Picture: THINKSTOCK
Picture: THINKSTOCK

THE government is making some headway in getting China to open its huge market to South Africa’s value-added goods such as wines and not just to raw materials, Trade and Industry Minister Rob Davies said in an interview this week.

China is South Africa’s largest single trading partner.

Manufacturers told Business Day earlier in the week that exporting finished products to China was a challenge due to "protectionist measures" implemented by the authorities.

"China has been dominated by our primary products. One of the things we have been doing is promoting value-added products into its markets," Mr Davies said.

The Department of Trade and Industry’s consultations and exhibition programmes are said to have yielded results.

"They (the Chinese) have supported these programmes. After the one we undertook in 2011, there have been R400m-worth of confirmed orders for value-added products, the biggest being wine," Mr Davies said.

Frontier Advisory CEO and emerging-markets analyst Martyn Davies believes, however, a single factor is making it hard for South African finished products to penetrate Chinese markets: "The challenge is how do you export manufactured goods to one of the world’s most competitive manufacturing countries?

"We could do far more to leverage market access into the Chinese market, one particular area being agribusiness products. There is large potential to do more through government-to-government negotiations."

Asia is not the only area of focus in South Africa’s search for trade and investment markets.

South Africa’s economic medium-term prospects would be "very good" if the country successfully continued to restructure its trade and investment relations, shifting from western countries to Asia and Africa, said Mr Davies.

A number of leaders, including those in government, have noted that South Africa has to tread carefully this year to avoid negative developments which could scare off investors. Violent strikes last year severely hit business confidence. The year has begun with a strike by Western Cape farm workers for higher minimum wages.

Although the government has been sympathetic to employers and employees, it appears to have paid more attention to workers.

"There is clearly a need for us to improve the conditions of farm workers," the minister said.

"We also need a situation where there is proper collective bargaining in the agriculture sector. We need to see a much more visible benefit-sharing between the farm owners and the workers," Mr Davies said.

Businesses have constantly said that while they respect the right of workers to strike, violence is unacceptable as it has the potential to damage investor confidence and sentiment.

"L abour unrest and militancy may also contribute to South Africa being cited as an unreliable supplier, which may dent South Africa’s standing as a trade partner," the South African Chamber of Commerce & Industry said on Wednesday.

Rand Merchant Bank economist Carmen Nel said in a research note on Thursday that foreign investors so far seemed not to be too concerned about the farm workers’ strike "based on the strong portfolio inflows and compressing yields and sovereign risk premium."