Win-win trade relations for SA and China

International relations

Trade between South Africa and China keeps rising as the relations between the two countries deepen.

According to the Department of Trade and Industry (dti), South Africa’s exports to China reached an all-time high of R85 billion in 2011, an increase of 45 per cent over 2010.

In October, 63 South African businesses looking to penetrate China’s huge market exhibited their products at the annual South African Expos in Beijing and Shanghai. The most popular South African product at the expo was agro-processing, especially wine.

At the same time, China’s International Brand Management Centre (IBMC) and Trade and Investment South Africa signed a Memorandum of Understanding (MoU) which will assist the South African enterprises to gain access into the Chinese market.

Comprehensive services

The MoU stipulates that the IBMC will provide comprehensive services to introduce and promote South Africa’s products and services in the Chinese market. It will also develop local distributors for selected South African enterprises, exporters and distribution channels.

In 2010 South Africa and China signed a Comprehensive Strategic Partnership Agreement. This agreement identified agro-processing, chemicals, plastics, steel, aluminium, automotive, capital equipment, manufacturing, electro technical, and paper and pulp as the top 10 products South Africa could export to China.

For its part, China has also been aggressive in penetrating the South African market. Recently, Transnet announced a consortium led by China South Rail (CSR) Zhuzhou Electric Locomotive as the winning bidder to supply 95 electric locomotives for its massive drive to upgrade its freight rail.

Transnet will pay R2.6 billion for the 95 locomotives, the first 10 of which will be assembled in CSR’s factories in China, while the remainder will be made in South Africa.

Producing jobs

Chinese manufacturer First Automobile Works, has also invested US$100 million (R884 million) to build a vehicle and truck assembly plant in Coega. According to the dti, the project President Jacob Zuma during a meeting with Chinese President Hu Jintao has produced 1 000 jobs to date.

Director-General at dti, Lionel October, said the relationship between the two countries should be seen more as a continent to continent relationship rather than two countries forming an alliance. “China’s investment has grown significantly in Africa and we have seen several companies invest in numbers.”

October pointed out that this was a win- win situation of mutual economic benefit and that this would further deepen the relations between the two countries.