The rapid growth of the major emerging economies, and in particular China, is creating a new world and this, in turn, will have consequences for South African business. “The rise of China completely redefines international relationships between the different parts of the global economic system,” Beijing Axis group MD Kobus van der Wath told Engineering News Online on Thursday.
“That means we have to think differently about our international engagements as well as how we act here domestically, as we are part of the global system,” he highlighted. “Everything local is in some respect global. And global effects reach into the local markets. The world is changing, and there are new winners and new losers. Our engagement must look different.”
In this new world, South African CEOs must be globalists and bring their companies into line with global best practice, by integrating global thinking with local business and taking local business into global markets.
“The good news is that many of our businesses have made good progress in this,” he reported. “But too many are still trapped in traditional markets and looking at the world in a traditional way. They need to cultivate a new ‘RSA Inc.’ that is new world ready. They need to understand global connectedness and global supply chains. Emerging countries are the biggest threats, the biggest opportunities and the most dynamic economies.”
In an address to the China Africa Business Forum 2011 in Midrand (north of Johannesburg) on Thursday, Van der Wath warned that the Eurocentric point of view, traditionally held by many South African businesspeople, “doesn’t make sense” anymore.
He pointed to the poor state of the economies of the developed countries and contrasted this with the dynamism of Asia.
China and other Asian (as well as Latin American) countries are the growing economies and the sources of a large, and growing, proportion of foreign direct investment, now and even more so in the future. To seize these opportunities and meet these challenges, South African business needed to develop a real understanding of these emerging economic powers. He made the point that the rise of these new powers was a long-term phenomenon.
“The awareness [in South Africa] is there. But we must see it through,” he affirmed. “We need to be strategic in developing engagement with non-traditional markets. We are in a global environment very different from before. We need to think how this new world will affect business in Johannesburg, in South Africa and across Africa.”