The Power of Partnerships and Trust

May 21, 2014

While Chinese firms in Africa are known for their economic development activities, much of the attention they’ve received for community relations hasn’t always been so positive.

However, there’s an untold story of Chinese companies that have generally managed both successful business operations and local community relations through corporate social responsibility (CSR), leading to significant benefits for both sides. For businesses working on the continent—either from China or elsewhere—the strategies of these companies offer insights about successful CSR work in challenging environments.

The Case of Huawei: The Power of Partnerships

Since 2006, telecommunications company Huawei has invested over $67 billion in large-scale projects, and today its African business brings in over $3.5 billion annually. With offices in 18 African countries, the privately-owned firm sells its mobile phones all over the continent, and has won a number of government contracts to build or improve mobile networks in places like Ethiopia, Zambia, Angola, and Nigeria.

While many of Huawei’s CSR activities have been under-reported, its social engagement and company profile got a big boost from a different approach in Kenya. There, instead of directly competing with local firms, Huawei chose to enter the market via a partnership with Safaricom, the Kenyan telecommunications market leader (and subsidiary of UK-based Vodafone). Huawei continued this partnership model with its CSR activities, teaming up with the Safaricom Foundation to conduct a range of critical humanitarian and development projects.

Thanks in part to Huawei’s support, the Safaricom Foundation has set up mobile medical camps, built classrooms, and started community-based income generation and clean water projects, all of which have helped hundreds of thousands of Kenyans. Huawei in particular was actively involved in wildlife conservation through sponsorship of the Safaricom Marathon, the “Kenyans4Kenya” disaster relief project, as well as a major upgrade to a medical clinic in Kisii County. And it aligned its own business priorities and expertise with the “Telecom Seeds for the Future” ICT scholarship and technology donation partnership with Kenyan universities in 2011.

Working in partnership with Safaricom, Huawei’s was able to target its social investments in ways that would be more impactful given the local firm’s knowledge of local conditions, while increasing visibility.

The Case of CNMC: Building Back Trust

While Huawei’s market is broadly pan-African, the state-owned China Nonferrous Metals Corporation (CNMC) focuses on large projects in fewer countries. CNMC has projects in 17 African countries, the largest and best-developed of which are its copper mines in Zambia, which include the massive Chambishi copper mine and the Luanshya mine (operated and expanded by CNMC since 1998 and 2009, respectively).

CNMC’s mining activities have provided an economic boost to Zambia since the late 1990s, but for most of that time, its community presence was basically nonexistent. While this “business-only” mentality mirrored that of many Chinese competitors, by 2006, CNMC’s lack of engagement with the local community nearly jeopardized its entire Zambian investments. An explosion that year at a plant owned by a subsidiary of CNMC led to anti-Chinese protests and doubts about the long-term future for CNMC in Zambia.

After the crisis passed, CNMC reconsidered its strategy, and began turning to CSR work, integrating community outreach directly into its work plans. The company built or repaired local roads, bus shelters, and hospitals, donated fertilizer to farmers in Luanshya and Roan, underwrote malaria prevention programs and cataract surgeries for local residents, and granted scholarships for students in Copperbelt Province, among other programs. In the past few years, the company took steps to highlight the increased importance it places on CSR, detailing its efforts in annual CSR reports and joining the UN Global Compact (an international effort to promote better CSR efforts). CNMC still faces many of the challenges inherent in mining operations in the global south, but its CSR work has clearly given it the ability to invest in the long term and work more closely with stakeholders in Zambia.

Replicating Success

Without question, the experiences and business models of Huawei and CNMC in Africa are quite different, but they share a few key CSR takeaways. Those companies looking to enhance their business operations through positive community relations in Africa should consider the following lessons from these companies:

  1. Find local partners, and listen to them – they understand and can explain local needs.This is true in both business and in CSR work, as shown by Huawei’s partnership with Safaricom and the Safaricom Foundation in Kenya.
  2. Understand that CSR work can lead to growth. CNMC was able to reduce negative publicity and expand its Zambian operations after it invested in CSR work. Its improved standing became clear when it managed to remain unscathed even while other Chinese-owned mines experienced major problems with labor relations, negative press, and government intervention (as in the 2013 Zambian government seizureof the Collum Mine).
  3. Use your company’s core competency when doing CSR.  Good advice for any CSR program, it is especially helpful for tech firms.  Huawei was able to donate its technology and provide technology scholarships as part of its CSR work. Not only was this relatively easy to do for a technology company, but it effectively brought CSR work in line with the company’s main business, benefitting both Huawei and the local community, and reinforcing the Huawei brand for consumers.
  4. Learn from the bumps in the road. Like many Chinese companies, CNMC worked in Zambia for years without engaging in serious CSR work, and suffered the consequences – labor problems, protests, and countrywide anti-Chinese sentiment. The company was able to learn from this experience, however, and turned to CSR as a solution.
  5. Get a CSR strategy! Huawei and CNMC’S CSR activities paid off because they were deployed strategically to address key company priorities, not carried out haphazardly. With the right planning and expertise, CSR can help companies capitalize on new market opportunities or mitigate business and PR challenges. Particularly for companies operating in Africa, it should be a key piece of the business plan.