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Thread: Are the textile quotas working?

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    Site Caretaker Dave A's Avatar
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    Question Are the textile quotas working?

    Our Deputy President is urging business to make use of the textile quotas that have been introduced. However, reading this report on M&G, I can't help asking a few questions.
    Deputy President Phumzile Mlambo-Ngcuka warned that the government may be forced to ask the Chinese to increase the quota of clothes and textiles they export to South Africa if local manufacturers fail to meet demands, the Dispatch Online reported on Tuesday.

    And should local businesses fail to make the most of the quota agreement that government had entered into with China, it would expire, she warned.

    Addressing businesspeople in Queenstown in the Eastern Cape at the weekend, Mlambo-Ngcuka said the government had identified textiles as one of the industries to revive economic growth and job creation.

    Retailers were still pessimistic about the ability of local producers to produce enough clothes and textiles, especially ahead of the festive season, she said.

    "We are asking ourselves: Where are our people to fill the gap? We are unable to sleep because we are worried that shelves will be empty and people will not produce to the required capacity. We will be forced to go to the Chinese with our tails between our legs and ask the Chinese to come back. Can you imagine that?"

    The recent decision of the Department of Trade and Industry to limit imports from China angered retailers, who argued that it would drive clothing prices sky high.

    But the government got the thumbs-up from labour unions, who said the move would curb job losses in the clothing and textile sector.

    Mlambo-Ngcuka said government found itself faced with a dilemma as "we need to grow the manufacturing capacity of clothes and textiles that are made in South Africa".
    1. Was it government initiative or labour lobbying that brought about the introduction of the quotas?
    2. Where are our people to fill the gap?
    3. How thorough was the planning for this initiative?
    4. Does our DP even understand the clothing industry?
    Just for starters, if the quotas were introduced with immediate effect, to the point that it affects stocks on shelves this summer, there was never any chance of local industry "filling the gap" by the festive season anyway. Ramping up production is not an overnight affair at the best of times, but in the textile industry lead time is quite possibly longer than in other lines of manufacture.

    Right now the retailers' buyers will be looking at their next Winter lines. Decisions on what to put on the shelves this summer were probably made 6 months ago.
    The trouble with opportunity is it normally comes dressed up as work.

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    Silver Member Candy Bouwer's Avatar
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    and i believe we are falling short on newsprint paper production in sa too...can't "they" and i mean people who deal with this, predict these sort of things and take measures before they have to resort to import products in general?
    "NETWORKING" is a "CONTACT" sport!"
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    Site Caretaker Dave A's Avatar
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    I suspect the answers to my questions 3 and 4 above are starting to emerge.
    The African National Congress (ANC) on Monday urged retailers to reconsider court action against the restriction of textile imports from China.

    "The ANC urges these retailers to reconsider their court action, and to instead work together with government and manufacturers to address their concerns in the interest of all South Africans," said ANC spokesperson Smuts Ngonyama.

    The party expressed concern after weekend reports indicated that major retailers planned to take the government to court over the implementation of limits on Chinese textile imports.
    full story from M&G here
    In the interests of all South Africans. An interesting phrase.
    The trouble with opportunity is it normally comes dressed up as work.

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    Site Caretaker Dave A's Avatar
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    An update on progress with the textile quotas.
    Durban - The department of trade and industry (dti) has backtracked on its quota restrictions for clothing and textile imports from China by amending the regulations to allow importers and retailers that show significant commitment to the local industry to be allocated extra quotas.

    Mike Morris, a professor at the School of Economics at the University of Cape Town, said on Friday that the move was significant as it vindicated those who had worried about the problem of instituting import quotas without sufficient research. The restrictions were introduced on January 1 as a temporary measure to lay a basis for improving the economic performance of the industry in the medium to long term.

    According to the International Trade Administration Commission (Itac), a monitoring committee received reports of successes from stakeholders, which indicated that relations had improved between retailers, manufacturers and labour as a result of the restrictions.

    Itumeleng Masege, Itac's acting chief commissioner, said as a result some of the major retailers had made serious commitments to the development of the domestic clothing and textile industry.

    However, talk in the industry is that the quota system is "a mess" and one of the unintended consequences is that a manufacturer/importer was given an insufficient quota for the amount it was importing but enough to cover what it was manufacturing. As a result, it has stopped manufacturing and is now importing everything.

