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Textile, Clothing and Footwear Sector
THE TRADE AND INVESTMENT SOUTH AFRICA PROFILE
When Trade and Investment South Africa was formed in 2000 as a division
of the Department of Trade and Industry (the dti), the original investment
promotion agency, Investment South Africa (ISA), and the export functions of the dti
were merged to form a single organisation. Trade and Investment South Africa is responsible for stimulating foreign
direct investment and exports of South African goods and services to international markets.
As part of the country's national economic strategy, Trade and Investment South Africa is tasked with identifying and
targeting key high-growth sectors and enjoys direct access at the highest levels to both
South African business sectors and trading partners. Thus, Trade and Investment South Africa is the essential point of
contact for anyone involved in investment and export promotion in this country.
At Home in South Africa
Locally, Trade and Investment South Africa functions under the umbrella of the dti, a broader family of
institutions controlling state assets in excess of R25bn and led by Minister Alec
Erwin. A number of units dedicated to specific aspects of the business process
operate within Trade and Investment South Africa. Sector specialists and strategic analysts work together to
oversee targeted export objectives. Simultaneously, logistics specialists, who
are located in the Enterprise Industries Development Division (EIDD) of the dti,
identify and take steps to eliminate bottlenecks in the supply chain, for both
exporters and investors alike. Thus, the dti provides a single-transaction arena
for investors and exporters at a national level and Trade and Investment South Africa is also mandated to co-ordinate
provincial initiatives to match investor requirements with opportunities available within
each of the nine provinces.
Trade and Investment South Africa focuses on promoting eight sectors of the South African economy that have
shown the greatest growth potential and marketability. These include:
Abroad
Trade and Investment South Africa identifies opportunities and provides core-market intelligence in 48
regional offices within South Africa's diplomatic centres worldwide. Key investors
are targeted in priority-growth sectors and specific sectoral expertise is added to
the equation. The regional managers operate according to international best practice
standards, pioneered by leading trading nations such as Singapore and Ireland. Trade and Investment South Africa's
single-transaction arena approach to service is ensured and promoted via their efficient
use of an extensive array of communication mediums. From negotiations and exhibitions to
handing over prospective leads to domestic-based facilitators and units dedicated to
specific aspects of long-term business processes, Trade and Investment South Africa always has a finger on the communication pulse.
Trade and Investment South Africa is a flexible, customer-oriented organisation, specifically in regard to
the services it delivers and financial incentives it oversees. For instance, in
2001 the export sectors prioritised by Trade and Investment South Africa realised R15.8bn in trade growth. In
addition, South Africa’s manufacturing sector gained R4.7bn in fixed inward investment.
Clearly Trade and Investment South Africa plays a guiding role in the promotion of South Africa as a leading,
internationally competitive business destination.
Investments Unlimited
As the central point of contact for anyone interested in investing in South Africa,
Trade and Investment South Africa offers the following services:
- Information on the various investment sectors and industries within South Africa
- Facilitation of inward investment missions, including travel itineraries
and movement within the country
- Introduction to potential joint-venture partners
- Consultation on the prevailing regulatory environment
- Introductions to relevant stakeholders in the private and public sectors
- Information on tax incentive packages
- Assistance with work permit applications
- Guidance with plant / site locations
- Logistical support for relocation
- Dedicated aftercare services
- Input into policy formulation on investment and trade promotion.
Exports Unlimited
The export process is sector specific, and sector strategies offer a framework
within which exports are encouraged and incentivised. These strategies address competitive
issues and international best practice standards regarding the product. Trade and Investment South Africa sector
specialists have a clear understanding of, and access to, the various industries.
Hence, they are able to provide sound advice, recommendations and assistance –
information that is invaluable to the potential exporter.
Trade and Investment South Africa provides a Customer Care service for manufacturers, a facility that offers
information and advice on current export processes and procedures. To ensure enquiries
are channelled to the relevant specialist organisations, the dti Customer
Contact Centre can be contacted on:
+27 (12) 394 9500 (International callers)
or 0861 843 384 (Local callers)
Trade and Investment South Africa is also mandated with developing small and BEE exporters and to manage the
Export Marketing and Investment Assistance Scheme (EMIA) as a key enabling incentive.
