Even with the commencement next month of the South African Revenue Service’s import duties on small parcels, local clothing sellers will never be able to compete with the likes of Shein or Temu, which flog dresses for as little as R32, or shoes for R100. Never mind the fact that your cheap outfit might not last a wash cycle, or that you’re adding to the industry’s waste problem.
Nor can SA manufacturers match the billion-dollar advertising budgets of these firms or hope to see hundreds of millions of dollars in Chinese government subsidies.
Where they might have a fighting chance is if they can optimise production lines and improve efficiency initiatives. By bolstering South African manufacturers’ competitiveness, locally manufactured goods could begin to replace imports on our shelves, with export opportunities expanded and local procurement stimulated.
Back in 2021, the Localisation Support Fund (LSF) was established to help revitalise South Africa’s struggling manufacturing sector by addressing “challenges” and promoting local manufacturing and exports.
The public-private localisation partnership, funded by an initial R340-million injection from Coca-Cola South Africa and Air Liquide, is geared at reducing imports, increasing exports and promoting industrial competitiveness in line with the 2021 localisation pact at the National Economic Development and Labour Council.
“Challenges” is government-speak for problems. The government and trade unions have been part of the LSF from the start, as members are drawn from the funding contributors, the government, business and labour.
Former Trade, Industry and Competition minister Ebrahim Patel was its first chairperson. Harald Harvey, an investor, is now in the chair, with businessman Grant Pattison, Luisa Ortega from Coca-Cola and Martin Kingston from Rothschild & Co South Africa as non-executive directors, alongside Patel and Western Cape Cosatu leader Tony Ehrenreich. Thami Moatshe, an entrepreneur with exposure to the private and public sectors, is the executive head.
On Wednesday, the LSF, which has conducted studies on the furniture and renewable energy sectors, reported on work it had done with two retail clothing, textile, footwear and leather (R-CTFL) sector manufacturers.
The two case studies — Green Thread Manufacturing (which manufactures clothing for Cape Union Mart’s Old Khaki and Poetry ranges) and Karma Clothing (a corporate-wear maker) — show that LSF interventions, aimed at driving efficiency and production line optimisation, can make manufacturers profitable and competitive.
Moatshe says one of the primary obstacles to manufacturing localisation is the high cost of production and the competitive pressure from cheap imports.
Green Thread Manufacturing, which has 350 employees, was operating at a loss after it transitioned from the Keedo children’s clothing line to women’s leisure fashion.
Cape Union Mart, Green Thread’s parent company, had aggressive ambitions for growth but encountered problems. LSF’s intervention streamlined processes, eliminated bottlenecks and ensured a balanced workflow, which helped the company turn its first profit in four years.
It also improved efficiency by 10% and reduced standard minute value (a measure used in the garment industry to gauge the time required to perform a specific task) by 55%, enhancing competitiveness and cost estimation accuracy.
Unlike Green Thread, Karma was growing (it already exports to Eswatini, Lesotho, Zambia and Zimbabwe), but needed to drastically improve production and timelines to allow it to look beyond sub-Saharan Africa.
Moatshe says by optimising the layout of the factory floor, doing visual mapping and giving staff further training, bottlenecks were resolved, capacity unlocked and Karma was positioned to scale from a medium-sized entity to a large business.
LSF has been set up to support efforts to achieve the targets of the South African R-CTFL value chain Master Plan 2030, one of which is aimed at growing employment in this sector from 212,000 to 333,000 workers.
Other targets include increasing the share of retail sales of locally manufactured clothing and footwear to 65% of total retail sales and growing the procurement by local retailers of locally manufactured R-CTFL products to at least R69-billion. They are ambitious targets, but given the right interventions, might just work.
Such interventions will never be enough to position local manufacturers against the cheap imports, although Moatshe says other factors come into play. After Covid-19 disrupted supply chains, retailers found it was better to procure goods right here in South Africa — at the same level of quality and in some instances, the same price — than to import from Mauritius or China. DM
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Business Maverick
After the Bell: Localisation helps keep cut-price Chinese imports at bay
Struggling under the weight of cheap imports, South Africa’s clothing and shoe sector is showing signs of revival. A new report shows how technical interventions can help to increase efficiencies to make this sector more competitive.
