TRALAC - Trade Law Centre

South Africa: Textile Top Dogs 'Their Own Worst Enemy'

Sunday, 30 January 2005

Source: Business Report (South Africa)

Durban - Independent clothing manufacturers and suppliers this week accused the local textile industry of being its own worst enemy, claiming that poor quality, service and high prices left much to be desired.

Arthur Limbouris, a director of Quiksilver, said many of the small and medium converters had begun importing from China when local manufacturers turned their focus to the export market at the time the rand weakened and the US's Africa Growth and Opportunity Act offered tremendous incentives.

"The net result was that small and medium converters were regarded as expendable. Some companies kept dealing with us but we took a hiding on prices, which went through the roof," he said.

"Now that the rand has strengthened, the textile industry is pleading that it needs us again, but we are now geared to importing from China," Limbouris said.

Gary Green, the managing director of Sector Sportswear, the licence holder for Lee Jeans and Wrangler South Africa, said three years ago the national sales manager of the country's largest denim mill had "proudly boasted" of how he had reduced the company's domestic supply base from 53 accounts to eight.

"In his exact words: 'Who needs the rats and mice when GAP and J Crew are giving us a few hundred thousand metres a month?'

"Now that the rand has recovered so significantly and the GAP orders are something of the past, this self-same textile manufacturer is part of a national lobby seeking government protection against imports."

Walter Simeoni, the president of the SA Textile Federation, said the denim textile manufacturer was owned by a Chinese operator and denied that the local industry had abandoned its domestic customers.

However, he said, manufacturers had increased their emphasis on offshore markets following the trade and industry minister's urging to focus on exports as part of their strategy.

Limbouris also claimed that 40 percent of all local orders was problematic in terms of quality and that deliveries were never on time. "To make matters worse, they only inform you after the delivery date that an order is going to be late," he said.

Stephen Göltig, a consultant to the clothing industry, said duties should be dropped on the capital-intensive textile industry and money invested in the labour-intensive clothing industry, which could then use cheap textiles imported from China, making it more competitive.

However, Simeoni said this was not the view of international experts, who believed verticality was the key to survival as the world currency pendulum was unpredictable.

"Textiles also have a great multiplier effect. For every one job in textiles, between three and four jobs are created in associated industries like engineering services, transport and packaging," he said.

"The industrialisation of the developed world has been on the back of the textile industry and the development of the manufacturing sector in eastern countries is taking place in the same way.

"To propel South Africa forward we need greater volumes so that we can create even more versatility and can enrich the manufacturing industry in South Africa," Simeoni said.

Green said he appreciated the dire predicament in which the textile industry found itself, but it needed to find solutions to its internal problems - which he blamed on decades of government protection - before calling for help in terms of quotas.

"I might still be shopping out of China even if they were more expensive because I know that I can get reliable service and product on time," Green said.

However, Ebrahim Patel, the general secretary of the Southern African Clothing and Textile Workers Union (Sactwu), disagreed, saying South Africa was becoming a sourcing place for quality products, which represented its competitive advantage in the marketplace. "One advantage of sourcing locally is that the supply chain is much shorter for local retailers so they can get quick deliveries," he said.

"At the same time, they get a great product for which they can get repeat orders, creating a commercial rationale for buying locally, as well as a moral rationale," Patel said.

Göltig called on the government to broaden the department of trade and industry's task team meetings - which include representatives from industry, government and labour - to include other interested parties.

Ronnie Stein, Foschini's financial director, said over 75 percent of Foschini's products were sourced locally and that the group had not experienced any problems with the local industry.

However, Selwyn Eagle, the general manager of TFG, Foschini's manufacturing and sourcing unit, pointed out that "when you're the smaller guy, your job will always be last in the queue".

Martin Deall, Edcon's chief logistics executive, said the group continued to do massive business with the local industry, which was still very important to it.

Simeoni said he was not against imports, as these provided variety, but when imports exceeded 30 percent of the market, they began to threaten the local industry and jobs.



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Click here to view a sector profile of South Africa’s bilateral trade with the United States, disaggregated by total exports and imports, AGOA exports and GSP exports.


Other regularly updated trade statistics on AGOA.info include: (click each link to view)

  • AGOA-beneficiary Countries’ AGOA and GSP Trade Aggregates

  • AGOA Trade by Industry Sector

  • Apparel Trade under AGOA’s Wearing Apparel Provisions

  • Latest Apparel Quotas under AGOA

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