Through EMIA funding is provided to companies for:
In addition, the formation of industry-based Export Councils to assist exporters in
reaching their targets is promoted. The approach has been tailored to allow small
businesses, as well as artists and craftspeople, to form an SMME Export Council and
an Arts and Crafts Export Council, which are able to function as entry points for
first-time exporters. This allows small businesses in any sector to access the dti
support structures and become successful exporters.
AN INTRODUCTION TO THE SOUTH AFRICAN ECONOMY
South Africa is one of the richest countries on the continent and in the world in
terms of minerals and other natural resources. It was, and still is, amongst the
world’s largest exporters of gold and diamonds and it also exports a wide range of
other industrial minerals. A Mediterranean climate in its southern region facilitates
its role as a major world exporter of citrus fruits and wine.
This abundant natural wealth led European settlers here as early as the 17th century.
The economy boomed and physical infrastructure was developed. Unfortunately in the
middle of the 20th century, the country faced the problem of apartheid, decisively
resolved in 1994 with the first democratically elected government. Since then the
country has begun to rebuild its economy and achieve much of the vast potential of
which it is capable.
Today South Africa has a population of 44 million people and a GDP of US$113
billion (2001). In terms of its business environment and international competitiveness,
it is rated at the low end of the OECD countries and at the top end of developing countries.
The Global Competitiveness Report ranks South Africa 25th out of 75 countries, fifth best
amongst all developing countries in the world. In terms of general infrastructure, the
country is rated 22nd, and in terms of its financial market sophistication 16th. Unlike
most developing countries, South Africa has a strong technological base, which has resulted
in its patenting products, such as the computer tomograph, using indigenous technology.
In addition, South Africa has concluded highly attractive preferential trade agreements
with the European Union, the United States and the Southern African Development Council
countries, all within the last three years. These agreements open up new market and business
opportunities for businesses wanting to invest directly in South Africa or partner with it
for other types of business collaboration.
Overview of the South African Textile, Clothing and Footwear Sector
The textile industry comprises 350 mills producing 560 million square metres of
fabric made from locally grown cotton, locally produced polyester fibre and
imported fibres. The fabric is valued at R12 billion and the apparel produced
from it amounts to 191 million units valued at R11 billion. Exports account
for R1,4 billion for apparel and R2,5 billion for textiles, mostly to the US
and European markets. Exports to theUS increased by a dramatic 62% in 2001,
driven primarily by the benefits offered under the Africa Growth and Opportunity
Act. Men’s wear, ladies’ wear and children’s wear are produced mainly in the
Western Cape, Kwa-Zulu Natal, Gauteng and Eastern Cape provinces. Although the
South African textile and apparel industry is small, it has impressive successes
in world markets. Sans Fibres, a local yarn manufacturer, supplies 80% of the
sewing thread used in the world’s apparel sewing operations; Gelvenor Textiles,
a local fabric mill, supplies more than 50% of the world’ s demand for parachute
fabrics; and, local suit manufacturer House of Monatic has delivered its one
millionth suit to the UK market.
The trend in the non-woven sector is towards greater value adding – particularly
in finishing. This includes coating substrates, geo-textiles and other technical
end-use services, such as filtration media and footwear. Increasing export opportunities
are created by the growing oil and gas sectors in South Africa and sub-Saharan Africa.
The domestic footwear industry consists of 112 manufacturers under the umbrella of the
Southern African Footwear and Leather industries Association (SAFLIA) and the National
Bargaining Council in addition to at least 60 other SMMEs. Kwa-Zulu Natal, the
predominant footwear producing province in South Africa, has a 62% share of
production; the Western Cape is next with a 23% share. The balance of footwear
is produced in the Eastern Cape (11%) and the Northern Province (4%).