    Michael Lawrence, the executive director of the National Clothing Retail Federation of SA, said he was not sure what the amendment meant. "Itac must be clear on the rules of the game. We must know what is meant by a 'significant commitment' … We also need to know who we should contact to fill in the gaps, not just to get extra quota, but to comply with the spirit and letter of the regulations," Lawrence said.
    full story from Business Report here
    The trouble with opportunity is it normally comes dressed up as work.

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    Site Caretaker Dave A's Avatar
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    I'm a little surprised to see this story.
    South Africa is unlikely to extend restrictions on Chinese textile imports beyond December 2008, when they are due to expire, a senior government official said on Wednesday.

    "We don't have any applications from anyone [to extend the quotas] ... and so my expectation is that if we don't get any, they will expire," Tshediso Matona, director general in the Department of Trade and Industry, told reporters.

    South Africa introduced quotas to restrict Chinese textile and clothing imports in January 2007 after unions complained the cheaper products were hurting local manufacturers and cuasing job losses.
    full story from M&G here
    Did the quotas help out textile industry?
    Can we afford to drop this quota system?
    The trouble with opportunity is it normally comes dressed up as work.

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    Site Caretaker Dave A's Avatar
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    Just when I thought Frame Textiles was dead and buried:
    In a renewed effort to save jobs at troubled Frame Textiles, Trade and Industry Minister Rob Davies and Economic Development Minister Ebrahim Patel have been meeting union representatives to draft a bailout package for the company, which employs 1 400 people.

    Should the expected multimillion-rand package be agreed, it would be South Africa's first bailout of a private company using state resources.

    The intention is to draw the Industrial Development Corporation (IDC), the state financier, into preventing the KwaZulu-Natal-based company from being shut down. A team of experts will meet again this morning before reporting back to the two ministers on Monday.
    full story from Business Report here
    Hmm. Interesting, but is such a move going to solve the problem or simply delay the inevitable. Until there is an environment where our textile industry can compete effectively in a global economy what are the medium and long term prospects for the SA textile industry?
    The trouble with opportunity is it normally comes dressed up as work.

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    I have searched in many major shops here in Houston U.S.A. for clothing manufactured in the U.S.A. and to date have found nothing!
    I do however only look in the middle to lower price range, I am sure that very high end clothing is still manufactured in the U.S.A.

    I would think the only textile or clothing manufactors who can surivive are those who can compete in an open and free market with global competitors on price, or the small manufacturer who is able to compete in the high end market.

    When and if the South African Govt. starts bailout packages for private corporations to benefit favored trade unions - that will be very bad news for our taxpayers.

    Yvonne

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    Full Member totius54's Avatar
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    We need government to set high tariffs on all Textiles and engineering goods and agriculture products.

    If we do not we will lose the wealth creating sectors of our country.

    Our unemployment will skyrocket to 80%.

    These cheap imports are bring with it poverty.

    We must stop supporting any retailer that bring in goods from India and China .

    Buy Made in RSA only

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    Site Caretaker Dave A's Avatar
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    Protection of local industries via tariff protection is a bit of a mixed bag. Whilst the protection helps local industries, it also raises the cost to the local consumer. And it doesn't necessarily help develop an internationally competitive industry either, so not much chance of export income. And then you get retaliation in industries that can be competitive on the world stage.

    What gets me with something like the textile industry is we have the raw product - why can't we be competitive?

    We shouldn't be exporting raw materials - we should be exporting finished products.
    The trouble with opportunity is it normally comes dressed up as work.

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    Full Member totius54's Avatar
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    Dave it all boils down to economics of scale.

    China have 1.3 billion people compare to our 56 million. Lets assume each person in China needs 3 pairs of socks . This tallies 3.9 billion .

    They can give all persons in the RSA 3 pairs of socks free and not see it effect their bottom line at all.

    Lets compare input cost Labour China pays about 1tenth compare to us
    Materials input costs 10% of what we pay.

    Bowl of rice in China 12 cents
    Bowl of rice in RSA 450 cents

    It is much more acceptable to pay little more for our goods but our employment rate is 85% .

    Cheap imports destroy jobs = poverty = crime

    the only people who wins with the cheap imports are the retailers.

    And the Chinese

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