VZCZCXRO1881
RR RUEHBZ RUEHDU RUEHGI RUEHJO RUEHMA RUEHMR RUEHPA RUEHRN RUEHTRO
DE RUEHGH #0640/01 2730046
ZNR UUUUU ZZH
R 300046Z SEP 07
FM AMCONSUL SHANGHAI
TO RUEHC/SECSTATE WASHDC 6311
INFO RUEHBJ/AMEMBASSY BEIJING 1445
RUEHCN/AMCONSUL CHENGDU 0906
RUEHSH/AMCONSUL SHENYANG 0907
RUEHGZ/AMCONSUL GUANGZHOU 0885
RUEHHK/AMCONSUL HONG KONG 1032
RUEHIN/AIT TAIPEI 0726
RUEHZO/AFRICAN UNION COLLECTIVE
RUEHGH/AMCONSUL SHANGHAI 6793

UNCLAS SECTION 01 OF 02 SHANGHAI 000640 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP/CM AND AF 
 
E.O. 12958: N/A 
TAGS: PREL ECON CH XA
SUBJECT: VISIT OF AFRICA BUREAU SENIOR ADVISOR, AMBASSADOR RUTH A. 
DAVIS, TO SHANGHAI, CHINA 
 
 
SHANGHAI 00000640  001.2 OF 002 
 
 
¶1.  (SBU) Summary:  In Shanghai from September 8-14, Ambassador 
Ruth A. Davis participated in the Vital Voices symposium for 
Chinese and African women business leaders, met with Chinese 
Africa experts, visited two Chinese companies investing in 
Africa and delivered a lecture on U.S.-African policy at East 
China Normal University.  Both Chinese academics and businessmen 
shared the challenges - and objectives - of Chinese economic 
involvement in Africa.   End summary. 
 
Vital Voices Symposium 
---------------------- 
 
¶2.  (U) In support of the Africa Bureau's China in Africa 
Dialogue, Senior Advisor Ambassador Ruth A. Davis and AF  Public 
Diplomacy and Public Affairs Director Claudia Anyaso represented 
the Bureau at the symposium "Women as an Economic Force:  A 
Leadership Training and Business Exchange for African and 
Chinese Women", Sept 9-12, 2007.    Organized by Vital Voices, a 
U.S. NGO, the symposium brought together more than 35 Chinese 
and African businesswomen to discuss economic development, 
encourage trade, and foster accountability and social 
responsibility.  The symposium was an outgrowth of the Vital 
Voices Leadership Summit held in Cape Town, South Africa in 
January 2007 that was attended by African women from more than 
30 countries, and women from another 12 countries, including 
China. 
 
¶3. (U) Ambassador Davis provided an overview of symposium goals, 
which included the value of positive partnerships and fair 
business practices as well as the importance of leadership 
training to enhance the entrepreneurial success of the African 
and Chinese symposium participants.  She then moderated a panel 
discussion on the theme "China and Africa: Business Trends, 
Challenges, and Opportunities" that featured nine of the Chinese 
and African participants.  One of the outcomes of the symposium 
was the formation of a joint African and Chinese businesswomen's 
forum to continue communication, dialogue, and mentoring. 
 
BHP Billiton Economist on China-Africa Relations 
--------------------------------------------- --- 
 
¶4.  (SBU) On September 13, Ambassador Davis and Ms. Anyaso met 
with BHP Billiton Economist and former FSO Robin Bordie to 
discuss the impact of Chinese investment in Africa.  Billiton, a 
large mineral extraction firm headquartered in Melbourne, 
Australia, has mining projects in Africa.  Its economists, 
including Bordie, are doing extensive research on Chinese 
investments in Africa and how Africans perceive them.  According 
to Bordie, poor quality of Chinese products and poor corporate 
management is causing a backlash from African publics. 
Reluctance of Chinese companies to hire and train local 
employees and importing Chinese construction teams and managers 
have also created negative perceptions. 
 
¶5.  (SBU) Bordie's research indicates that large Chinese 
State-Owned Enterprises (SOEs) are more successful and are 
perceived more favorably in Africa than small and medium 
Enterprises.  Among SOEs there appears to be an emerging 
consciousness that Chinese companies need to act more 
responsibly.  She noted that the real problem in China-African 
relations is that cheap Chinese products are undermining small 
African entrepreneurs.  African textile makers find it hard to 
compete with Chinese manufacturers who copy traditional African 
textiles and sell them at cut-rate prices.  One possible area of 
African and Chinese cooperation is biotechnology, as China is 
interested but has been unable to grow genetically modified food 
due to the small acreage of Chinese farms.  Joint ventures 
between Chinese and African farmers may be a mutually beneficial 
answer. 
 