South African footwear exports in 2001 were low at 1.5 million pairs, but have
increased by 22% in volume terms from 2000. SADC, the regional grouping of which
South Africa is the largest country, received 43% of these exports, 19% went to
the EU and 9% to NAFTA. With the recent benefits of preferential trading arrangements
with the US and the EU, there are improved prospects for increased exports to these regions.
Competitive Advantages of the South African Textile,
Clothing and Footwear Sector
Preferential Market access
Preferential market access is perhaps the strongest competitive advantage that
South Africa has in this sector. South Africa has entered into preferential
agreements with the US, EU and sub-Saharan countries. These agreements confer
generous trade benefits as given below.
Africa Growth and Opportunity Act (for the US market)
Under the Africa Growth and Opportunity Act (AGOA), the US extends to South
Africa and other sub-Saharan countries GSP benefits for more than 1800 additional
items beyond the standard GSP list of 4600 items. Special provisions apply to
the apparel sector. For South Africa, this benefit took effect in March 2001 for
apparel items and October 2000 for other items. It will remain in force till 30
September 2008. Details on specific items that enjoy AGOA privileges are given
in Annex A. More detailed information is available from the US government
website www.agoa.gov.
European Union – South Africa Free Trade Agreement
A Trade, Development, and Cooperation Agreement containing a Free Trade
Agreement (FTA) went into effect between South Africa and the European
Union on 01 January 2000. Under the FTA, the EU is committed to the full
liberalisation of 95% of South African imports over a 10-year transitional
period, while South Africa is to liberalise 86% of EU imports over a 12-year
transitional period. Details on specific items that enjoy benefits under this
arrangement are given in Annex B.
Southern African Development Community
The SADC trade protocol, which came into effect in September 2000, provides for
the phasing down of tariffs for 11 of the 14 SADC member countries. The participating
member countries are from the sub-Saharan region, but exclude SADC members Angola, the
Democratic Republic of Congo and Seychelles. This trade bloc has a combined population
of 135 million. The participating member countries hope to establish a free trade zone
by the year 2004.
South Africa Customs Union
Under the present SACU agreement, participating member countries South Africa, Botswana,
Lesotho, Namibia and Swaziland have totally abolished internal tariff barriers. Their
respective governments are presently ratifying a new agreement finalised on the 25
October 2002. The main change introduced in the new agreement pertains to revenue sharing.
Availability of raw materials
Cotton: South Africa presently produces 40 000 tonnes of cotton and produces
above world-average lint, providing the potential for the local cotton pipeline to
become increasingly export-oriented. Cotton fibre and yarn can also be imported from
the SADC region to supplement production for AGOA purposes.
Wool and Mohair: South Africa is the world’s largest mohair producer and the
fifth largest producer of wool. South Africa produces 4 300 tonnes of mohair fibre and
50 000 tonnes of wool fibre. Close working relationships with Italian users of mohair
are being developed to sustain mohair and wool usage.
Vegetable Fibres: South Africa is successfully growing and processing natural
fibres such as flax and hemp, in response to the worldwide demands of the automotive
industry for environmental friendly body parts. In response to this, South Africa has
attracted an Irish linen yarn spinning operation.
Leather: South Africa has the raw materials needed to produce any type of
footwear from low end to high end. Bovine, ostrich, Nile crocodile, game leather,
textile and PVC and PU synthetic raw materials can all be sourced locally without difficulty.
Low labour cost
Despite the fact that infrastructure in South Africa is nearly first world,
costs are generally comparable to those of developing countries. Typical wage costs
in the apparel and footwear industries are given below.
Typical wage costs in the apparel industry
| Category | Average Rands/Week |
Average USD/Week |
| A | R280.80 | $28.08 |
| B | R280.91 | $28.09 |
| C | R436.83 | $43.68 |
| D | R337.95 | $33.97 |
| E | R389.07 | $38.91 |
Source: National Bargaining Council For Clothing and Textiles; US$ = R10
Category A
Assistant store person, automatic hydraulic hat presser, belt person, boiler assistant,
cardboard box maker, cleaner, coat turner, cutter of traveler’s swatches, dispatch packer,
general worker, hat sprayers, ironer, layer by hand, layer by machine, marker, operator, packer,
patent turner, pinner, plain sewer, sorter, stamper, winder.
