433369666-The-Case-for-Investing-in-South-Africa

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COMPARATIVE ADVANTAGES OF
SOUTH AFRICA’S MANUFACTURING SECTOR
Basis for comparative advantage
Established manufacturing base that is generally
technologically advanced.
Sustainable performance owing to diversity in production
capability and competitiveness.
Strong linkages with other sectors of the economy.
South Africa’s world-class infrastructure is geared to
support export-led growth.
Innovation and strong research and development
capabilities exist in South Africa’s manufacturing sector.
Positioned to continue benefiting from strategic industrial
policy support measures due to the relatively high jobsintensity
of several manufacturing sub-sectors.
Select investment trends in these sectors
• Increased competitiveness and penetration by South
African industry in global automotive chains have
attracted higher investment by original equipment
manufacturers (OEMs) in the country’s automotive sector
(e.g. Mercedes-Benz, BMW) as well as newcomers such
as BAIC.
• Chinese investment in South African manufacturing
has been facilitated by the China Africa Development
Fund and focuses on electronics manufacturing (e.g.
establishment of the Hisense industrial park).
• South Africa’s world-class infrastructure and competitive
position in accessing regional markets have attracted
foreign investment into the textiles industry (e.g. Pegas
Nonwovens, the largest producer of spunmelt nonwovens
in Europe, the Middle East and Africa, is investing
ZAR1.3-billion in Atlantis, Cape Town).
AUTOMOTIVE INDUSTRY: WORLD-CLASS AND COMPETITIVE
• The manufacturing sub-sector producing motor
vehicles as well as vehicle parts and accessories,
including bodies and trailers, contributes 6.6% to
the manufacturing sector’s GDP and accounts for
approximately 10.2% of the total value of its sales.
• South Africa is the biggest market for new vehicles in
Africa, accounting for around 45% of new vehicle sales
on the continent.
• Producing more than 610 000 vehicles annually, South
Africa is the dominant vehicle producer on the African
continent. The industry attracts high levels of FDI
from the leading global OEMs as well as components
manufacturers.
• The growing presence of several global OEMs in
South Africa signals its increasing prominence as a
manufacturing hub. These include Toyota, VW, Ford,
Mercedes-Benz, BMW, Nissan/Renault and Isuzu,
with China’s BAIC as a newcomer. A number of heavy
commercial and bus manufacturers assemble vehicles,
such as Iveco, FAW and Tata.
• Supplier proximity and local content are key potential
sources of competitive advantage for OEMs. South
African-based OEMs are supported by about 500
firms split between Tier 1, Tier 2 and Tier 3 suppliers
producing a wide range of parts.
LOCATION OF OEM PLANTS IN SOUTH AFRICA
GAUTENG:
• FORD
• NISSAN
• BMW
DURBAN:
• TOYOTA
EAST LONDON:
PORT ELIZABETH:
• MERCEDES-BENZ
• VOLKSWAGEN
• ISUZU
• BAIC