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Should investment in Africa consider sustainability?

August 2015 – A comparison between South African and Chinese business experiences. This exploratory working paper considers how foreign investment by Chinese companies could be used to promote strategic leadership around sustainability in South Africa.

Download the working paper.Should investment in Africa

Author

Han Cheng

Publication date

August 2015

Abstract

As the world’s third largest foreign investor, China is increasingly shaping the global market through its private sector. The environmental and social footprint of international Chinese businesses has spread along with their sectoral and geographical expansion. This footprint is felt through the direct operations of these businesses, as well as through their global supply chains and cross-border trade. Over the past few years, instances of poor social or environmental management linked to Chinese foreign investment projects have caused concern both in the international community and in China itself. 

Chinese executives are relatively inexperienced in running companies of a multinational nature. As a result, they often have little familiarity with sustainability-related business risks in foreign markets. It therefore makes sense for Chinese businesses to collaborate with more experienced international and local actors to manage such risks. Success here will enable China’s foreign investors to demonstrate that they are delivering positive social impacts. This, in turn, will help bolster their strength and reputation in the global market.

This research paper sets out to provide a broad investigation into the specific local context in South Africa (as seen primarily through the eyes of South African businesses) and to consider how this might drive Chinese businesses to implement sustainability practices.

The paper concludes that Chinese companies need to consider sustainability issues through a widened lens, and adopt a more holistic and strategic approach to sustainability management. This in turn will help to manage unconventional risks in a complex environment and approach sustainability as a new lens through which to explore opportunities.

This project was supported by the University of Cambridge Institute for Sustainability Leadership (CISL). It draws heavily on stakeholder consultations in South Africa by CISL’s Visiting Researcher, Han Cheng, with supervision from its Director, Sustainable Economy, Dr Jake Reynolds, and the former Director of CISL’s South African office, Peter Willis, and Professor Richard Calland.

Citation

Cheng, H. (2015), 'Should investment in Africa consider sustainability?', University of Cambridge Institute for Sustainability Leadership (CISL), Working Paper 01/2015

About the author

Han Cheng 100x100Han Cheng’s interest lies in international development, environmental sustainability, and public policy. His work with us in South Africa and Cambridge focuses on governance and private sector partnerships for development, as well as our China engagement.

Han works as an independent consultant with environmental groups, academics and public bodies in Asia and Africa. He has been a visiting scholar at Yale University’s MacMillan Center for International and Area Studies, and The Energy and Resources Institute in India. Han was the Global Governance Futures Fellow to the Global Public Policy Institute in Berlin, Tsinghua University in Beijing, and the Brookings Institution in Washington DC. Han graduated from Renmin University of China.

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About our working papers

Working papers are circulated for discussion purposes only. Their contents should be considered preliminary and are not to be quoted without the authors' permission. All views expressed are those of the author.

Han Cheng, Visiting Researcher

Jake Reynolds, Director, Sustainable Economy

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