Wednesday, April 12, 2006

China in Africa: Good or bad?

TWENTY-TWO percent of South African business owners have attributed the decrease in their output to China’s economic growth, while 15% credit their profits to the Asian country, says a Grant Thornton survey released this week.

China was perceived as the biggest threat to business by 28% of business owners, while 6% and 4% respectively believed that Zimbabwe and India posed a threat to SA business.

The majority of the businesses that cited China as a threat to their future were based in Durban and Pietermartizburg, where the textile industry had been negatively affected by “cheap” Chinese imports.

The research was carried out among 7000 owners of medium-sized businesses in a range of industries in 30 countries, including 300 in SA, between September 1 and October 31 last year.

On average, a majority of South African business owners (61%) reported that the Chinese boom had had no impact on their operations. Only 13% of businesses perceived China as an opportunity, while 6% and 5% believed that the US and the UK respectively would still provide opportunities for SA .

Manufacturing sector companies which regarded China as the greatest threat led the pack, at 53%, with retailers following at 24%, construction companies at 23% and the services sector at 11%.

Leonard Brehm, Grant Thornton SA’s national chairman, said only 37% of South African businesses reported import or export as part of their business. The top three trade partners of this group were Namibia, Zimbabwe and Botswana.

“This shows that the regional focus of the South African market will not feel the full impact of the Chinese economic boom for some time” Brehm said.

He said the world was adapting to China’s economic growth. East Asia, for example, was more receptive to trade with the country while Europe was more cautious about embracing the trade opportunities China presented. Countries such as Thailand, Turkey and Poland also felt the Chinese boom had adversely affected them....

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