When it comes to Africa, China's inroads are just getting started

Far and away, China has grown into the largest trading partner with Africa, the world's poorest continent. As the Economist reports, China and Africa exchange $160 billion in goods each year, and over the past decade, more than a million Chinese, mostly laborers and merchants, have moved there.

Melissa T. Cook, founder andmanaging director of African Sunrise Partners LLC,was in China last September for a conference on infrastructure and she took advantage of the opportunity to catch up with some of the companies that she knew.

What surprised her most was that the private Chinese companies - the non-State-owned enterprises - seemed to be just getting started in Africa.

"Anyone who says China is already huge in Africa doesn't appreciate how huge China is overall," she said. "So Africa for China is strategically important but the private sector companies are just trying to figure out where they should be."

"China's got a lot of room left to grow in Africa, and I think they will," she said.

In contrast to the USpresence in Africa, China takes a much longer-term, more strategic view and is willing to do business with anybody. The US is much more careful about supporting governments that sit within "US parameters", she said.

China has also been willing to tie financing with the strategic direction of the big state-owned companies, she said.

"When I talk to US companies that compete against the Chinese - whether it's telecommunications equipment or machinery, those areas in particular, it's been very difficult to compete against the Chinese, because they bring import-export bank financing," she said.

The US has the Import-Export Bank, but it is not committed to be strategically tied to preferential treatment of a particular company.

The Chinese government has had a policy of "going out" for companies. Beijing has always had the view that construction and big machinery companies need growth in markets outside of China and Africa is seen as a very appropriate place for them, Cook said.

US firms have had plenty to do at home, in Latin America and in Asia and there hasn't been a big push for the US to get involved in Africa.

Until recently. It's all changing and Cook is one of the engines of that change. She was recently appointed to the President's Advisory Council on Doing Business in Africa.

Their mission: "Trying to stimulate a lot more activity from US companies," she said. "The view is that in order to have successful long-term stability, job creation is such an important part of that."

With a lot of the big Chinese conglomerates, she explained, their Africa activities are often buried so deep that unless you are in Africa asking people who they work for it's hard to find out about Africa from the Beijing or Shanghai side.

"It's true for a lot of companies," she said. "Africa can be done in a very small division that people aren't aware of."

In US companies, the CEOs are under such intense pressure to deliver earnings growth every quarter and there's not a lot of tolerance in the institutional investor community for long-term investments where no one has a clear idea of what the path is going to be.

Cook has found that the smaller companies, the $1 billion to $5 billion sized, have a much better success rate in Africa because they don't have to answer to public shareholders and can be a lot more nimble.

On her last trip to China, Cook looked for companies that are not SOEs that have overseas divisions. What she found was that the older, more senior people didn't seem to have any idea and were a little more risk-adverse.

"But then in every place I went I found some guy in his 30s who's been to Africa 40 times and just goes all over the place," she said.

At the Africa Infrastructure and Power Forum in Beijing last September, Cook said she met two young Chinese women who had just graduated college and were going to work for one of the big SOE engineering and construction companies in Africa. One was going to live in Equatorial Guinea; the other was bound for Brazzaville, Congo.

"I said to them, are your parents nervous, and they giggled, it was really cute," Cook said. "But that's what China's doing that the US is not doing. You've got to get people in on the ground."

It's a long-term commitment, she said: Make local contacts, hopefully have a great experience and learn how things are really done.