Since 2010 China has been South Africa’s single-largest trade partner, but bridging the cultural divide has, for many companies, been a perilous journey fraught with pitfalls and capsized business ventures says Colin Smith, MD of South Africa’s largest compatible ink cartridges group, Trink.
Yet for many, forging a business link with the People’s Republic has seen their enterprises expand exponentially – particularly here in the Eastern Cape with investments such as the First Auto Works (FAW) plant at Coega, showing the commitment by the Chinese.
Last year was declared the “Year of South Africa in China”, and this year has been called the “Year of China in South Africa” by both countries. The SA Chamber of Commerce and Industry (SACCI) also acknowledges the opportunity, with chief operations officer Peggy Drodskie saying: “China is a very large market. It has a growing middle class and over 100 cities with a population of more than one million.”
She continues: “It is a fast growing economy and the world’s largest market for vehicles, cell phones, as well as seafood. It also has the most internet users and on-line games players. It has the great potential for all products and services.”
The Trink Group has become the largest importer and distributer of compatible ink cartridges in South Africa and Africa, thanks to a recent deal with Chinese company Kingway. Our success has not been overnight. In fact, a recent deal in which Kingway bought up 20% of the company was a delicate feat several years in the making.
The Chinese work on trust. If they don’t trust you, they won’t do business with you, which is why our deal took years before it came to fruition. One needs to build up a relationship first. If we had only been doing business with one another for six months to a year, the deal would not have transpired.
According to SACCI, South Africa’s trade agreement with China provides “preferential conditions for business between the two countries”.
“The Department of Trade and Industry can assist, as it has a desk dedicated to promoting trade between the two countries,” says Drodskie.
Trink started off with reconnaissance missions to the mainland, scouting out factories and checking that Chinese representatives in South Africa were in fact who they claimed to be.
We found that there are a lot of people who will say they work for a certain company, when they are in fact just agents who charge a mark-up on the product that company sells. Finding this out meant we were able to cement a relationship first-hand with the company, eliminating any agents and middle-men – a move which has stood us in good stead.
Furthermore, the days of viewing imports from China as cheap and inferior are in the past as there are stringent industry safety and manufacturing standards such as ISO (International Organization for Standardization) which many Chinese companies have adopted.
The mind-set has changed with regards to Chinese imports. Now they’re seen as a major cost saver, and now the standards are the same as the imports from America or Europe.
South Africa also enjoys preferential treatment in China thanks to its membership status with BRICS – the association representing Brazil, Russia, India, China, and South Africa. As of 2014, the five countries collectively represented 3 billion of the world’s population and 18% of the global economy.
As SACCI puts it: “This makes it beneficial to trade with China as a BRICS member. It also places South Africa at an advantage as the conduit for Chinese, Brazilian and Indian trade into Africa.”
The business is there. It is now up to us to put in the effort to go and get it.
Alan Straton
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