Category B
Baster, clicker, conveyer feeder, cutter, examiner, finisher by hand, fitter-up, folder, lay copier,
machinist, maker of bows for dresses, operator of automatic lace, embroidery, monogramming machine,
presser, seam welder, setter of automatic pleating machines, shaper, sloper, factory clerk.
Category C
Colouring mass-measurer, cutter, dyer’s assistant, handyperson, knitting machine operator,
linker, loader of magazine or comb mender, overlocker, plain sewer, sewing machinist
including button, buttonhole and hemming machinist, shaper of fully fashioned garments,
wrapper, wrap knitter.
Category D
Backwinder, boiler attendant, cleaner, dispatch packer, draw threader, examiner, floorwalker,
general worker, grader, mender of socks, operator, parcel maker, pre-cutter, presser, pre-or-post
boarder or former, sampler, seamer, sorter, turner, winder, yarn changer (pig tailer).
Category E
Assist foreperson, dyer, mechanic, patternmaker, and supervisor.
In the footwear industry, typical wage costs are
| Category | Average Rands/Week |
Average USD/Week |
| Pattern Cutter | R725.83 | $72.58 |
| Closing Machinist | R456.37 | $46.64 |
| Class II Operator | R485.45 | $48.55 |
| Class III Operator | R431.47 | $43.15 |
| General Worker | R431.47 | $43.15 |
Source: South African Footwear and Leather Industries Association; US$=R10
Major foreign investors currently operating in South Africa
Several leading international companies have manufacturing facilities in South Africa already
or have substantial procurement contracts with South African producers.
Manufactures in textiles and apparel
| Company | Country of Origin |
Activity |
| Ulster Carpets | Ireland | Carpets |
| Novel Spinners | Hong Kong | Denim fabric |
| Richfin | Taiwan | Jerseys |
| Toga Liings | France | Linings |
Manufacturers of footwear
| Company | Country of Origin |
Activity |
| Beier | Germany | Safety Footwear |
| Barker | Germany | Formal & Casual Men’s Footwear |
| Jordan | Germany | Formal & Casual Men’s Footwear |
| United Fram | Germany | Safety Footwear |
| Wayne Plastics | Germany | Gumboots |
| Futura (Bata) | Canada | All types |
Companies procuring textile and apparel items
| Company | Item |
| Mark and Spencer’s | Men’s and women’s constructed wear |
| British Home Stores | Bed linen |
| The Limited Inc | Leisure wear |
| Liz Claiborne | Leisure wear |
| Gap | Leisure wear |
| Tommy Hilfiger | Leisure wear |
| Tommy Hilfiger | Leisure wear |
| Classique Manufacturing | Leisure wear |
| Lilla - P | Leisure wear |
Companies procuring footwear
| Company | Country of Origin | Activity |
| Puma | Germany | Athleisure |
| Addidas | Germany | Athleisure |
| Nike | USA | Athleisure |
| Hush Puppies | UK | Formal & Casual Women’s Footwear |
| FII | UK | Formal & Casual Women’s Footwear |
| Rhombah Wallace | UK | Casual & Casual Women’s Footwear |
Business Opportunities
Foreign businesses can either invest directly in wholly owned manufacturing plants or
enter into business arrangements with existing producers through joint ventures,
licensing or procurement. Opportunities in the manufacturing of textiles and apparel
exist in the following areas:
- Large-scale manufacturing of industrial textiles using polyester and other fibres
- Middle- to high-end apparel wear, with opportunities to expand into the USA and European markets
- Cotton spinning, weaving and knitting utilising locally and sub-Saharan African grown cotton
- Downstream industry opportunities, such as yarns, fabric and knitwear as a result
of the wool and mohair sector
- Manufacturing of synthetic textiles for the apparel sector, given the opportunity
for the expansion of South Africa’s textile base under the African Growth and
Opportunity Act (AGOA)
- Production of cellulose textiles such as rayon and viscose.
