How importing from China directly effects the South African Manufacturing Sector?
Manufacturing companies in South Africa are faced with the issue of needing to compete for business with Chinese imported machinery and equipment, due to the fact that China is able to manufacture the goods for cheaper.
Companies needing machinery, parts and equipment manufactured, are looking for the cheapest prices, even if the quality is lowered. We are unable to produce the work for cheaper due to the fact that SA’s monthly expenses for businesses are too high. Fuel and electricity rates go up constantly; rental costs of factories go up 7%-10% per annum and staff salaries being raised each year. The higher company expenses become the more we have to charge by the hour to cover these expenses. There is no option to lower cost, especially by 25%-30%.
“South Africa could not compete with Chinese Products, which were often between 25% and 30% cheaper than locally produced items.”- Natasha Odendaal
This is a major crisis for small to medium sized manufacturing companies in SA, as there is not enough work for the companies that are still running in SA and now China is ‘sharing’ from the small pool of business that there is. Quality is no longer a factor, all that matters these days is quantity.
The Manufacturing sector had lost in excess of 300 000 jobs between the first quarter of 2008 and the first quarter of 2012.
He also noted the closure of about 440 000 small businesses, of which some were a direct result of Chinese imports, in addition to a depressed sector.”- Natasha Odendaal