The Schmooze FM team spent a sunny day in Oxford last week, taking in more than just the sun, but also an excellent and frank account of the motivations behind China’s interest is in Africa. Natural resources are just the tip of the iceberg, its a lot more strategic than that. Here’s the list in no particular order:

1. Few strong domestic competitors – Chinese companies looking to expand abroad face stiff competition from well resourced, decades long established companies in almost every sector in the US and Europe. Contrast this with the relatively smaller and less well capitalised competitors in most African countries.

2. Growth and returns – According to UN data, Africa offers a higher return on investment than any other emerging market. Its no surprise, given that according to the Economist, six of the world’s ten fastest-growing economies in 2010 were in sub-Saharan Africa and the average African economy will outpace its Asian counterpart over the next five years. The pent up consumer demand is unparalleled anywhere else in the world, imagine acquiring 100 000 new customers a week for a new broadband service, just ask the folks at Econet in Zimbabwe.

3. Large, young population with increasing purchasing power – Africa has over a billion people, and over 40% of these are under 25. The long held myth that there’s no buying power is outdated, Africans spent $860 billion on goods and services in 2008—35% more than the $635 billion that Indians spent, and slightly more than the $821 billion of consumer expenditures in Russia. If Africa maintains its current growth trajectory, consumers will buy $1.4 trillion worth of goods and services in 2020, which will be more than Russia’s $960 billion. Also according to McKinsey, there are more families earning USD$20K in Africa than there are in India. McKinsey also estimates that by 2040, Africa will have a bigger labourforce than China, which will at that stage be experience the effects of an ageing population.

4. China Friendly – Although there has been rumblings of discontent, China enjoys largely cordial relationships with the vast majority of African countries, in many cases stemming from China’s historical support for anti colonial movements across the continent.

5. Political importance – Africa represents 55 votes in the UN general assembly vs 2 for North America, 50 in Europe, 48 in Asia and 15 in South America.

6. Resources – Africa’s wealth of mineral and energy resources is well documented and requires no further elaboration here.

Given the above points, expect even more Chinese participation in Africa in the coming years. China has been a trojan horse for the other BRICs to focus their efforts on investment and trade with Africa. Brazil, Russia and India are all aggressively targeting opportunities on the continent as should any company seeking revenue and profit growth.