Opportunities in the manufacturing of footwear exist in the following:
- PVC sole
- Synthetic and Textile footwear uppers
- Exotic leather accessories
- Metal toecap footwear
- Hi-tech footwear
- Industrial, medical and technical textiles.
| Opportunities for the procurement in textiles and apparel are: |
| Knit wear | Woven wear |
| Golf shirts | Denim jeans |
| Children's wear | Formal wear - suits, blazers, skirts |
| Sportswear | Active wear - trousers, shorts, shirts |
| | Sportswear |
Opportunities for procurement in footwear are:
- Footwear of synthetic/textile upper
- Women’s formal footwear to USA and EU
- Athleisure footwear to SADC
- Men’s formal footwear to USA and SADC
- Youth footwear to EU and SADC
- Footwear of leather uppers
- Women’s formal/casual footwear to USA and EU
- Men’s formal/casual footwear to USA, EU and SADC
- Industrial footwear to EU and SAC
- Exotic leather goods to EU, USA and Japan
Annex A: Trade Preference under the Africa Growth and Opportunity Act
(provided by the United States)
Preferences on items of textiles and apparel
| Hs Code |
Description |
Mfn Duty |
Preferential Duty |
| 6101.10 |
Mens or boy’s overcoats, windbreakers, knitted or crocheted of wool or fine animal hair |
16.8% |
Free |
| 6102.10 |
Women’s or girl’s overcoats, windbreakers, knitted or crocheted of wool or fine animal hair |
17.1% |
Free |
| 6105.20.2 |
Men’s or boy’s shirts, knitted or crocheted of other man-made fibres |
32.5% |
Free |
| 6114.30.2 |
Other garments knitted or crocheted of man-made fibres, bodysuits and body shirts |
32.5% |
Free |
| 6203.39.1 |
Men’s or boy’s suits, ensembles of artificial fibres containing 36% or more
wool or fine animal hair |
22% |
Free |
| 6204.69.25 |
Women’s or girl’s trousers, breeches, and shorts of artificial fibres, other |
29% |
Free |
| 6211.11.1 |
Swimwear, men’s or boy’s, of man-made fibres |
28.2% |
Free |
Preferences on items of footwear
| Hs Code |
Description |
Mfn Duty |
Preferential Duty |
| 6402 | Synthetic uppers (excludes, for example, woven nylon which is
treated as "fabric") | 6% | Free |
| 6403 | Leather uppers | 8.5% ladies; 10% men’s | Free |
| 6402&6404 | Rubber/fabric uppers: averages about 48% as a result of three
ranges |
Under $6,50/pair: 67%;$6,50 – $12,00/ pair:37%; Over $12,00/pair: 25% (lower for Athletic) |
Free |
Annex B: Trade Preferences offered by the European Union
Preferences on items of textile and apparel
| EU Tariff Phase Down |
| Tariff |
Product Description |
Conventional Duty |
Duty with GSP |
Y1 2000 |
Y2 2001 |
Y3 2002 |
Y4 2003 |
| Subheading |
(%) |
(%) |
(%) |
(%) |
(%) |
(%) |
|
| |
|
|
|
|
|
|
|
| Section A |
List 1 0% after 3 years |
(- 15%) |
(75%) |
(50%) |
(25%) |
|
|
| 61 |
Knitted |
|
|
|
|
|
|
| 6101 |
Men’s overcoats, windbreakers |
13 |
11.1 |
8.3 |
5.5 |
2.8 |
