Saturday, 15 December 2012 13:49

Newsletter 23

In this newsletter:

  • China Tops in South African Trade
  • Mozambique-China Trade Continues to Grow
  • South Africa: Wine to China

China Tops in South African Trade

South Africa has experienced a significant shift in trade with a new emphasis on links with developing nations, at the expense of traditional partners in the developed world, according to a leading South African economist.

Mike Schussler, CEO of, a Johannesburg-based economics consultancy, has looked at the evolution of South African trade since 1998. "Two important changes have happened since then," he told IPS.

"China has become the manufacturing capital of the world, and a lot of South Africa's mineral products go to China, and India is becoming a manufacturing and service centre."

Schussler said that in 1998, the five major destinations for South African exports were the United Kingdom, the United States, Germany, Japan and the Netherlands, with China in eighth place.

In 2008, the top five were Japan, the U.S., Germany, the U.K., and China in fifth place - while India was in seventh place, according to data from the South African Department of Trade and Industry.

Figures for the first nine months of this year show that China is now the number one destination for South Africa's exports, followed by the U.S., Japan and Germany, with India now in fifth place.

"Two of the top five are now South-South players, with China and India both members of the BRICS alliance," said Schussler, referring to the association of Brazil, Russia, India, China and South Africa.

Schussler stressed that just as exports are being increasingly sent to other developing nations, South African imports are also increasingly coming from the nations of the South.

"The top six currently consist of China, Germany, Saudi Arabia (which is mainly oil), the U.S., Japan and India," he said.

South Africa joined the BRIC group of leading emerging markets at a summit meeting in China in April 2011, and President Jacob Zuma will host the next BRICS summit in Durban in 2013.

There has been much criticism of South Africa's inclusion in the club, as all the other members have far larger economies.

However, Schussler noted that South African membership is already reflected in changing trade patterns, with less emphasis on business with developed nations, and more on cultivating closer economic ties with developing partners.

And he pointed out that while South Africa alone may not have the same economic weight as fellow BRICS nations Brazil, Russia, India and China, it has a political and strategic importance as an African member.

As Schussler explained, the evolution of South African trade in recent decades has to some extent been determined by the wider changes in the global economy, with the ascendancy of China and India.

However, this change is in line with the South African government's own wish to boost commercial links with other leading developing nations, and there is every reason to believe that the South African trade spotlight will continue to shine strongly on the BRICS nations and the rest of the developing world.


Mozambique-China Trade Continues to Grow

Trade between Mozambique and China was worth 1.1 billion US dollars between January and October this year, according to Cao Jiachang, the deputy general director of the Africa and West Asian Affairs Department of the Chinese Trade Ministry.

Speaking to Mozambican reporters in Beijing, Cao said this was an increase of 46 per cent compared with the same period in 2011.

For all of 2011, the volume of trade between the two countries reached almost a billion dollars, which was a 37 per cent increase on the 2010 figure. The pattern in recent years has been for a rapid increase in trade between Mozambique and China, at an average of more than 30 per cent a year.

In 2011, Mozambique occupied the 23rd position in the list of China's most important trade partners. It occupied the same position in the first ten months of this year, despite the sharp rise in Sino-Mozambican trade.

"This shows we have to make a greater effort to improve our bilateral trade", said Cao.

He noted that China's exports to Mozambique are very diverse, but the same is not true of Mozambique's exports to China, which consist essentially of timber and minerals. However, Cao said that China is willing to help Mozambique expands its exports.

"We have many exhibitions in China, and some of them can serve as a platform for Mozambican products", he added.

The Chinese authorities also say they are pleased with the political stability and peace that Mozambique has enjoyed since 1992, when the General Peace Agreement between the government and the apartheid-backed Renamo rebels brought an end to the war of destabilization.

Thanks to peace and stability, Cao said, Mozambique has been able to maintain noteworthy levels of economic growth and development, enabling the country to attract foreign investment and expand its trade.

The Chinese official believed that Mozambique has enormous potential thanks to its huge reserves of natural resources, and excellent conditions for agriculture.

The Chinese investments are mostly concentrated in cement factories, mining, agriculture and fisheries. Some Chinese companies have also expressed an interest in cooperating with Mozambique in the generation and distribution of electricity.

As for trade between China and the entire African continent, this reached 166.3 billion dollars in 2011, an increase of 31 per cent compared with the 2010 figure.

Exports from China to Africa reached 73.1 billion dollars (an increase of 22 per cent), while China's imports from Africa reached 93.2 billion dollars (an increase of 39 per cent).

From January to October this year, trade between Africa and China was valued at 163.9 billion dollars.

"Our exports to Africa reached 69.4 billion dollars, which was an increase of 16 per cent compared with the same period in 2011", said Cao. "Our imports from Africa were 94.5 billion dollars, which was an increase of 25 per cent".

In 2011, the largest African trading partners of China were South Africa, Angola, Sudan, Nigeria and Egypt. In the period from January to August this year, the list underwent slight changes. It is still headed by South Africa, followed by Angola, Nigeria, Egypt and Libya.

By late September this year, Chinese companies had signed contracts to the value of 193.8 billion dollars in Africa, covering the areas of finance, telecommunications, tourism, manufacturing and mining.


South Africa: Wine to China

South Africa and China are partners within a club of leading emerging markets, and it would seem natural that exports of South African wine to the Chinese market should be surging.

However, there is a feeling within the wine industry that not enough of the right support is being made available by the authorities.

Governments have made the political move to form the Brazil, Russia, India, China and South Africa (BRICS) alliance, but it could be argued that they should also be working just as hard to ensure that trade grows alongside political activity.

"South Africa's BRICS positioning should be an immediate and massive boost to the wine industry - but it isn't even felt as far as I can see," warned Mike Ratcliffe, owner of the Warwick wine estate in Stellenbosch, in the heart of the Cape Winelands.

There has been an increase in the number of litres of wine sold to China, but this would be misleading, as there is very little in the way of solid branded product with a reasonable expectation of sustainable growth.

Ratcliffe was dismissive of the current activities by South Africa's Department of Trade and Industry (DTI) in boosting wine exports to China, and he argued that instead all efforts should be focused through the industry export body: Wines of South Africa (WOSA).

"The DTI -sponsored trips to the Chinese market are poorly planned, poorly received, often mocked by Chinese importers, and what I would consider an irrational use of state funds," he complained.

Cape Town-based TV chef and wine consultant Michael Olivier told IPS that there must be a more coordinated effort among all the South African role players for better sales of South African wine in China.

"I would hope that BRICS would assist, but it takes consistent marketing to break through," he stressed.

Ratcliffe is worried that the industry "has yet to open a Chinese office, appoint a Chinese representative or commence any kind of effective media or marketing campaign in China.

"This ridiculous and laughable state of affairs is not entirely due to a lack of political will, but mainly due to a lack of funding.

"Generic export marketing funds should be forthcoming from Provincial and National coffers to support a labour-intensive industry."

Johannesburg-based branding consultant and wine writer Jeremy Sampson agreed that the South African government's support for the wine industry is not enough, and is not in evidence.

He stated: "Apparently they are busy, but where is the evidence?"

Sampson told IPS that there must be more imagination in promoting exports, and pointed to the growth in auctions of premium wine in Hong Kong, saying this is one platform which should be better explored.

Mike Ratcliffe remained convinced that exports to China can and must be boosted and that the rewards could be massive, as China has virtually unlimited potential as a market for wine.