Nov 28, 2012
China imports threatens SA manufacturingBack
Mangaung|Africa|Industrial|Resources|Africa|China|South Africa|Electricity Cost|Manufacturing|Manufacturing Industry|Manufacturing Sector|Transport|Coenraad Bezuidenhout|Infrastructure|Stewart Jennings
© Reuse this
Speaking at the launch of the Manufacturing Circle’s position document ahead of the African National Congress’s (ANC’s) Mangaung conference in December, he criticised the Free Market Foundation statement last month claiming that cheap imports were not hurting the manufacturing industry, saying that local jobs were being lost and exported to China, in particular.
The manufacturing sector had lost in excess of 300 000 jobs between the first quarter of 2008 and the first quarter of 2012.
He also noted the closure of about 440 000 small businesses, of which some were a direct result of Chinese imports, in addition to a depressed sector.
Manufacturing Circle executive director Coenraad Bezuidenhout added that the proliferation of unfairly incentivised imports from China, in the context of a global downturn and Chinese pressure in other markets, was the biggest threat to South Africa’s manufacturing industry.
Jennings noted that South Africa could not compete with Chinese products, which were often between 25% and 30% cheaper than locally produced items.
“Administered prices in other Brics countries have decreased by over 36% in the last decade, while South Africa’s electricity cost [for instance] have increased by over 170%.”
South Africa’s purchasing management index registered a three-year low, owing to bad business conditions and contraction in manufacturing, and Jennings forecast a further decline in the next two years unless key domestic policy issues, and the levelling of the trade situation, were not addressed immediately.
The trade deficit between China’s imports to the country and South Africa’s exports currently registered at 6.4% of gross domestic product.
“Manufacturing is among the top three multiplier sectors in terms of value addition, job creation, export earnings, and revenue generation for every R1 invested. It also provided the only viable means of beneficiating natural resources in the country,” the position document said.
The manufacturing sector provided the “greatest opportunity for job-rich economic growth”, but it was in crisis and key interventions were required by the ruling ANC to correct its path.
Government needed to ensure fair trade through the necessary adjustment to tariff and nontariff barriers; strengthening bilateral and multilateral regional and key export market ties; promoting a competitive and stable exchange rate; and improving transport linkages to regional and other key markets.
The Manufacturing Circle’s position document, which was presented to the ANC, tabled a number of proposals aimed at placing South Africa as the “gateway manufacturing destination” for exports to sub-Saharan Africa and enabling the country to compete domestically on an equal footing with imports. This, in turn, fed into the aims of pushing the country to become a competitive beneficiator of its own resources.
The report also tabled possible suggestions for interventions to promote a competitive currency and battling volatility, industrial policy, infrastructure and industrialisation and local procurement and industrialisation.
Edited by: Mariaan Webb© Reuse this Comment Guidelines
Other Trade News
Recent Research Reports
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
Real Economy Insight: Automotive 2014 (PDF Report)
This four-page brief covers key developments in the automotive industry over the past 12 months, including an overview of South Africa’s automotive market, trade figures, production and the policies influencing the sector.
Real Economy Insight: Construction 2014 (PDF Report)
This five-page brief covers key developments in the construction industry over the past 12 months. It provides an overview of the sector and includes details of employment in the sector, infrastructure and municipal spending, as well as insight into companies’...
Real Economy Insight: Electricity 2014 (PDF Report)
This five-page brief covers key developments in the electricity industry over the past 12 months, including details of State-owned power utility Eskom’s generation activities, funding and tariffs, independent power producers and prospects for the sector.
Real Economy Insight: Road and Rail 2014 (PDF Report)
This six-page brief covers key developments in the road and rail industries over the past 12 months, including details of South Africa’s road and rail network and prospects for both sectors.
Real Economy Insight: Steel 2014 (PDF Report)
This four-page brief covers key developments in the steel industry over the past 12 months. It provides an overview of the global and South African steel and stainless steel markets, South Africa’s major steel producers and events that have shaped these markets.
This Week's Magazine
Local aerospace company Denel Aerostructures (DAe), part of the State-owned Denel Group, has won a fourth contract to manufacture parts for the Airbus A400M military air transport and air-to-air refuelling aircraft. The new contract, which was won in an international...
Although CEO Mark McChlery and chief marketing officer Bob Skinstad likened themselves to children in a playground when taking on the task of “reengineering and repositioning” the Seartec brand, the “young, dynamic and enthusiastic guys” were like proud...
An increasing number of buyers, in both the new and used car markets, are opting for finance structures that lower their monthly repayments, says asset financing company WesBank. These include the use of large balloon payments (also known as residuals), as well as...
Tertiary education institutions can use search engine giant Google’s Chromebook to provide secure mobile end-point devices for students on which they can share documents, work collaboratively on documents and access education materials and applications being used...
Local ceiling and partition company Abbeycon has beaten global competition at the Saint-Gobain Gypsum International Trophy competition, which was held last month in Berlin, Germany.