Investing in Africa‘s Future

　　A mini city that could rival the world’s majorfinancial centers is set to rise on Johannesburg’s doorstepin the next 10 to 15 years. This follows chemicaland explosives giant AECI’s sale of 1，600 hectares ofits Modderfontein surplus property assets in Gauteng，South Africa， to Chinese property developer Zendai inearly November 2013.

　　Zendai， a company listed on the Hong Kong StockExchange， plans to build a massive infrastructureproject on the land purchased for $100 million， transformingit into a financial center on par with Manhattanin New York， Lujiazui Finance and Trade Zone in Shanghaiand Hong Kong’s Central Financial District.

　　According to the plan， Zendai will develop sevenkey sections in the city - a finance and trade center，an industrial node， a conference and exhibitioncenter， an African culture theme park， an educationand training center， a sport and recreation center anda residential area.

　　Its development will include houses and apartmentsfor about 33，000 families. Approximately100，000 people could eventually live in the area while100，000 could also work there. About 70 percent ofthe development will be targeted at the black middleclass.

　　The company also has plans to develop 10 hotelsand 10 shopping centers in the area and discussionsare already underway to open a new Gautrain rail stationin the vicinity.

　　To bring more cash flow to the development，the company will first launch construction of hoteland residential buildings. “We plan first to complete3，000 houses and apartment units in three years，”Dai Zhikang， founder and Chairman of the ZendaiGroup， told ChinAfrica. “The first batch of these canbe expected to be completed in 2014.”

　　AECI said that Shanghai Zendai is well placed tomove forward with the project to the acceleratedbenefit of Gauteng and South Africa as a whole.

　　Among these benefits are more job opportunities，sooner， according to AECI， which will retain about1，300 hectares of land for the company’s current andfuture operations.

　　Global ambitions

　　Established in 1993， Zendai is a private conglomerateengaged in finance， real estate and cultural sectorswith assets totaling $4.9 billion. It has propertyprojects in 12 major cities in China and has alreadycompleted more than 1 million square meters ofproperty development. In 2011， the company beganits first overseas property project in New Zealand， andthe mini city outside Johannesburg is its second overseasproperty project and first transaction in Africa.Zendai told Mail & Guardian Business that austeritymeasures in property purchase restrictions enforcedby the Chinese Government in a bid to slow downrising property prices caused the company to lookoutside of its own country for growth.

　　“It’s a move consistent with the company’s longtermdevelopment plan and is an important step inits overseas development plan，” said Dai， adding thatthis investment does not indicate that the companyis turning its business focus overseas.

　　Dai said Africa’s vast land area， rich resources andrelatively lagging economic base placed it as ripe forinvestment. He saw South Africa as the economiccenter of Sub-Sahara Africa and Africa’s growth pathwas in need of complete financial services.

　　“We perceive after careful studies that Modderfonteinis to Johannesburg and South Africa whatLujiazui is to Shanghai and China two decades ago，”Dai told ChinAfrica. Lujiazui Financial and Trade Zone，a financial district established in Shanghai in 1990，has helped push forward the growth in Shanghai andChina as a whole.

　　Modderfontein was identified largely for its strategiclocation and size. Situated in the center of an economictriangle formed by downtown Johannesburg，Midrand and OR Tambo International Airport and closeto the Sandton Central Business District， it has a highpotential to become a gateway to a newly internationalizedJohannesburg.

　　“New York City and Hong Kong represent the pastcentury and the financial city in Modderfontein [SouthAfrica] will represent development in the next 100years，” Dai said.

　　Jobs and tax revenue

　　The impact of this project on the local economy， taxrevenues and job creation are all positive factors goingforward.

　　According to Dai， over the next 10 to 15 years，about $8 billion will be invested in the project andan estimated 12 million square meters of buildingswill be constructed in the area. A recent economicimpact study by the Bureau of Economic Research atStellenbosch University indicates that direct and indirectbenefit for the national economy could be $1.4billion， with $100 million generated in local governmentrates and taxes. According to the study， there isa capacity to create 22，000 jobs， 65 percent being inthe semi-skilled and unskilled sector.

　　Dai estimates that more than 20，000 people will beneeded in the developing and constructing process.

　　To develop the project， the company also needsa large number of professionals and inter-disciplinarytalents. The recruitment information will be availableon the company’s web pages. Dai said he welcomesthose who are interested in communicating with himon Sina Weibo (Chinese version of twitter) or throughWeChat.

　　Vote of confidence

　　The Gauteng Provincial Government has given theZendai investment thumbs-up， with Gauteng PremierNomvula Mokonyane saying the property developmentis a vote of confidence in the GautengProvince and South Africa as a whole.

　　“Shanghai Zendai is a highly respectedcompany in the property developmentindustry，” said Ernie Lai King， head ofEdward Nathan Sonnenberg (ENS) Chinapractice. “Mr. Dai is a highly successful businessmanand accomplished visionary withgreat experience in property development. Isupport his vision and plan.” The ENS Chinapractice， the largest Chinese business desk inthe South African law firm， acted as lead legaladvisor and project coordinatoron the Zendai transaction.

　　“Opportunities always goalong with challenges，” saidDai when asked to commenton the investment environmentin South Africa， whichhas been under a cloudrecently in the wake of seeminglyendless labor unrest.

　　“Like any other countries inthe world， South Africa has itsown problems. But opportunitiesare just right besideproblems. South Africa is oneof the earliest countries todevelop [in Africa] and is aleading economy in Africa. Itis a consensus that as a BRICSmember， the country will starta new round of development，”said Dai， adding that Zendai iswell set as an early investor inthe country.

　　The Modderfontein projectwill serve as a stepping stonein Zendai’s developmentin Africa. The company hasintentions to invest in mining， agriculture， tourism andenergy sectors in Mali， Tanzania and the DemocraticRepublic of the Congo， Dai told ChinAfrica.

　　Problems and risks

　　Regarding the risks of investing in Africa， Dai said highrisks may also mean high returns. Investing overseasis fraught with political， legal， social， economic andespecially exchange rate risks， which means investorsneed to be well informed and quick on their feet.

　　Lai King said the areas where Chinese investorsneeded the most expert advice in South Africa wererelated to language and cultural differences.

　　According to Lai King， to save costs， Chinese firmssometimes used inexperienced lawyerswho offered poor advice leading tofinancial losses. Chinese firms also need toknow more about local labor laws， mininglaws， anti-trust laws and tax laws in SouthAfrica.

　　On the question of rumors that Chinesewill impose their business practicesand lifestyle on South Africans， Lai Kingtold eNCA TV that Chinese come to thecountry to do [business] deals， not tochange the government or impose religiousbeliefs. “They don’t set up militarybases. They come here to do business，”he said.