Between 2014 and 2017, I researched three Chinese companies in Ethiopia. I observed management activities and interviewed 88 Chinese and local employees, including managers at different administrative ranks, engineers, technicians, union representatives and workers. For confidentiality reasons, I assigned them pseudonyms that reflected each company’s focus: Zhonghua Construction, Huaxia Telecom and Yuqi Autos.
This state-owned company worked with subcontractors to manage workers
Zhonghua, a leading Chinese state-owned construction company, manages its local projects through subcontractors. For example, to build a sports facility in Ethiopia, the company worked with at least five private Chinese subcontractors. The contractor and subcontractors recruit and manage their own Chinese and local employees. In total, the sports facility project had an estimated workforce of 800, of which about 70 percent were Ethiopians.
During project execution, I found that the contractor and subcontractors used different approaches to manage employees. The contractor, as a flagship Chinese state-owned enterprise, was very conscious of building a good local image as a responsible employer. Subcontractors, in contrast, are more sensitive to operational costs and work progress given their tight schedule and thin profit margins. As a result, employees of the contractor enjoyed higher pay, more job security, more room to negotiate labor contracts, less stringent rules and better relations with the Chinese managers than those working for the subcontractors. The subcontractors, in an effort to squeeze more profits, were prone to minimize costs by enforcing overtime work and issuing salary cuts if there were project delays.
This telecom company set localization goals
Huaxia, a high-profile telecommunications company, follows a business model of “state-owned and private-operating.” Despite the state ownership, it faced fierce competition from a private Chinese telecommunications tycoon over local projects and human resources. To boost its local competitiveness, Huaxia launched a project in 2016 to replace Chinese employees with locals, with a goal of reaching a 65 percent local workforce, compared to a starting point of 45 percent. Other strategies aimed to increase local employees’ sense of inclusion — the company offered individual career mentoring, additional training and opportunities to learn Chinese, along with social events and casual gatherings.
The various initiatives to promote employee integration appeared promising: Local employees I interviewed acknowledged that their work experiences had improved. But local employees still faced obstacles to reaching high-level decision-making echelons within the company, as it maintained a stringent evaluation and promotion procedure. Language is another barrier: Frequent communications with headquarters and officials in Chinese banks require Chinese proficiency. Therefore, the company relied on expatriate Chinese for essential marketing, financial and managerial activities. Local employees primarily took up positions related to customer interface or external affairs to handle the company’s relationship with local governments, clients and subcontractors.
This private auto assembler had a 95 percent local workforce
The third company, Yuqi, is a private investor engaging in automobile assembly, sales and services. This company received little support from its headquarters in terms of business planning, staffing and logistics. Limited resources compelled Chinese managers to be self-dependent and entrepreneurially minded about daily operations — this meant that the company largely entrusted local employees to carry out daily managerial duties.
Unlike the other two companies I studied, Yuqi employed only eight expatriates in Ethiopia, calling them “supervisors”; 95 percent of its workforce is Ethiopian, with locals filling all managerial and technical positions. The company also adopted a highly streamlined organizational structure and a casual working environment. Chinese supervisors shared office space with local managers and socialized with them on a daily basis. Nonetheless, the eight Chinese supervisors still retained the ultimate decision-making power, including on critical matters such as salary, promotion and dismissal.
These three companies illustrate the various ways that Chinese companies operate businesses and manage employees in Africa. A wide range of factors influences their management strategies, including established industrial practices, local market conditions and the resources they receive from the headquarters. In fact, the same company might apply different managerial approaches and strategies to different groups of employees, or adjust management practices over time.
To be sure, my research does not cover all of the different Chinese employment practices in Ethiopia — or in Africa. The three companies discussed here may not be representative of other Chinese investors in each of these sectors. Moreover, as these companies continue to grow and develop in Africa, it is likely that they will adjust their management strategies in response to new circumstances both within the company and in the host African country.
Nonetheless, the employment practices of these three companies highlight the fact that Chinese businesses are contributing to local job creation across different sectors, although with large variations in terms of the types of jobs, specific contract terms and the level of decision-making power of local employees. In addition, the cases also reveal that Chinese companies can be flexible and adaptive in their employment strategies — which may give host African governments some room to push forward employee-centered changes in the workplace.
The broad diversity of Chinese employment practices in Ethiopia is a further reminder that sweeping claims about China being either a benevolent friend or a neo-colonizer in Africa may be outdated. Instead, scholars, policymakers and the general public can draw much information from a closer look at the variability and complexity of Chinese activities and their local impacts.
Editor’s note: Be sure to check out our new series exploring Chinese investment in Africa, along with activities related to debt relief, infrastructure and other critical issues across the continent. See below for the contributions from the Johns Hopkins School of Advanced International Studies China Africa Research Initiative (SAIS-CARI) workshop; new articles will be added as they are published.