Johannesburg - South Africa has seen growth of more than 1 000 percent in sales of certain value-added products traded with China since the two countries agreed to co-operate in promoting value addition to their primary resources and to increase their participation in the global value chain.
For instance, exports of light vehicles to China increased to 5 369 units in 2012 from 1 202 units in 2011, growing in rand value to more than R842 million. Exports of compression-ignition engines jumped to R482m from R27.1m over the same period.
Vehicle exports to China from South Africa in 2011 came from Toyota, Volkswagen, BMW, Mercedes-Benz and Nissan. In 2012, Ford also started to export to China.
Norman Lamprecht, the executive manager at the National Association of Automobile Manufacturers of SA, attributed this strong growth to BMW South Africa increasing exports of its 3-Series models to China last year.
Speaking in Xiamen, China, during the first day of the China International Fair for Investment and Trade on Sunday, Sharika Motan, the deputy director of export promotion at the Department of Trade and Industry, said these figure were expected to increase significantly this year because of BMW’s exports and as a result of several investments in the automotive sector that were in the pipeline.
Total automotive exports to China were worth R1.13 billion last year, while China’s light vehicle exports to South Africa were valued at R1.25bn last year.
Rob Davies, the Minister of Trade and Industry, said a number of projects aimed at adding value to South Africa’s commodities had attracted Chinese investment.
“There is an important project… a manganese sector plant, which is going to add value to manganese products.
“In the investment pipeline from China we have two automotive manufacturers but the level of investment is not yet where we think it should be,” Davies said.
Value-added products account for only 6 percent of South Africa’s total export basket but Davies said co-operation with China was expected to strike a balance in the products the countries traded.
“We cannot count on continuing simply to be a producer and exporter of mineral products. We want to move up the value chain; we want to move up the value chain in our relations with China,” Davies said.
China has been South Africa’s largest trading partner since 2008 and most South African exports to China have been raw minerals.
Last year South Africa’s trade deficit with China widened because the value of exports to China declined as the mineral commodities supercycle passed its peak.
In 2010, South Africa and China agreed to form a comprehensive partnership to promote the trade of more value-added South African products. Ten strategic investment projects were identified, as well as 10 sectors of focus, including agro-processing, chemicals, automotive, capital equipment, steel and aluminium.
Davies said South Africa’s wine exports to China had grown faster than China’s overall wine imports. They grew by 57 percent between 2008 and last year.
Motan said China was now among the top 20 nations importing South African fresh produce. Its fruit purchases from South Africa grew by 67 percent between 2008 and 2012. In the same time, canned fruit imports grew 21 percent and were gaining momentum.
“We’ve been pursuing opportunities for South African fruit producers in a range of fast-growing emerging economies,” Davies said.
“Even here in the exhibition we’ve seen quite significant increases in our wine sales and there are quite a lot of agro-processing products which are on exhibition and we are hoping to increase our sales of those products.”
The biggest investment by a Chinese firm in South Africa to date is a $440m (R4.4bn) project in the mining industry. Investments by South African companies in China are estimated at between $600m and $800m.
The Department of Trade and Industry has incentives for foreign companies looking to invest in activities that would add value to South Africa’s primary resources, such as manufacturing, mineral beneficiation and agro-processing. These include the Automotive Production and Development Programme and grants for companies wanting to expand their factories. - Business Report