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NZ Exporters Urged To Look To South Africa

New Zealand exporters are being urged to look to South Africa, a country with an emerging consumer market with increasing purchasing power and a high propensity to spend, and a country that has a huge range of product needs.

Trade New Zealand’s representative in Johannesburg Michelle Cohen arrives in New Zealand this week for a two week visit (22 October – 6 November) and says she wants to raise awareness of South Africa as an exciting, albeit challenging export market, with good prospects for sustainable growth.

Note to editors – Michelle Cohen will be visiting Christchurch (22-25 Oct), Wellington (25-27 Oct), Nelson (27-29 Oct), Hamilton (29-31 Oct), Tauranga (31 Oct – 1 Nov), Auckland (1-6 Nov).

“I’ll be talking to companies about the benefits of trading with South Africa and highlighting specific sector opportunities and how Trade New Zealand can help turn those opportunities into commercial results.”

Cohen says she’ll also be pointing out some of the advantages South Africa offers over other developing export markets.

“The community is friendly, competitive, English speaking and much like
New Zealand in many ways. It is politically and economically stable and has a solid infrastructure.”

Cohen says although the disposal income of the white middle class is reducing, there is a potentially much larger, growing Black middle class which aspires to the finest quality branded goods and services and has the money and propensity to afford those products.

In the year ending June 2000, New Zealand exported $80 million to South Africa, up 10 percent on the previous year, ranking it alongside markets like Iran and Brazil. Main export items are currently casein, lamb, radio-telephone equipment and frozen vegetables.

While New Zealand exports to South Africa have increased steadily since trade barriers came down in the mid-90s, Cohen believes we could be doing a lot better.

She says New Zealand is perceived positively in South Africa, but it’s a somewhat limited perception that somewhat predictably focuses on rugby, sheep and wine.

“While New Zealand is seen as being green and clean and its people friendly, ethical and good sportspeople, its products are still widely speaking, unknown. There is no real appreciation of the high quality and high tech products now coming out of New Zealand.”

She says South Africa is a unique market, in that it has both first world and third world aspects in the one country. That opens up a broad range of export opportunities.

“New Zealand telecommunications companies are one sector that have focused on South Africa and this has paid dividends in terms of foreign exchange earnings. Along with IT, it’s an area that will continue to offer excellent potential.

“The national telecommunications agency Telkom is in the midst of putting out a tender worth NZ$300 million which will be split into nine or 10 projects and which Trade New Zealand is encouraging Kiwi companies to seriously consider.”

She says there are also good sector opportunities for New Zealand businesses in the marine industry, with a demand for parts and spares and new innovative products. Ironically Cohen says many of South Africa’s boatbuilders have emigrated to New Zealand, hence the demand for imported products.

“Another growth area is engineering, building and construction. There is a renewed focus on low cost housing. The property market has gone into a climb just recently, adding interest to both residential and commercial opportunities.

“New Zealand consultants who do so well in many other parts of the world will also find opportunities in South Africa, in capacity, building and government transformation, and in many areas of education and training.”

Cohen says Kiwi specialty food exporters are already picking up on the South African fascination for novel and new products. As with a lot of countries, she warns South Africa has stringent labeling requirements for foodstuffs and other products, such as electronic goods. Packaging too must comply with requirements.

Agritech and pasture management companies will also find a demand for their expertise, says Cohen, with South African farmers seeking ways of working more effectively and cost effectively, and adding value to their crops.
New Zealand electric fences are already exported to South Africa, initially for farming, and expanding into security and game ranches.

On a wider level, Cohen says South Africa is the springboard into the greater sub Saharan African region, recently named by the Economist’s Intelligence Unit as the fastest growing region in the world.

“The easiest way to trade with the SADC countries is to forge links with a South African partner who is experienced and knowledge in that region. Africa has a reputation of officious red tape, bad business ethics, bribery and corruption, as well as limited foreign exchange. Good South African traders have had a lot of experience in handling those issues and would prove a viable partner to
New Zealand business people looking to expand northwest of South Africa.”

While problems of corruption in business in South Africa have all but been stamped out, Cohen says crime is an issue, though not to the extent it is portrayed by the international media, and probably no worse than in many other parts of the world.

A greater challenge for New Zealand exporters is the changing and confusing local environment in South Africa. Cohen says her office spend a lot of time assisting companies through the red tape.

“We help them deal with national and local government officials, establishing requirements to doing business, and complying with legislation that would not apply elsewhere such as labour legislation and Black empowerment issues.”

Despite the bureaucracy, Cohen says South Africa has a thriving business environment. “It is the world’s 21st largest exporter and 24th largest importer. The country is politically sound, with a smooth transition of power from Nelson Mandela to President Thabo Mbeki. The country is economically sound, and a statement by Standard and Poor’s that they intended to upgrade South Africa to “investment grade” early in the new year has triggered a flow of investment from the UK and the USA.”

Cohen emphasises that New Zealand companies – new or experienced – who want to explore the South African market must be committed to supplying the market, and also to forming enduring client relationships.

“Companies need to visit the market often and keep in close contact in order to maintain relationships. This is considered very important to South Africans.”

For more information contact:
David Robertson
Market Services Manager Australia, Pacific and South Africa
Trade New Zealand, Ph: 04 496 6414

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