Algeria‘s first business partner: China overtakes France

Algeria‘s biggest trade partner: China overtakes France

Algeria: a booming country

As one of the largest economies in Africa, Algeria is the 3rd African economy after Nigeria and South Africa and has an income of more than $125 billion.

Algeria's economy is mainly based on the oil sector which constitutes a pillar of the Algerian economy and accounts for about 60% of the GDP and 98% of total exports!

In 2011, to develop the country, to avoid an Arab Spring, and to reduce its dependence on oil revenues, the Algerian government adopted a new strategy. First of all, the government decided to renew and modernize all the country’s infrastructures to attract more and more foreign investors and thus to create jobs.

To reduce its dependence on oil revenues, the country focused on the agriculture sector to increase the development of exports as well as to reduce the high rate of imports of agricultural products such as fruits and vegetables. Moreover, the Algerian government decided to invest in tourism, in the automotive sector and also in the banking industry to create a climate of confidence that encourages foreign firms to invest.

In implementing these new strategies, Algeria has attracted a lot of foreign firms from all over the world. Foreign companies invested in a multitude of projects thanks to advantages like a reduction of customs duties and the same privileges as the local investors.

The Chinese conquest of the Algerian Market

The Chinese government understood that Algeria is a tremendous potential trading partner. That’s why China strengthened its diplomatic relations with Algeria establishing sustainable partnerships with the government and local companies.

In 2012, the Chinese president came to Algeria to meet the Algerian government to develop their bilateral economic, politic, and cultural relations. In February 2013, they upgraded their relations by signing a CSP (Comprehensive Strategic Partnership) and this trade agreement allowed China to capture the Algerian market.

In 2013, Chinese companies working in Algeria invested more than $25 billion in various sectors such as construction, agriculture or mining. Thus, Chinese companies won a lot of tenders thanks to their competitiveness and their responsiveness to the demands of the different markets.

Now, in Algeria, it’s usual to find Chinese people working in banks, international airports or in the local supermarkets for example.

Building on its success, China became the Algeria's biggest business partner in 2013.Recently, I saw a report on television that showed the first mixed mass wedding in Algeria with Chinese men and Algerian women.

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These weddings show us the involvement of Chinese people in Algeria. Although a lot of people disagree with these weddings, it seems that Chinese people and Algerian people have both discovered a new culture and both of them do some efforts to get accustomed to these new different cultures.

France lose its leadership in Algeria

France was the biggest trade partner; the biggest supplier and the biggest customer of Algeria for decades.

France politically considers Algeria as a friendly and brotherly country and vice-versa.

In terms of business relations, France was the biggest partner of Algeria thanks to its FDI (Foreign Direct Investments) in Algeria and their bilateral agreements. Algeria exports petroleum products to France and imports high quality food products from France for example.

But, in 2012, Nicole Bricq, the French minister of Foreign Trade developed new strategies to increase the French foreign trade. These new strategies were intended to develop French relations (business) with emerging markets such as India or Argentina, so France chose to focus on these emerging markets. But the French government failed to determine the potential of Algeria, contrary to China.

The French government made mistakes in Algeria's economic, political and social issues. Moreover, a lot a French companies decided to retreat from the Algerian market and they left the door open.

All these factors explain why France lost its leadership in Algeria. The French government tried to

renew the relationship with Algeria but, the visit of Hollande's president is not enough to regain its leading position.

In the future, is France able to regain its leading position in the Algerian market?

Sarah Fénanir