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South Africa is not like countries in Africa where Chinese companies rely on ultra low-cost labour supplies, so its relationship with Chinese investors is different, says South Africa’s trade and industry minister Rob Davies.
China is South Africa’s most important trade partner and the biggest market in Africa for Chinese exports.
Davies explains why South Africa is different: “We’re not really in the same place as some other countries on the continent – where the sort of flying geese model, the low wage activities of China will find their places. We’re not in that space in South Africa, we never will be. […] We offer a quality experience. We offer productivity. We offer capability. So I think that’s actually what we learned with Hisense.”
Chinese investors give South Africa a vote of confidence
Hisense, a world leader of flat panel televisions and household appliances expanded its plant in Atlantis, Western Cape in March 2019. Davies says the R72m ($5m) investment into the Hisense refrigeration and television production lines at its factory was an “important achievement” and “another example of the fruits of South Africa’s successful partnership with the People’s Republic of China”.
Davies says Hisense’s management told him that the plant is performing better than others based in North America and the European Union. “This is part of our pitch as a country for manufacturing investment that if you come and invest in South Africa you will have a good experience,” adds Davies.
Davies tells The Africa Report: “South Africans are perfectly capable of hosting and operating as workers and managers and so on in competitive industrial enterprises in this case fast moving consumer goods, in other cases in automotive products.”
South Africa’s automotive drive
Davies says the new South African Automotive Masterplan, announced late last year, now has a clear programme: a localisation rate of 60% and doubling employment in the sector by 2035.
He explains: “It’s a significant industry but a weakness has been that the percentage of local content has not been high enough. And in the automotive master plan we finally got a consensus among the automotive manufacturers, the component manufacturers and also the unions that this would be the basis of the new programme.”
South Africa’s automotive industry in numbers:
• Contributes 6.9% to GDP (4.4% manufacturing and 2.5% retail)• Accounts for 30.1% manufacturing output and 13.9% of total exports
• Employs 110,000 people in vehicle and component production
• Annual investment of R12.2bn
Source: Wheels24
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