EU businesses would have an appetite to expand their operations in South Africa and contribute to the revitalisation of the manufacturing sector. But fundamental imbalances such as the flood of cheap and sometimes illegal imports, which make it difficult to compete, need to be addressed. Stefan Sakoschek, a quality consultant to both the government and the European Union (EU) Chamber of Commerce and Industry of Southern Africa, said that apart from creating policy certainty and an environment conducive to economic growth and job creation, the country needed to halt the flood of cheap, noncompliant imports. He stressed that it was hurting local manufacturing, which is currently operating at about 18% below its production capacity. “Substandard goods are being imported and we are a dumping ground for cheap goods from China. This affects local companies because we manufacture to much higher standards and we pay much better wages,” Sakoschek said. “We operate to ISO 14 000 and ISO 9001 standards, and we comply with all the national standards to make manufactured goods of a better quality. “As a result, our goods come out more expensive.” However, he said, firms that manufactured in China to export to South Africa and the United States paid wages as low as $1 per hour and produced goods of a low quality. Sakoschek said it was important to convince South African consumers that it was better to buy a good quality, locally manufactured product than a cheap, “quick fix” Chinese product, which would cost more in the long run because it would not last. “We need to find a solution to control those imports. We are also a dumping ground for counterfeit products like paraffin stoves and electrical wires, which are dangerous,” he said. However, he added, some goods such as laptops were not manufactured locally at all, so there was no existing local competition for the imports. “Before we can promote the concept of ‘buy local’, we need to be able to promote buying locally at a reasonable price and acceptable quality, compared to substandard imports,” Sakoschek said. He said it was also important for the government to explore the possibility of outsourcing product quality verification processes to private, third-party conformity verification companies that would, for example, verify the quality of imports in the country of origin before they were exported to South Africa. Sakoschek added that unemployment was “the mother of all problems” facing the country. He also cited the recent xenophobic attacks and riots as a related factor, saying the underlying reason for the outbreak of this violence was an assumption that foreigners were taking jobs from locals. “Any policy to promote the reduction in unemployment would improve the situation. Our focus at the chamber has always been to try to advocate for low technology manufacturing in South Africa in order to employ more of the masses, but to implement it is not easy,” he said. Sakoschek said EU manufacturers were also concerned about the government’s talk of nationalisation as it was reminiscent of the USSR’s policies before its collapse. He said the country also needed to take steps to beneficiate raw materials like iron ore and coal locally, rather than exporting them and then reimporting the commodities as consumer goods from China, the EU and elsewhere. “If these issues are addressed, there will be an appetite to expand production in South Africa,” he said.
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Substandard goods are being imported and we are a dumping ground for cheap goods from China. – Stefan Sakoschek