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Cablegate: Chinese in Angola: Doing Business and Settling In

VZCZCXRO4778
RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHLU #0171/01 0531501
ZNR UUUUU ZZH
R 221501Z FEB 07
FM AMEMBASSY LUANDA
TO RUEHC/SECSTATE WASHDC 3733
INFO RUCNSAD/SOUTHERN AFRICAN DEVELOPMENT COMMUNITY
RUEHBJ/AMEMBASSY BEIJING 0093

UNCLAS SECTION 01 OF 02 LUANDA 000171

SIPDIS

SENSITIVE
SIPDIS

FOR AF/S AND EAP/CM

E.O. 12958: N/A
TAGS: ETRD EINV PINR CH AO
SUBJECT: CHINESE IN ANGOLA: DOING BUSINESS AND SETTLING IN

REF: 06 LUANDA 1204

1. (U) This is one in a series of cables on the Chinese
business community in Angola. Previous cables have examined
the Chinese line of credit.

2. (SBU) Summary: Chinese businesses, especially
construction companies, are highly evident in Luanda. The
Chinese are having an impact on the landscape of the city,
and the cross cultural experience is having an impact on at
least some of the Chinese. Chinese corporations, taking
advantage of preferential contract awards under the Chinese
line of credit, export their excess capacity to Angola, while
higher earnings are the draw for most of the Chinese workers.
While a few of the companies may eventually shape themselves
into viable international concerns through their experience
in Luanda, most still operate in a very provincial fashion.
End Summary.

Sticking (it) Out in Luanda
---------------------------
3. (SBU) Chinese workers and businessmen are a visible
presence in Luanda, walking, riding, driving and working out
of doors. Working in Angola is a chance to earn more money
for Chinese workers. For example, a telecommunications
worker earning USD 2300 per year in China works 10 months in
Angola for an additional USD 7100 with a two-month break in
China. Others will wait two years before going home. An
independent Chinese entrepreneur, already in Angola for
several years, confided to econoff that he would never have
been able to earn several million dollars per year by staying
home.

4. (SBU) Each Chinese company operates as a self-reliant
group and its employees keep largely to themselves. Like
many other expatriates in Angola, they look to their
companies to provide certain services. Although workers
build their own dormitories, one company imported a farm
family to raise fresh vegetables in a two-hectare garden.
Some companies also employ Chinese cooks. As a group, the
Chinese in Angola are overwhelmingly, but not exclusively,
male. The main interest is in acquiring a small fortune to
take back to China, thus many office workers will watch DVD's
at their computer on the weekend rather than go out on the
town in Luanda, one of the most expensive cities in the
world.

5. (SBU) Although the exact terms of Angola,s oil-backed
bilateral line of credit from China have not been published,
they reportedly include provisions requiring the Government
of Angola to contract with Chinese firms for projects funded
through the line of credit. For their part, the Chinese
companies are required to hire at least 30 percent Angolan
employees in their projects.

Westward Bound
--------------
6. (SBU) Less well-known Chinese businesses such as the
Guangxi Hydroelectric Power Company and the 20th Railway
Construction Brigade have come to Angola. Angola offers a
protected market for Chinese companies because of the credit
line tie-ins. At the same time some of the Chinese companies
are trying to improve their building and business techniques
and prepare to compete head-to-head in the future with
international construction firms now active in Angola and
elsewhere.

7. (SBU) Near Viana, east of Luanda, the 20th Railroad
Construction Brigade, a state-owned enterprise based in
Shaanxi Province, is building the 467 kilometer rail line
between Luanda and Malange. Roughly 75 percent of the
company,s employees are Angolan, but none work in skilled or
supervisory positions. In general, Chinese businesses have
no interest in training Angolans for more responsibility.
Further, most Chinese have limited Portuguese language
skills, and very few Angolans speak Chinese.

Quality of Workmanship and Excess Capacity
------------------------------------------
7. (SBU) Some Angolans have criticized Chinese contractors
for shoddy workmanship. For example, the Panguila low-income
housing project north of Luanda has come under fire. While
cracked walls are a poor advertisement, the houses are
painted, wired and have indoor plumbing. Many of the houses
they are replacing had none. Criticism that the housing is
isolated from jobs and stores is a greater problem, but one
that resulted from a GRA decision and not blamable on the
Chinese. Highly visible Chinese projects in central Luanda
include the Ministry of Finance building completed in 2005,

LUANDA 00000171 002 OF 002


renovation of the Luanda Provincial headquarters building,
several schools and the railway line to Malange. To date
there have not been many complaints about these works.

8. (SBU) Chinese firms in Angola also seek to use their
excess capacity. The 20th Railway Construction Brigade,s
manager, while trying to win the contract to build Luanda,s
new international airport, also kept his deputies scouting
for small projects, such as small apartment renovations )
completed over successive weekends.

Cross-Cultural Misperceptions
-----------------------------
9. (SBU) As with any mixture of cultures, stereotypes and
misinformation cloud the perceptions of each group. Many
Chinese see Angolans as lazy, and themselves as industrious
for their willingness to work long hours and forgo weekends.
Many also see Angolans as spendthrifts, while some note that
they are generous. According to several Chinese drivers,
they present an attractive target for Angolan policemen
waving them to the side of the road to inspect documents but,
in essence, requesting bribes. (Note: This is a common
practice in Angola, though non-Angolans are especially likely
to be pulled-over. End Note.) The more outgoing Chinese work
actively to learn Portuguese and cultivate Angolan friends.
Meanwhile Angolan rumors abound that there are hundreds of
thousands of Chinese &invading8 Angola. Many Angolans also
believe that the Chinese workers are former prisoners,
released from jail in exchange for moving to Angola to work,
although Mission's Chinese-speaking econoff has met no
Chinese worker who fits that description.

10. (SBU) Comment: Embassy Luanda has noticed the
demonstrable influx of Chinese over the past year, with many
more presumably mid- and upper-level Chinese workers visible
at local restaurants, at supermarkets or driving around the
city. Lower level laborers tend to be seen working on road
and other construction projects outside the city. Chinese
businesses (restaurants, small shops) are also springing up
to support the Chinese workers in Angola. While the majority
of the Chinese are here for short term contracts to make
their fortune and return to China, a few are putting down
roots with long term intentions. Whether businesses will be
able to turn into world class construction firms through
their Angolan experience remains to be seen, but in the
meantime, they will certainly return home with sizeable
profits.
EFIRD

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