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The China effect – eroding SA’s economy, increasing unemployment and delivering inferior products

30 August 2012
Opinion Piece
By Dave McDonald, Divisional Managing Director of Jasco Electrical Manufacturers

5 December 2011

We’ve all heard the saying ‘local is lekker’ and seen campaigns by local manufacturers urging us to support South African brands. However, the China effect is being felt the world over, our own country included, as businesses and retailers increasingly look towards the Far East to source products rather than supporting local manufacturers.  This because of the plain fact that goods manufactured in China are cheaper.

South Africa has felt the effect most predominantly in the clothing, textile and motor industries, but more recently the local electrical manufacturing industry has also come under threat. The lure of these cheaper, mass produced electrical components has resulted in an increasing number of imports at the expense of locally produced products.

While cheaper imported products may be appealing on the surface, the effect of importing such large numbers of goods is detrimental to the local economy. Aside from this, more often than not these imports are without warranty and may be produced using inferior methods and materials. In the clothing and textile industries this results in poorly produced goods, but in electrical manufacturing uncertified inferior products can be incredibly dangerous, causing short circuits, fires and other problems that can result in the loss of human life.

The increase in the number of Chinese imported products has led to many of these manufacturers going as far as shipping the goods themselves, encouraging local suppliers to take advantage of cheap products. Importing products also circumnavigates the problems of labour in South Africa. It is far easier to place an order with a Chinese manufacturer and sell it when it arrives than deal with unions and the complexities of the labour laws.

Obtaining quality certifications and approvals in South Africa has also made the import of Chinese manufactured electrical equipment an attractive prospect. All locally produced products should be tested by the SABS for compliance, but this is a lengthy process – and with good reason. In comparison, if a product is manufactured in China, it will be tested at an accredited test house and a certificate will be issued within seven working days or sooner.

Since certificates of authenticity are easy to counterfeit it is hard to know whether a product has actually been tested or not, and the quality standards deemed acceptable in China may not be on par with local compliance requirements. The unfortunate truth is that South African manufacturers are competing on an unfair playing field. Countries in the Far East such as China are not subject to the same laws as local producers, and so are able to mass produce goods quickly without the same restrictions.

The policing of imported products, particularly electrical goods, is fundamental to the safety of all South Africans. The National Regulator for Compulsory Specifications (NRCS), a part of the Department of Trade and Industry (DTI), has undertaken to do this in conjunction with Customs and Excise. However, there are still products that manage to ‘slip through’ and one only need visit flea markets or small town traders to realise this. These markets are often full of dangerous and untested plugs, stoves and heaters.

Gambling with the safety of consumers and contributing heavily towards lost jobs, loss of income, a poorer economy and greater poverty will only lead our country further into trouble. It is therefore crucial for a few fundamental issues to be examined.

The testing houses are the first issue that needs to be addressed, as testing products is an incredibly time consuming process. This must become more efficient and aligned with industry, in order to encourage local manufacturers to become part of the process.

The government should also encourage the manufacture of electrical good in South Africa by offering to test locally produced goods for free and by increasing the import charges dramatically on any product that can be made locally. This will drive local producers to design and manufacture more of their own products, by making imports less appealing and easing the local process, which in turn will stimulate job creation and economic growth.

The balance between what our country exports and what it imports is increasingly tipping in favour of China. There is no added value to our exports, since we send out raw materials and it returns to our shores as a finished product. Flooding the country with cheap imported goods does nobody any good in the long run, and could cause the local economy to stagnate and grind to a halt if it is not dealt with in the near future.

The fact is that we have all of the raw materials and the people needed to make these products ourselves. South Africa is more than capable of taking on Far Eastern manufacturers at their own game.  The time to step up, rally Government on this issue and fight back is now.

For more information, visit Jasco Electrical Manufacturers at www.jasco.co.za,

Or contact:

Dave MacDonald
Divisional MD
Jasco Electrical Manufacturers
Tel: 031 579 4701
Email: dave.macdonald@jasco.co.za