Officials of the South African Development Community recently stated that the current African Free Trade Agreement (FTA) negotiations are progressing smoothly and are expected to be completed one year ahead of schedule in 2015. This seems to be good news for South Africa, one of the 26 member countries.
The textile and apparel industry is one of South Africa’s important industries. However, in recent years, South Africa has faced demands from textile workers to raise minimum wage standards and domestic textiles have been subject to competition from the international market. The textile and apparel industry lacks competitiveness and has shrunk. In this case, on the one hand, the smooth advancement of the African Free Trade Agreement negotiations may promote the development of various industries in South Africa, including the textile industry. On the other hand, the South African government is actively expanding investment to promote comprehensive reform of the country’s textile industry.
The trade agreement may bring business opportunities to South Africa
The African Free Trade Area negotiations are divided into three parts, including the South African Development Community (SADC), the Common Market of Eastern and Southern Africa (COMESA), and the East African Community (EAC). Negotiations on the African Free Trade Agreement, covering a total of 26 countries in East and South Africa, are currently progressing smoothly and are expected to be completed one year ahead of schedule in 2015. If the negotiations are successfully completed, it will benefit 600 million people in 26 countries. After the Free Trade Agreement (FTA) comes into effect, it will establish the largest regional integrated market in Africa so far. Kizito Sikuka, a researcher at the Southern African Research and Documentation Center, said that the final trade agreement will consist of a tripartite free trade area and will achieve the goal of establishing a single customs union in the near future. Through investment that improves and expands competition, Africa’s intra-regional trade is expected to increase rapidly and deepen regional integration. In addition, after the agreement comes into effect, more trade barriers will be eliminated and African countries will be encouraged to explore new markets.
South Africa is one of the BRICS countries and a member of the South African Development Community. In the South African Development Community region, South Africa’s products exported to the region account for 40% of all intra-African trade. In addition, South Africa is located at the southernmost tip of the African continent, with an advantageous geographical location and strong commercial re-export capabilities, which is one of the driving forces for Africa’s economic development. Investing in South Africa is not only an important way to enter the local South African market, but also the large African market.
The government invests in the textile industry in various ways
In addition to the international aspect, the future free trade agreement will bring opportunities to the development of South Africa’s textile industry. On the domestic aspect, the South African government continues to expand investment to promote the development of the country’s textile industry and meet the country’s consumer demand for textiles and clothing. . South Africa’s Minister of Trade and Industry, Rob Davies, said that in the coming year, the South African government will continue to increase investment to support the development of the country’s textile and apparel industry, that is, the implementation of the Industrial Development Action Plan in South Africa is coming to an end. In 2014, promoting the development of the textile and apparel industry will become the central task of the South African Department of Trade and Industry, and all future activities will be launched around this task.
The textile and clothing industry is one of South Africa’s important industries, absorbing a large number of labor employment in the country. Take effective measures through the South African Department of Trade and Industry, including strengthening the supervision and testing of imported products by South African Customs to ensure that imported products comply with relevant customs and tax laws and regulations; reduce the import of unfair and illegal products; designate departments in accordance with the “Priority Procurement” The Policy Framework Act was adopted to purchase related products, and domestic buyers were encouraged to strengthen cooperation with relevant retailers; the introduction of the Textile and Clothing Competition Plan (CTCP), etc., enabled the country’s textile and clothing industry to achieve steady development. Moreover, the South African Department of Trade and Industry will continue to invest in a variety of ways: including the formulation of the “Manufacturing Competitiveness Enhancement Plan”, “12 Financial Subsidies”, and the “Clothing and Textile Competitive Development Plan” projects.
Retailers try to attract customers online
A survey data shows that the current total value of South Africa’s retail market has reached 500 billion rand. However, the development of e-commerce is restricted by logistics factors and other factors. Online retail accounts for a smaller proportion. Compared with online shopping, currently, Most residents in South Africa still prefer to go to physical stores for consumption. According to a survey report by Accenture released by the South African media, about 46% of South Africans prefer to shop in physical stores, while 25% shop online through mobile phones and computers.
With the introduction of e-commerce in South Africa, many South Africans will check the prices of related products online before going to physical stores to shop, and finally make a purchase decision. However, because they find that online shopping will encounter many problems, most people end up shopping online. I still choose to go to physical stores to buy goods.
Although South Africans currently prefer to shop in physical stores, the future development speed of e-commerce in South Africa cannot be underestimated. The global telecommunications operator organization GSMA stated that in the past five years, sub-Saharan Africa has become the fastest growing region of mobile phone users in the world. The penetration rate of mobile phone networks in South Africa has reached 30%, which is higher than the global average, which means One in every three people in South Africa is a mobile broadband subscriber. Faced with the booming online market, major retailers in South Africa have been testing the waters of e-commerce, either doing domestic trade e-commerce or getting involved in foreign trade e-commerce. Foreign media destinationconnect reported that the online shopping field in the South African market is still in its infancy, but local retailers are rapidly expanding their customer base and increasing operating profits.
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Multi-level
The South African commodity market structure is multi-layered, with a prominent binary structure. White people, who make up a minority of the country’s population, own more than 60% of total social consumption, while black people only own 20% of consumption. Therefore, on the one hand, there is a white consumer market in South Africa that is consistent with or close to that of developed countries, and on the other hand, there is a black consumer market that has consumption levels similar to those in black African countries.
After the founding of New South Africa, the government adopted various policies to change the distribution of wealth. The consumption power of black people also gradually improved, and a mid-range consumer market between the two was gradually formed.
Diversity
South Africa’s commodity sales channels are diversified, and sales channels also include modern supermarkets, various scattered sales outlets, and market-type markets coexisting.
South Africa has the same modern supermarkets and shopping centers as European and American countries. At the same time, simple small shops, stalls and markets in black residential areas are still the most important sales channels for goods. South Africa’s modern commercial sales system is highly concentrated in cities where white people live, while the vast rural areas, dominated by black people, lack modern commercial sales networks.
High degree of monopoly
The sales channels of major commodities in the South African market are highly monopolized by chain commercial systems, and developed commodity sales channels are controlled by more than a dozen large commercial chain systems. According to different business scopes, these chain systems have the headquarters responsible for unifying imported goods, branches distributed throughout South Africa responsible for sales, and unified management of product prices and services. In the past, most of its main clients were white people, but now it is open to all races and classes. The products sold in the market are all medium and high-end products, and imported goods account for a large proportion of the products sold. These commercial chain systems have many years of operating history and good reputation in the local area. A large part of the goods they sell, such as footwear, clothing, and home appliances, are produced at designated locations abroad and have high standards for quality and delivery time. and after-sales service have higher requirements.
Strong re-export ability
South Africa has strong commercial re-export capabilities and has a greater impact on the markets of neighboring countries. The commercial chain system has branches not only in various cities in South Africa, but also in surrounding countries.
South Africa is a member of African regional economic organizations such as the Southern African Economic Community and the Southern African Customs Union, and its commodities, goods, and currencies can circulate freely in the region. At the same time, due to historical and geographical reasons, goods transferred to neighboring countries of South Africa through the South African commercial chain system are highly competitive in commercial sales in these countries. South Africa has a developed sea, land and air transportation and financial and insurance systems. It has always been an entrepôt center for trade in southern, eastern and central Africa.
