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