the government has, unfairly I believe, attracted much opprobrium for its decision to appeal against the Competition Commission’s sanctioning of Wal-Mart’s entry into South Africa.
Many financial media reports have been scathing of the appeal, which is not surprising because financial journalists seem to invariably take a supportive stance towards big business interests that are contrary to the State’s standpoint.
If big business supports a deal it must be right, is the short-sighted approach, with insufficient interrogation of the pros and cons.
It is a given that the entry of the world’s biggest retailer will provide South African consumers with some cheaper prices, but after weighing up those pros and cons, my column of cons far exceeds the mere plus factor of a cheaper basket of goods. In fact, apart from the cheaper prices, there is a preponderance of worrying adverse factors.
My principal concern is that it is pointless to enjoy cheaper prices if our manufacturing industry is decimated by Wal-Mart’s universal culture of primarily sourcing stock from the sweatshops of the Far East.
I speak with some authority, having been employed by a major textile company that once employed 15 000 staff, but is no more after the local market was flooded with Chinese and Indian fabric.
Part of the group comprised the Waverley Blanket company, which was the biggest blanket manufacturer in the world, and manufactured world-class quality products. Five thousand workers were employed in five blanket mills to service a costly investment in looms, spinning capacity and the sizeable labour component.
But the government relaxed the incoming trade duties in return for an oil deal with Turkey, and that country flooded our market with bulk rolls of already woven blanketing, which had been heavily subsidised by the Turkish government and cheap Turkish labour.
It has been suggested by proponents of the Wal-Mart deal that the government is discouraging foreign investment by opposing the deal. The truth is that investors will invest where they can garner healthy profits, whether it is in authoritarian countries such as China or heavily socialist ones such as Venezuela.
Countries such as the US are heavily protective of their local industries, including agriculture, which is subsidised. No one castigated the Canadian government as being against foreign investment when it refused to sanction the BHP Billiton’s bid to buy the Potash company, saying it would have an adverse affect on the Canadian economy. And that was a direct government action, with no input by any independent competition tribunal.
So I am glad that we have a government that is taking an interest in foreign commercial transactions that could have an enormous adverse effect on our economy. The Thabo Mbeki administration turned a blind eye to many huge deals that ultimately have not been beneficial to our country.
When Makro originally entered South Africa from Holland, it was a tangible investment because it slowly built its own infrastructure from zero. The biggest benefactors from the Wal-Mart takeover are Wal-Mart/Makro’s majority foreign shareholders.
Today’s many foreign mercenary deals have questionable benefit. Barclays Bank bought into Absa’s decades of infrastructure and rides on the back of our local banking pricing bonanza. What did Mittal Steel’s purchase of Iskor do for South Africa besides causing local steel prices to rocket, and profits to be exported off-shore?
If we receive genuine foreign investment with companies importing their expertise and capital to open new businesses to compete with our big five retail discounters, we will welcome them with open arms. In the meantime, let Wal-Mart prove its bona fides to our vigilant government. We cannot afford any further attrition of our manufacturing industry or emerging small retailers.
Derryck Bellis
Bryanston, Sandton