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South Africa: Clothing Sector Urged to go Niche, not Fight China

Published date:
Thursday, 22 June 2006

South African clothing manufacturers and designers should concentrate on producing high quality, "distinctively South African" clothing that could capture niche markets which were not in direct competition with the efficient Chinese, Free Market Foundation director Eustace Davie and economist Jasson Urbach said.

In an article released on Wednesday entitled "Strengthening strategic ties with China" in the context of the visit of Premier Wen Jiabao of China to President Thabo Mbeki on Thursday, the two said: "South African manufacturers should seriously consider following the example of their counterparts in New Zealand.

"Realising that they could never match the Chinese on price, New Zealand decided to move upmarket, competing on quality and style rather than on price. This approach has been most successful."

South Africa could then have the best of all worlds: a thriving local clothing manufacturing industry, continued access to low-cost clothing for its poor from China, and no strife with China.

The two noted that much of the "ongoing antagonism" directed at China results from the ability of the Chinese people to be more efficient than anyone else in the production of clothing and textiles.

Along with producers elsewhere in the world, South African producers struggle to compete. "However, the vast majority of South Africans are benefiting from being able to purchase the low cost, good quality, Chinese goods. It is typically consumers at the low end of the market that have benefited from the lower prices."

Arguing that South Africans should not be frightened of an increasingly open Chinese market, they said: "In open trade regimes it is domestic and foreign consumers that decide which industries will prosper and the increased competition leads to greater efficiency overall.

"The World Bank estimates that if we were living in a tariff free world, income around the globe would increase by 832 billion US dollars as a result of increased trade in all goods. Most of these gains - about 539 billion dollars - would flow to developing countries."

Opening to the outside world had greatly promoted the development of China's foreign trade, they noted. China's import and export volumes increased from $1.13 billion-worth in 1950 to $360.65 billion-worth in 1999, "or an increase of 319 times".

The total import and export volume in 1999 increased by 17.5 times, as compared with that in 1978 - when economic reforms from a centralised system began. In terms of foreign trade, China ranked 32nd in the world in 1978, and rose to ninth in 1999.

At the same time the per capita disposable income of urban households in 2004 was 9 422 yuan (R7 858), a real growth of 7.7 percent, while per capita net income of rural households was 2 936 yuan (R2 449), a real increase of 6.8 percent, both representing the highest growth since 1997.

By the end of 2004, the savings deposits of urban and rural households totalled 11.9 billion yuan, an increase of 1.6 billion yuan compared to the beginning of the year. - I-Net Bridge

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