0 |
| 6102 |
Women’s overcoats, windbreakers |
13 |
11.1 |
8.3 |
5.5 |
2.8 |
0 |
| 6103.4 |
Men’s trousers, shorts |
13 |
11.1 |
8.3 |
5.5 |
2.8 |
0 |
| 6104.5 |
Women’s skirts |
13 |
11.1 |
8.3 |
5.5 |
2.8 |
0 |
| 6108.39 |
Women’s dressing gowns, other textiles |
13 |
11.1 |
8.3 |
5.5 |
2.8 |
0 |
| 6112.11 |
Tracksuits, cotton |
13 |
11.1 |
8.3 |
5.5 |
2.8 |
0 |
| 6112.11 |
Tracksuits, synthetic |
13 |
11.1 |
8.3 |
5.5 |
2.8 |
0 |
| 6112.31.90 |
Men’s swimwear, synthetic, other |
13 |
11.1 |
8.3 |
5.5 |
2.8 |
0 |
| 6112.41.90 |
Women’s swimwear, synthetic, other |
13 |
11.1 |
8.3 |
5.5 |
2.8 |
0 |
| 6112.49.90 |
Women’s swimwear, other textiles, other |
13 |
11.1 |
8.3 |
5.5 |
2.8 |
0 |
| 6113.00.10 |
Garments, coated fabrics |
13 |
11.1 |
8.3 |
5.5 |
2.8 |
0 |
| 6115.1 |
Pantyhose |
12 |
10.2 |
7.7 |
5.1 |
2.6 |
0 |
| 6115.2 |
Women’s hosiery <67 dtex |
12 |
10.2 |
7.7 |
5.1 |
2.6 |
0 |
| 6115.91 |
Other hosiery, wool |
12 |
10.2 |
7.7 |
5.1 |
2.6 |
0 |
| 6115.92 |
Other hosiery, cotton |
12 |
10.2 |
7.7 |
5.1 |
2.6 |
0 |
| EU Tariff Phase Down |
| Tariff |
Product Description |
Conventional Duty |
Duty with GSP |
Y1 2000 |
Y2 2001 |
Y3 2002 |
Y4 2003 |
| Subheading |
(%) |
(%) |
(%) |
(%) |
(%) |
(%) |
|
| |
|
|
|
|
|
|
|
| Section A |
List 1: 0% after 3 years |
(-15%) |
(75%) |
(50%) |
(25%) |
|
|
| 62 |
Woven (not Knitted) |
|
|
|
|
|
|
| 6201 |
Men’s overcoats, windbreakers |
13 |
11.1 |
8.3 |
5.5 |
2.8 |
0 |
| 6202 |
Women’s overcoats, windbreakers |
13 |
11.1 |
8.3 |
5.5 |
2.8 |
0 |
| 6203.4 |
Men’s trousers, shorts |
13 |
11.1 |
8.3 |
5.5 |
2.8 |
0 |
| 6204.5 |
Women’s skirts |
12 |
11.1 |
8.3 |
5.5 |
2.8 |
0 |
| 6207.29 |
Men’s pyjamas, other textile |
13 |
10.2 |
7.7 |
5.1 |
2.6 |
0 |
| 6207.91 |
Men’s dressing gowns, cotton |
13 |
11.1 |
8.3 |
5.5 |
2.8 |
0 |
| 6208.91 |
Women’s dressing gowns, cotton |
13 |
11.1 |
8.3 |
5.5 |
2.8 |
0 |
| % of basic Duty |
| |
GSP |
Y1 2000 |
Y2 2001 |
Y3 2002 |
Y4 2003 |
Y5 2004 |
Y6 2005 |
Y7 2006 |
| List 1 |
15 |
75 |
50 |
25 |
0 |
0 |
0 |
0 |
| List 2 |
15 |
86 |
72 |
57 |
43 |
28 |
14 |
0 |
Preferences on items of footwear
| HS Code | Description | MFN Duty |
| 6401 | Waterproof footwear with outer soles & uppers of rubber or plastic | 17% |
| 6402 | Footwear with outer soles & uppers of rubber or plastic | 17% |
| 6403 | Footwear with outer soles of rubber, plastic leather or composition leather and uppers of leather | Between 5 and 8% |
| 6404 | Footwear with outer soles of rubber, plastic, leather or composition leather and uppers of textile materials | 17% |
| 6405 | Other footwear | Between 3.5 and 17% |
| 6406 | Parts of footwear | 3% |
Incentives
A range of incentives is available to qualifying investments. The more commonly
used incentives are given below:
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