JOHANNESBURG - We wrote last week about public private partnerships in South Africa and one in particular between the Department of Small Business Development and Nestlé South Africa. We are often asked how multinational companies such as Nestlé qualify to be part of the buy local movement.
In fact, we have a number of multinational companies (MNCs) that are members of Proudly South Africa, including Nestlé, Massmart (Walmart), Hisense and Nissan. It is not the ownership of the entity that concerns us, but the role the company plays in our local economy that qualifies them for membership.
The role of MNCs, especially in emerging economies, is an important one with the foreign direct investment (FDI) they bring with them often being the biggest source of external finance for the host country. MNCs bring transferable skills and technology as well as capital. For a multinational company to enter a new market, conditions for them to invest and build a viable and sustainable operating base have to be favourable and make good commercial sense for their entry to be worth their while.
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Never underestimate South Africa's attractiveness as an investment destination even in the most turbulent of political times. We can credit our “cousins” at Brand South Africa for the work they do in enticing businesses to come and establish a base here. To support awareness of South Africa’s being “open for business”, they recently launched a digital campaign called CEOs Know with a number of chief executives of MNCs based in South Africa sharing insights into their respective companies’ investment in our country. And last year the Department of Trade and Industry (dti) established and launched a new focused entity, Invest SA, to help make it easy for companies to access South Africa as an investment destination.
Investment
Hisense, a Chinese-owned consumer white goods and electronics company and member of Proudly South African has been in the country for 21 years. It set up its base at Atlantis, in the Western Cape, where unemployment and crime are major challenges facing the community. In 2013 they opened a new facility, covering 100000m2 and producing 1200 fridges and 1700 televisions a day, representing a significant investment.
Their workforce is 98percent drawn from Atlantis.
This is a great example of a multinational putting down firm roots in a host country, providing jobs and producing goods for local consumption, keeping profits in the country and reinvesting in their own growth and bringing socio-economic improvements to their immediate area.
We cannot ignore the subject of revenue outflows by some MNCs, and how and to what extent some companies have moved profits offshore has been hotly debated, but we believe we have some great examples of companies that are showing real commitment to South Africa, which have heeded the message of Proudly SA and continue to reinvest and/or grow their investment in the country.
South Africa’s automotive sector is critical to the country's economy and Nissan’s commitment to upgrading its Rosslyn plant, where the NP200 and NP300 bakkies are manufactured, as well as negotiations with their Japanese parent company to add a new 1-ton truck to the line, is another example of an MNC demonstrating its Proudly SA credentials.
When the US’s Walmart concluded its 51percent purchase of Massmart in 2012, the deal came with terms and conditions imposed by the government, aimed at protecting jobs and deferring what was anticipated would be an influx of foreign manufactured goods on the shelves of Makro, Game and Builder's Warehouse stores.
In addition to guaranteeing no retrenchments of its local workforce for two years, Walmart Massmart also committed to investing R100million over its first three years of operation in local suppliers.
Of its own volition, Massmart extended this programme and just last year we were part of the exciting launch of a supplier development programme of 33 local suppliers, of whom eight were specifically imported replacement products.
The Walmart Massmart deal brought jobs, skills development and more consumer choice to South Africa. The deal has also brought massive benefits to local companies by opening doors to export deals to them - one of their local suppliers of braai briquettes, Umlilo Charcoal Products, exported an entire container to a Walmart partner in Chile in 2017!
We must ensure that MNCs in South Africa benefit both the company and the country equally. We at Proudly SA will continue to push for more than just raw production materials to be procured locally, but to insist that everything required for the business to function, including office consumables, is also sourced from local small, micro- and medium-sized enterprises.
Let’s be Proudly South African and multinational at the same time. Buy local to create jobs.
Deryn Graham is PR Manager at Proudly SA.
The views expressed here are not necessarily those of Independent Media.
-BUSINESS REPORT