China shifts focus to upper-end products

Chinese manufacturers and investors see South Africa as their first port of entry into the rest of Africa, and China has been SA’s largest trading partner for the past four years. This is according Zhang Xialing, deputy director of the foreign trade department of China’s ministry of commerce, who addressed the country’s 114th import and export Canton Fair in Guangzhou, Guangdong province last month. The Chinese State Council ‘s latest China-Africa Economic and Trade Cooperation White Paper shows that trade between the continent and China fell short of just under US$200bn ($198.49bn) in 2012 – a year-on-year growth of 19.3%. Of this figure, $85.319bn consisted of Chinese exports into Africa, an increase of 16.7%, and $113.171bn was due to imports from Africa – up 21.4%. Trade relations between South Africa and China represent a large chunk of that figure, amounting to around $60 bn. Xialing noted that apart from the “traditional exports” of electronic equipment and clothing, Chinese companies were shifting their focus to upper-end market products and increasing their foreign direct investment (FDI) on the continent, again using South Africa as a springboard. The China Daily newspaper uses the Hisense group as an example, with the company having invested US$56 million in an electronics factory in Atlantis, north of Cape Town in June this year. The factory is reportedly focusing on manufacturing f lat screen television sets and refrigerators and has plans to double in size over the next few years with a view to extending the production of washing machines, airconditioning units and possibly coffee machines. According to Hisense, the latest data from GfK – a German research group – Hisense TVs and refrigerators ranked in the top three in South Africa during September, with 16% of the total LCD TV market share, followed by LG, and 14% of the total refrigerator market, after local brands DEFY and KIC. In October, Hisense sales exceeded $10 million in South Africa. Xinhua.net press agency reports that by the end of 2012, China had signed bilateral agreements with 32 African countries and established joint economic commission mechanisms with 45 countries on the continent. INSERT $60bn The value of trade between SA and China.