China Southern eyes Africa, South America expansion

China Southern eyes Africa, South America expansion
China Southern Airlines (CZ, Guangzhou) is planning to expand into South America and Africa over the next five years the carrier’s Senior Vice President (Marketing) Wu Guoxiang has told the South China Morning Post.

In an interview, Wu said the carrier was looking at Johannesburg O.R. Tambo for its next African destination after Nairobi Jomo Kenyatta, which it currently serves from Guangzhou 2x weekly using A330-200 metal. In South America, China Southern is looking at developing services to points in Brazil and Argentina, he added without mentioning specifics.

China Southern’s international operations currently focus on East Asia, Oceania, Europe, and North America (the United States and Canada only). Direct flights between China and Africa and between China and South America are currently dominated by non-Chinese carriers although flag carrier Air China (CA, Beijing Capital) has attempted to gain a foothold through the launch of its own services from Beijing Capital to each of Johannesburg O.R. Tambo and São Paulo Guarulhos (via Madrid Barajas).

As it stands, Africa and South America are becoming increasingly attractive destinations for Chinese capital given China’s thirst for natural resources and need for new export markets.

According to an Ernst & Young (EY) Africa Attractiveness report published last month, since 2005, China has invested in 293 FDI projects in Africa, resulting in an investment outlay of USD66.4 billion. Aside from general trade and Foreign Direct Investments, Chinese companies and state-related entities have been involved in both financing and building numerous infrastructure projects across Africa including ports, roads, railways, dams, telecom networks, power stations, and airports. The primary benefactors of Chinese capital have been Egypt, Nigeria, Algeria, South Africa, Mozambique, Ethiopia, Angola, Niger, Zambia, and Morocco.

In Latin America and the Caribbean, China is looking to realize USD500 billion in trade and USD250 billion in investment by 2025. In Brazil the focus has been primarily on infrastructural projects – the country’s massive rail network and its untapped potential in particular. Beijing has similar interests in Argentina where in 2014, it agreed to provide Argentina with over USD20 billion in loans to finance numerous infrastructure projects, including new railway lines and hydropower dams. Last month, Buenos Aires signed a framework agreement with the China Development Bank (CDB) for the rehabilitation of the Belgrano Cargas (II) railway.

Under the deal, the CDB bank will finance the acquisition of railway equipment, works and services for a narrow-gauge train with a total extension of 1,400 km. The Belgrano Cargas (II) initiative connects the Provinces of Argentina’s so-called Mesopotamia area.