Yesterday, different questions about different aspects of South Africa’s industry were posed by two different media persons.
The first by David Biggs in his Tavern of the Seas column was why we import goods from China and elsewhere we could make here. And why we could not become a producer of luxury, designer goods.
The second question was CapeTalk’s John Maytham to an interviewee about why South Africa did not have far more tourists than it already did with the local currency at over R14/$ and R21/£, making it a value-for-money destination.
The short answer to the first question is because our comparatively expensive labour and production costs, low productivity and poor work ethic compared to China and Asia mainly, the world's factory, make it unlikely we'll ever compete.
However, we can possibly compete in niche, luxury and designer goods, not mass produced stuff. But local manufacturers lack vision, confidence, government support and suffer confusing policy to take advantage of local resources, skills and capacity to make great products that can succeed first in the local market, then the world.
I've unsuccessfully been looking for a household good (a quality mattress). Not one of the numerous local manufacturers makes a top quality product. A few advertise so and come close, but fail in one or more areas. The problem also is often the prices of the goods they do produce are at or close to premium, luxury international brands without the commensurate standard and quality. As I told a retailer, their goods are mutton dressed up as lamb, at lamb's prices. If one wants quality, one must be prepared to import it. The thing is we export a lot of the raw materials used in the manufacture of goods that we import.
Last week Western Cape Premier Helen Zille led a delegation, including Wesgro, to China to boost trade and investment. Their plan is to grow agriculture and wine exports and tourism. The Western Cape does have a comparative advantage in agriculture. But this is not how we will grow the economy, which is in manufacturing.
Industrialisation occurs when an economy shifts from agriculture to manufacturing, and South Africa has seen its industrial base weakening – de-industrialising – over the past 20 years. Industrialisation, especially with the raw materials at our disposal and policies that encourage it, equals economic growth and prosperity.
The low value of the rand compared to major international currencies, the same reason why South Africa should be a cheap destination for foreign tourists, means we should compete as a manufacturer of, not cheap, mass produced goods that's China’a speciality, but niche and high-end goods using our comparative advantage. But this is not happening, as corporates sit on vast cash reserves or seek markets elsewhere rather than invest locally - an "investment revolt".
We should not be going to China to seek solutions to our economic problems, as the premier and president has done, because we won't find them there. The solutions are here in the production of quality goods and services.
The first by David Biggs in his Tavern of the Seas column was why we import goods from China and elsewhere we could make here. And why we could not become a producer of luxury, designer goods.
The second question was CapeTalk’s John Maytham to an interviewee about why South Africa did not have far more tourists than it already did with the local currency at over R14/$ and R21/£, making it a value-for-money destination.
The short answer to the first question is because our comparatively expensive labour and production costs, low productivity and poor work ethic compared to China and Asia mainly, the world's factory, make it unlikely we'll ever compete.
However, we can possibly compete in niche, luxury and designer goods, not mass produced stuff. But local manufacturers lack vision, confidence, government support and suffer confusing policy to take advantage of local resources, skills and capacity to make great products that can succeed first in the local market, then the world.
I've unsuccessfully been looking for a household good (a quality mattress). Not one of the numerous local manufacturers makes a top quality product. A few advertise so and come close, but fail in one or more areas. The problem also is often the prices of the goods they do produce are at or close to premium, luxury international brands without the commensurate standard and quality. As I told a retailer, their goods are mutton dressed up as lamb, at lamb's prices. If one wants quality, one must be prepared to import it. The thing is we export a lot of the raw materials used in the manufacture of goods that we import.
Last week Western Cape Premier Helen Zille led a delegation, including Wesgro, to China to boost trade and investment. Their plan is to grow agriculture and wine exports and tourism. The Western Cape does have a comparative advantage in agriculture. But this is not how we will grow the economy, which is in manufacturing.
Industrialisation occurs when an economy shifts from agriculture to manufacturing, and South Africa has seen its industrial base weakening – de-industrialising – over the past 20 years. Industrialisation, especially with the raw materials at our disposal and policies that encourage it, equals economic growth and prosperity.
The low value of the rand compared to major international currencies, the same reason why South Africa should be a cheap destination for foreign tourists, means we should compete as a manufacturer of, not cheap, mass produced goods that's China’a speciality, but niche and high-end goods using our comparative advantage. But this is not happening, as corporates sit on vast cash reserves or seek markets elsewhere rather than invest locally - an "investment revolt".
We should not be going to China to seek solutions to our economic problems, as the premier and president has done, because we won't find them there. The solutions are here in the production of quality goods and services.
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