Professor Mary Teagarden was interviewed on the China – Africa relations by the Euro magazine of the Czech Republic. The short version of the interview was published in the Euro magazine on August 26. Below is the full-length version of the interview.

Mary Teagarden, Professor of Global Strategy at Thunderbird School of Global Management, focuses in business dynamics in the Asian Pacific Rim, Mexico, Latin America, and emerging market economies, with an emphasis on China and India. She has helped many Chinese and Indian multinationals with their global expansion strategies. She serves as an advisor or director of four Chinese multinationals. Professor Teagarden teaches courses on Global Strategy and HR Management in the Executive MBA program offered by Thunderbird in partnership with CMC Graduate School of Business in the Czech Republic.

EURO: China is becoming an increasingly important partner of Africa. What reasons do you see behind this fact?
TEAGARDEN: The Chinese are pragmatic. China has deep pockets--lots of money to invest and Africa needs investment. Chinese manufacturers are ambitious--eager to build exports, scale, brand and global footprint and Africa has an emerging market and hunger for low-cost goods. The Chinese growth juggernaut depends on natural resources and there is not a sufficient supply within China--Africa is rich in natural resources. Two-thirds of China's 1.4 billion person population live in rural communities. The Chinese government worries about instability in rural regions. Low cost manufacturing creates jobs, and stability, in these regions--especially for agricultural products. China has a burning desire to move up the value chain and Africa presents opportunities as a market and as a supplier of the raw materials to enable China's value chain migration.

EURO: How important is the role of oil in this respect and the China’s effort to secure more sources of raw materials?
TEAGARDEN: China needs oil. China's unquenchable thirst for oil has driven CNOOC (Chinese National Offshore Oil Corporation, CIOG (China International Oil and Gas) and SINOPEC to sign deals despite very high levels of risk--insecurity and political uncertainty--in their quest to close deals to search for oil and gas. The Chinese government is willing to underwrite this risk. This thirst for oil is probably the most important driver of China's investment in Africa. China's willingness to provide aid and infrastructure investment in Africa is part of a long-term strategy to secure future relationships in this emerging region of the world--the final frontier.

EURO: Besides raw materials production, what are some other fields China is involved in Africa?
TEAGARDEN: China's well known giants--Haier, Legend, TCL, ZTE, Huawei--and scores of unknown manufacturers in pharmaceuticals, foodstuffs, textiles, plastics, consumer electronics, garments and shoes are experiencing success in marketing their relatively low-cost products--from handsets to refrigerators to laptops to televisions to medicines--throughout Africa. These Chinese exporters have been so successful that in countries like South Africa and Nigeria, China faces antidumping actions. African manufacturers cannot compete with the low cost of Chinese products. Despite criticism of "shoddy Chinese good" from local competitors, African consumers persist in buying Chinese.

EURO: According to you, what advantages and disadvantages does this alliance have for African countries?
TEAGARDEN: China's investment in Africa is a good news-bad news story. The good news is that China is willing to make investments, and assume risks that most of the rest of the world will not or cannot. Consumers in Africa have access to a wider array of goods, at lower prices than they did before China's involvement. Some African employees will be employed as CNOOC and CIOG explore, and extract oil and gas. Africans will enjoy improved infrastructure, which in turn can make Africa more attractive to foreign investment from other countries. The bad news is that Africa risks becoming overly dependent on one partner--one gigantic, extraordinarily powerful partner. As this happens, African countries risk losing independence and the benefits of being able to play one investor off against the other. Perhaps worse, hundreds of small African manufacturers will certainly be driven out of business by China's low-cost products. Unfortunately, most African countries are not in the position to resist China's overtures. China faces accusations of neo-colonialism and exploitation.

EURO: Do you have any statistical data showing how much China has invested in Africa? (either so far this year or in 2006)
TEAGARDEN: In 1999 the bilateral China-Africa trade volume was US$2 billion. By 2006 this trade had grown to over US$55 billion. The Chinese Commerce Ministry estimates that China-Africa trade will surpass US$100 billion by 2010. The largest proportion of foreign direct investment into Africa is into the oil sector. For the past 15 years, over 70 percent of FDI has been into five of Africa's oil exporting nations. While more than half of FDI into all African countries goes into natural resource exploitation, other sectors are beginning to grow including telecommunications, food processing, construction, tourism, light manufacturing and transportation equipment sectors. China is in the vanguard of this investment.

EURO: Can we expect a change in the China’s attitude towards the problematic regimes of Africa, such as Sudan, in the near future? Should international organizations or world powers put pressure on China to stop dealing with the Sudanese regime?
TEAGARDEN: Chinese foreign minister Bo Xilai defends his country's involvement in Africa: 'All of those things we have done towards Africa are out of a sincere feeling from the bottom of our heart, or to put it another way, from the profound friendship and wonderful feelings we have cherished with Africa over the past decades." In March, 2007 Chinese president Hu Jintao commented, "Frankly, sovereign African countries are fed up of being told that they cannot govern themselves unless an outside power keeps them in check by using aid as a carrot and stick device. China's public pledge of non-involvement and "win-win" cooperation with problematic regimes will persist--they need the resources and markets. While China may be willing to appear even-handed publicly, we can expect behind the scenes arm twisting to align their partners with Chinese interests. On a cultural level, this tactic allows face-saving for all and culturally face-saving is very important to the Chinese. On a more pragmatic level, this tactic allows more degrees-of freedom for resolution of thorny issues.

International organizations and world powers have a vested interest in stability in Sudan. To the degree that the Chinese supply arms to the Sudanese, these external organizations should expert pressure on the Chinese to stop arms trade. The Chinese argue that if they do not supply arms, some other country will. On the other hand, regarding oil exploration there are may rogue regimes that have oil. If these institutions exert pressure on China to cease oil investment we begin down a slippery slope. Is Venezuela or Iran next?