Feb 03, 2012
Is South African industry globally competitive?Back
© Reuse this
One lasting impression is that South African industry is tied into an enormous battle to be globally competitive. This view appears to be quite representative across a broad section of industries.
Severe challenges posed by imports, primarily (but not exclusively) from the Far East, are a reality. Our market is just another target market for companies producing enormous volumes and the extent of government subsidisation and support in some of these countries poses a real threat to local industry.
Against this backdrop, one would expect more frequent and more focused applica- tions for protection in the form of antidumping and countervailing duties. Yet many industries are just too fragmented to orchestrate a focused approach when applying for protection. At least, remedies are available to deal with dumped or subsidised imports and better communi- cation within industries can go a long way to ensuring that these remedies are properly exploited.
Of greater concern is the real possibility that our industries are just not competitive, even in a fair trade environment.
Our history entails a legacy of protection and a focus on being self-sufficient, stemming from the sanctions era. While we developed world-class technologies in areas ranging from defence to the chemicals industry and agriculture, very few of our major inventions and technological advances made it into the global arena in a big way.
In addition, our primary industries con- sist of only a handful of players established in an era where ‘sanction busting’ was the way to get into global markets. Many of these cornerstone industries are the ones most often applying for additional protection against imports.
Our most commonly recognised big indus- try that finds itself integrated into global supply chains is the automotive industry and this seems to be possible mainly as a result of substantial government support. While this may sound rather damning, it provides enormous insight. Most governments around the world support big industry in one way or another. Should our government not have more industry-focused programmes at the scale of the automotive industry programme?
With an enormous need for job creation, the current focus on support for small, medium-size and microenterprises (SMME) is both commendable and necessary. SMMEs are, however, exposed to global trends and unfair trade practices, with limited ability to withstand the rigours of the international market. While building an economy primarily on SMMEs may assist in job creation and provide greater social stability, it does little to integrate our industries into global supply chains, where production takes place with the benefit of real economies of scale.
To develop a globally competitive export industry, a substantial local market is often required. Even with the size of our population, our spending power on more than the most basic items is limited. For many industries, the benefit of having a significant local industry as a springboard just does not exist.
The common strategy of always seeing Africa as a primary market to develop that springboard into the global market is also flawed as most African markets are already importing at globally competitive prices, and obtaining market penetration is a lot more difficult than originally thought.
It should be clear that the stumbling blocks to South Africa becoming a global player are not only a lack of skills and perceived high electricity costs – the truth is we are behind the curve on global industrial development and challenges like skills shortages and a volatile currency are just secondary hurdles.
There appears to be only one answer – government and industry need to replicate what has been achieved in the automotive sector for other key industrial sectors, and this needs to be done with the same urgency and in parallel with the development of SMMEs.
Edited by: Martin Zhuwakinyu© Reuse this
Creamer Media Senior Deputy Editor
To subscribe email firstname.lastname@example.org or click here
To advertise email email@example.com or click here
Other Pieter du Plessis & Donald Mackay News
The tough economic environment in South Africa over the past few years has served as a catalyst for protectionist pressures. Increasing import competition has further flamed calls for protection from various industries. According to the press, steelmaker...
Recent Research Reports
Construction 2016: A review of South Africa's construction industry (PDF Report)
Creamer Media’s Construction 2016 Report examines South Africa’s construction industry over the past 12 months. The report provides insight into the business environment; key participants; local demand; geographic diversification; corporate activity; black economic...
Energy Roundup – February 2016 (PDF Report)
The February 2016 roundup covers activities across South Africa for December 2015 and January 2016 and includes details of a Government Gazette notice that confirms Cabinet’s decision to move ahead with the 9 600 MW nuclear procurement programme; State-owned power...
Energy Roundup - December 2015 (PDF Report)
The December 2015 roundup includes details of State-owned utility Eskom’s application to claw back R22.8-billion; South Africa’s ranking as an investment destination for renewable energy; and a nuclear expert’s thoughts on reactor designs for South Africa’s nuclear...
Water 2015: A review of South Africa's water sector (PDF Report)
Creamer Media’s Water 2015 Report considers the aforementioned issues, not only in the South African context but also in the African and global context in terms of supply and demand, water stress and insecurity, and access to water and sanitation, besides others.
Input Sector Review: Pumps 2015 (PDF Report)
Creamer Media’s 2015 Input Sector Review on Pumps provides an overview of South Africa’s pumps industry with particular focus on pump manufacture and supply, aftermarket services, marketing strategies, local and export demand, imports, sector support, investment...
Liquid Fuels 2015: A review of South Africa's liquid fuels sector (PDF Report)
Creamer Media’s Liquid Fuels 2015 Report examines these issues in the context of South Africa’s business environment; oil and gas exploration; fuel pricing; the development of the country’s biofuels industry; the logistics of transporting liquid fuels; and...
This Week's Magazine
Power and automation company ABB is in the launch phase of its highest payload, multipurpose industrial robot, the IRB 8700. The robot has a reach of 3.5 m and can handle a payload of up to 800 kg. “When designing the IRB 8700, we emphasised reach and payload, as...
Identity and Access Management (IAM) is a critical facet of a connected security ecosystem, as controlling the confidentiality, integrity and authorisation of data access and use is key to securing new digital business channels. However, companies face several...
Data underpins digital business models, the digital economy, the Internet of Things and the fundamental changes in the ways people interact and protecting data is crucial to securing new ways of doing business, says T-Systems South Africa information and...
The City of Cape Town will issue a tender for the procurement of electric buses for its MyCiTi service, in line with the council’s commitment to lower its carbon footprint, says executive mayor Patricia de Lille. The tender, to be advertised early in February, will...
The iSimangaliso Wetland Park Authority signed a R10-million contract last month with local tailings storage facility specialists Cyclone Engineering Projects to remove about 100 000 m3 of dredge spoil obstructing the natural course of the uMfolozi river, in...
Next ArticleTrade trends and forecasts