Several South African retailers, which also includes the likes of Woolworths Holdings Ltd. and The Foschini Group Ltd., are reportedly increasing their investment in the country’s local clothing companies, both in an attempt to reduce their dependence on Chinese imports as well as to consolidate a supply chain that was thrown into a mess by the Covid-19 restrictions.
The firms have apparently signed up to a market plan that contains a target that sees them sourcing approximately 65% of their goods and products from local manufacturers over the course of the next 10 years. While progress toward this goal would vary according to the chain, the rate of the spread of the coronavirus has considerably elevated their collective focus.
Chief Executive Officer, TFG, Anthony Thunström stated that the coronavirus pandemic made such significant disruptions to the existing supply chain that it has gotten everyone asking whether they really want themselves to be so reliant on Chinese imports ever again?
Answering his question, Thunström stated that the retailers seem to have made their decisions and are now increasingly focusing on sourcing goods locally.
This shift away from Chinese imports comes as the President of South Africa, Cyril Ramaphosa increases focus on reviving a South African manufacturing sector that has been deteriorating since the apartheid-era sanctions were lifted over 20 years ago. These sanctions allowed companies to look for cheaper alternatives from international suppliers, making them more reliant on Chinese imports. Re-establishing this industry would greatly help in achieving the country’s goal of creating more jobs, and alleviating the official unemployment rate, which has touched a 17-year high.
Head of sourcing, Woolworths, Lawrence Pillay stated that as the country opened its doors to international trade in late 1990s, Chinese imports came in and promptly decimated the local market as the sole dictating factor then was cost. Pillay further added that the world has been radically changed since them and now there is so much more to it than cost alone. Carbon footprints, Sustainability, logistics challenges; all these determinants are forcing a rethink.