnings through salary
differentials, and employer-provided housing, meals and
transportation (Ref A). A few, however, have found the
opportunity to become truly rich in Angola. Like a previous
XIX century generation, shrewd businessmen lured by Angola,s
phenomenal economic growth are finding their fortunes outside
of China. Zhang Feijun, an independent Chinese businessman
in Luanda, is one such individual.

In Angola Ahead of the Chinese Wave
--------------

3. (SBU) Zhang came to Angola from Anhui Province ten years
ago, following the example of other Chinese traders who
trailed Chinese exports to their end markets, and before the
current wave of construction companies participating in
Angolan infrastructure construction. Zhang began his
operations as a trader, annually selling tons of items like
clothespins, coat hangers, padlocks, and wrenches. His
business competes with Angolans and other foreigners who
import consumer goods from China into Angola. Zhang sells
his goods wholesale to local vendors, including the legions
of &zangeiros8 or street-hawkers, who peddle their wares on
Angola,s streets. He also provides short-term credit to the
vendors as they come to his warehouse to renew their stock,
which he sees as an essential service for trading in Angola.


4. (SBU) Since the serious Chinese invasion began after China
extended its first line of credit in 2005, Zhang has expanded
his activity, partnering with an old friend in China to
import Chinese-made cement: his friend provides the
financing, Zhang the local business connections. They import
two shiploads of concrete each month, selling to Chinese
construction companies as well as Angolans and other foreign
builders. Dependably supplying a homogeneous product in an
unsettled market provides substantial profits - over USD 2
million per year for Zhang,s company.


5. (SBU) Zhang,s income from his wholesale and retail
businesses in Angola have made him wealthy by U.S. standards
and even more so by Chinese standards. Besides his home in
China, he has bought two apartments in Luanda,s blistering
real estate market to house his family. (Note: An average
3-bedroom apartment retails for several hundred thousand USD.
End note.) Unlike most Chinese, who travel alone to work
overseas, Zhang has brought his wife and daughter to live
with him. He employs a staff of 15 Chinese and some 80
Angolans. Zhang,s business has put him into contact with a
wider range of Angolans than most Chinese businessmen and his
serviceable Portuguese has helped him reach out to Angolans.


Navigating the Angola Business Environment
--------------

6. (SBU) However, even a knowledgeable foreigner meets new
challenges. One Angolan customer, who buys USD 4,000 worth
of cement per week, complained that Zhang,s Angolan delivery
drivers were demanding bribes. Zhang was both surprised and
at a loss to find a way to prohibit his drivers from
extorting his customers. Until he can solve the basic
problem, he is mollifying his customer. (Note: This type of
bribery is almost institutionalized in the Angolan business
environment. End note.) He treats customer complaints
seriously and works diligently to keep his customers
satisfied. Zhang also knows that his business remains
vulnerable to the displeasure of the government or powerful
individuals. He has also traveled outside of Luanda looking
for business opportunities along the coast in Benguela and in
the interior in Huambo for both his trading company and his
cement partnership.

Comment
--------------

7. (SBU) Today,s high profits may shrink, but Zhang is in
the process of establishing himself as a reliable Angolan
businessman. He maintains close ties with China, returning
several times a year. He attended the November 2006 Forum on

LUANDA 00000287 002.2 OF 002


China and Africa (FOCAC) business forum, which ran parallel
to the forum for national leaders. Angola has also changed
his perspectives and he is more open to understanding
cross-cultural differences. While larger Chinese
corporations have garnered headlines for their overseas
investments, Zhang exemplifies a resurgence of an old
phenomenon, the successful expatriate Chinese businessman.
EFIRD