Cisco, IBM, Apple and other U.S. companies are investing heavily in China. They see China as a very strategic market which they must not just sell things but also invest massive resources to tap local innovation.
For Apple, China remains its second-most important market outside the United States. The company continues to make big investments in the country despite political pressure to bring more of its manufacturing activities back to the United States. Apple CEO Tim Cook spoke in the World Development Forum in China last week.
Last, Apple said it would build two more research and development centers there in Shanghai and Suzhou. That makes four so far, at a cost of about $500 million.
IBM’s CEO Ginni Rometty was in Beijing Sunday, where she signed her company’s new partnership with a division of a huge local conglomerate, Wanda Group. This is IBM’s second big foray into China’s cloud services market, which is tightly controlled from a regulatory standpoint. Few details were disclosed about the new alliance, but IBM will share revenue with its new ally.
Apple and IBM are far from alone in their need to strengthen their friendships in China, ahead of possible changes to the U.S.-Chinese trade relationship. Cisco pledged $10 billion to the market back in 2015, so it also has plenty at stake.
Contrast that with Africa where these companies largely make any serious innovation investments. While IBM has a research unit in a university in Kenya, Cisco and Apple are largely nowhere in the R&D nexus in Africa.
But you cannot blame these firms. African governments are always sales-driven as we see technology capabilities within the lens of buying and owing tech products. The creative aspect of it is not that common. So when we meet companies like IBM, Cisco and Apple, we are focusing on how many sales offices they will open. We rarely have policies that deliver incentives for them to invest.
It is also important that the challenges faced by local companies are the same these foreign companies will face. So if the local companies do not see value in risking capital on new investments, you should not blame the foreign ones for opening only sales offices in Africa.
It is easier to succeed in Africa selling imported things than making innovative products owing to trade policies.
Africa needs to have a redesign because what is happening now will not provide jobs for its citizens. If IBM, Cisco and other U.S. companies continue to invest in China, the result will be continuous Chinese dominance in global trade. Africa will miss the opportunity to provide employment for its citizens and that will be catastrophic for its long-term security.