Chinese Academics: Economic Relationship with Africa Becoming 
More Diverse 
--------------------------------------------- ------- 
 
¶6.  (SBU) On September 13, Shanghai Consul General Kenneth 
Jarrett hosted a luncheon for Ambassador Davis with Shanghai 
academics interested in Africa.  Dr. Ni Jianping, Vice 
President, Shanghai Institute of American Studies, said China 
must find a way to coordinate its national interests with the 
interests of SOEs and private firms, to include modifying its 
policy of non-intervention.  China also must bridge a "cultural 
gap," to include the greater focus African nations accord human 
rights, and more effectively convey its culture to the African 
 
SHANGHAI 00000640  002.2 OF 002 
 
 
people. 
 
¶7.  (SBU) Dr. Mu Tao, Vice Dean and Africa Specialist, History 
Department, East China Normal University, said it is a 
misperception that China is only interested in Africa for its 
resources and that in many African countries, China is trying to 
change and diversify the economic relationship to achieve a 
"win-win" outcome.  He referred to Tanzania where China is 
helping local textile makers improve their businesses to compete 
with Chinese and other foreign firms.  Mu, an advisor to the 
2010 Shanghai World Expo where many African countries will have 
exhibitions, said that Expo organizers are trying to assist 
African participants in identifying their best products and 
marketing these products at the Expo.  On the national level, he 
said that the Chinese Government recognizes the importance of 
corporate social responsibility and is intervening accordingly, 
to include requiring Chinese private enterprises to obtain 
export licenses before they can operate in Africa. 
 
Chinese Companies: Different Approaches 
--------------------------------------- 
 
¶8.  (SBU) Ambassador Davis and Ms. Anyaso also visited two 
Shanghai companies investing in Africa.  The first company, 
Shanghai Electric, is one of the largest suppliers of power 
generation equipment in China and has just begun to enter the 
African market.  According to Shanghai Electric Assistant to the 
President Andrew C.K. Li, the company signed a contract with 
Tanzania to provide the country with thermal power generation 
equipment in January 2007.  Li finds that the biggest challenge 
of doing business in Africa is the lack of infrastructure and 
lack of equipment and parts in the local market.  Li said 
Chinese are employed rather than local workers because the 
company provides equipment assembled in China.  He said it saves 
time and is easier to have Shanghai staff handle service 
problems. 
 
¶9.  (SBU) Ambassador Davis and Anyaso also visited ZTE, a 
telecommunications company that sells mobile phones, wireless 
equipments and terminals.  ZTE has much more experience in 
Africa than Shanghai Electric and is taking a more long-term 
approach to Africa.  Two-thirds of ZTE's revenue comes from 
overseas sales, the bulk of those being in Africa.  ZTE, in 
partnership with Siemens, recently signed a contract with 
Vodaphone to sell two million mobile phones to Kenya, South 
Africa, Tanzania and the Congo. 
 
¶10.  (SBU) Vice General Manager Zhao Yizhe said ZTE has a strong 
sense of social responsibility and has adopted a "localization" 
strategy.  It has 20 local offices in Africa and more than 50 
percent of its employees in the offices are from the local 
community.  It sends engineers to provide training to local 
staff and, at times, also pays for African staff to travel to 
ZTE's training center in Shenzhen in southern China.  In 
addition to training local employees, ZTE also outsources its 
projects to African companies and tries to pass on its 
technology to these companies. 
 
Lecture at East China Normal University 
--------------------------------------- 
 
¶11.  (U) On September 14, Ambassador Davis gave a lecture on 
U.S.-Africa relations to approximately 60-70 graduate students 
at East China Normal University.  She stressed that U.S. goals 
for Africa dovetail with African nations' own interests and 
include freedom, rule of law, and security.  She noted that the 
United States is working successfully with African nations to 
further economic development and end conflicts, and that 
together the U.S. and China can contribute to the continent's 
continued success.  Ambassador Davis described the official 
talks that AF Assistant Secretary Frazer has had with her 
Chinese counterparts, in which they discussed areas of potential 
cooperation such as agriculture, health, and Darfur. Ambassador 
Davis noted that there is a common perception in the United 
States that China is only interested in Africa in order to 
extract resources and has failed to encourage transparency and 
the rule of law.  High student interest kept Ambassador Davis 
fielding questions for almost an hour. 
JARRETT