Chinese-Cameroonian car factory venture fiasco: Botched scam or consequence of corruption?

By Mbom Sixtus, first published on Mimi Mefo Info. Karen Zhang and Liam Lee contributed to this story.

As of February 2021, many local and international companies had already stamped their footprints on Central Africa’s newest and largest seaport, the Kribi Industrial Port Complex in the south of the Republic of Cameroon. Conspicuously absent on the list of investors is the Sino-Cameroonian venture, Cameroon Automotive Holding Company (Cameroon Auto) which had promised to be among the biggest investments in the zone.

The founder of the company, Lu Fuqing, had said they will invest about US$153 million in building Central Africa’s first auto plant on the industrial zone. Company officials had also promised to create over 4,600 direct jobs. The first “Made in Cameroon” sedans, SUVs, mini-vans, and pick-up trucks were supposed to be rolling out of the Kribi factory in January 2018, according to the company’s bosses.

Back in April 2017 Cameroon Auto organized an auto exhibition in Yaoundé and claimed the cars presented were made by Cameroon Auto’s partner company in China. But we noticed that the company’s supposed brand, “Star of Africa”, appeared to have been simply glued onto the vehicles clearly made by other Chinese car manufacturers like Foton.

Prototypes of the “Star of Africa” on display at the Yaounde auto exhibition, April 2017 (Image: Sixtus Mbom).

Many projections were made and hopes were raised sky high. “Star of Africa” was going to grab the lion’s share of the auto market in the Central African sub region; only a handful of existing distributors of new cars such as CFAO’s CAMI Toyota, KIA Motors, Tractafric Motors, SMT Volvo, and AUTOHAUS VW Cameroon were to be its competition. Or so people were made to believe.

Four years after the exhibition, none of the company’s lofty promises have been kept. Right from the start the company turned out to be a deception in the eyes of many, and company and government officials have been hauling blame from one side of the negotiation table to the other.

It should be recalled that Lu Fuqing obtained authorization to create and run the Sino-Cameroonian company after meeting with Cameroon’s President Paul Biya, the country’s Prime Minister, the Secretary General at the Presidency, and other top government officials. Lu was promised a 500-hectare portion of the 26,000 hectare industrial zone.

David Yonguet, Project Manager of the Cameroon Automotive Holding Company, blames government officials in Cameroon for the failure of the company to deliver on its promises. Without citing names, he accuses top government officials of blocking the project, claiming that paperwork for acquisition of land titles and other company documentation were being delayed because the company would not pay requested bribes to state officials.

Yonguet said the National Anti-Corruption Commission in Cameroon opened an investigation to uncover the truth when the matter was brought to its attention.

Meanwhile, Lu Fuqing maintained that on the Chinese side everything was moving on as planned. He said the company had made 5,000 vehicles in its car assembly plant in China. Parts of the Cameroon Auto plant were being pre-fabricated in China and would be transported to Cameroon for assembling when they get clearance from the host government, he claimed. He also said parts of more vehicles were being built in China and complained about dawdling negotiations with Cameroon Customs authorities.

The company also claimed it was training Cameroonians in China to occupy positions in the company when it goes fully operational in Kribi.

We sought out to verify the authenticity of the claims the company made.

Speaking of administrative bottlenecks, Shinwin Soh Donatus Boma, Deputy General Manager of the Cameroon Investment Promotion Agency, dismissed claims the project was stalled by government officials.

He told Cameroon News Agency that the agency had offered the company incentives including tax exonerations during its first ten years of production and marketing, just as it does to other new businesses. According to him, Cameroon Auto may just be cash strapped. We have given them time to raise funds and following our guidelines, the effective period of some of our incentives can be extended for a period of time.

To fact-check the company’s claims of active production in China, we visited Tianjin City in China where Lu Fuqing’s company is based. After three attempts, we could not meet him and neither were we able to reach him by phone.

When we consulted China’s Registrar of Companies, we found that Cameroon Auto’s partner company, Tianjin Jinhuai Trading Co. Ltd, registered in Lu Fuqing’s name, had a registered capital of only RMB500,000 (about US$72,000) as of 2019. The registry also indicated he had registered another company known as Hong Kong Jinhuai Trading Company Ltd in 2014 but it was dissolved in 2016.

From the visit and interview with another Chinese auto exporter, it turns out Lu Fuqing runs a small company that sells auto parts in China, though with an ambition to extend his business to Africa. It also appeared Lu does more PR than actual work, and gives the impression that he is working on behalf of a famous Chinese listed company, Foton. Chinese media reporting on the failed project in Cameroon has highlighted hurdles Lu claims the government of the host country put on his path.

But award-winning investigative journalist Amindeh Blaise Atabong told Cameroon News Agency that the Chinese might not have really meant to build any auto plant after all.

“When I look at the project, it reminds me of the controversial GEOVIC cobalt project. The company had claimed to have discovered the ‘largest known primary cobalt deposit in the world’ and promised to invest millions in the mining of this mineral resource in the East region of Cameroon. Company officials used the project to extort US$100 million from the government of Cameroon as well as raised US$66 million from the Toronto Stock Exchange. They made a lot of money for themselves in large paychecks and stocks, and would end up shutting down their offices with nothing to show for the company’s two decades of existence in Cameroon,” he said.

Atabong added that it was also delisted from the Toronto Stock Exchange.

Noting though that the information he has about the Cameroon Auto project is too sketchy for him to make any real conclusions, Atabong said he doubted it would amount to anything.

Despite the fact that all evidence on the ground suggests that the Cameroon Auto project is not what is was presented to be, Guy Dzeuguem, Communication Strategist for Cameroun Auto, argues the company is still in business.

“Our office in Yaoundé is still operational and we are in search of financing,” he told Cameroon News Agency on February 19, 2021.

Admitting that no activity whatsoever has been carried out on the project site as expected, Dzeuguem insisted, “Setting up a business of this magnitude requires huge sums of money. We need partners, investors that would facilitate transportation of vehicles and pre-fabricated factory building parts from China to Cameroon”.

Asked whether he has been to China to see the work being done, Dzeuguem said he has not but remained optimistic that funds are being raised for the project to take off. He told us he is totally oblivious of all financial transactions of the company and doesn’t know how much his bosses make in salaries and stocks.

“There are people still working in our offices but I am on involuntary unpaid leave ever since we sold the prototypes brought in from China,” he noted, maintaining his optimism that things will fall into place eventually.

However, even without the contributions of the Sino-Cameroonian auto venture, Chinese companies have been ranked as the leading contributors to the success of the Kribi Deep Seaport.

At the end of 2020, China recorded 174,045 tons of goods exported through the port, Taiwan emerged a far distant second with 14,773, while Malaysia took the third position with 13,699 tons. The three countries export mainly construction equipment, electrical appliances and food, according to Wilfried Michael Mama, Operations Manager of the Port Authority of Kribi .