Newsletter No 46 / 3 December 2021
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SA retailers look to end reliance on Asia for products
Wisani Shibamby sews a blanket at the TFG Prestige Clothing factory in Johannesburg. Picture: Thapelp Morebudi
Spiralling shipping costs and Covid-19 supply chain disruptions are accelerating a shift by South African retailers to end their heavy reliance on Asia and move to source products locally.
More than 50% of SA’s clothing textiles, shoes, and leather products are imported, mostly from China, putting Africa’s leading economy and its retailers at the mercy of forces beyond their control such as Chinese power shortages.
While the government launched a programme in 2019 offering tax incentives to source goods locally, the recent spate of problems arising out of Asia has added urgency to what had been a slow shift, four top retailers in SA told Reuters.
“Most furniture in SA is currently imported, we are looking at various options to manufacture more here, particularly at the moment when shipping costs are up 400%. So it’s even more of a reason if you needed one,” TFG CEO Anthony Thunström said in an interview.
TFG, which sources 72% of its clothes locally, said earlier this month it wants to locally manufacture 30-million pieces a year within four years, up from 11.5-million currently, and is adding furniture and jewellery to its growing local list.
Thunström said a lot of TFG’s jewellery is already made in SA, but he wants to further increase local sourcing.
The owner of British women’s wear brands Hobbs and Whistles and SA’s @Home homeware brand wants these products to be manufactured on a quick turnaround basis to improve lead times and be competitive against global chains such as Zara, owned by Inditex and Swedish rival H&M.
TFG said on November11 it will spend a further R575m ($37m) over the next three to five years to build local manufacturing capability.
South African retailers are not alone in looking local as constraints expose the vulnerability of globe-spanning supply chains and low-cost manufacturing hubs which have led to an over-dependence on imports, particularly from Asia.
Italy’s Benetton and Hugo Boss, have already indicated they are sourcing clothes closer to home.
Power cut impact
Norman Drieselmann, CEO of SA’s Retailability, which owns the Edgars department store chain, said that China’s power cuts have added a two-week delay to clothing on top of four weeks due to Covid-19, ahead of the critical festive season.
Woolworths told Reuters it expects the power cuts will impact its orders for March next year. The retailer, which sources about 30% of its fashion, beauty and home products from China, said it is making arrangements to buy more locally.
Retailers who spoke to Reuters did not share potentially competitive information about who would be producing goods for them in SA or exactly where in the country.
But budget clothing and electronics retailer Pepkor did say it wants to work with existing and strategic suppliers to manufacture easy-to-make clothing like T-shirts and shorts and provide financial capital to buy machinery.
“We’ve now identified some vendors that we want to work with, now the next thing is to develop the further capacity for them,” Pepkor CEO Leon Lourens told Reuters.
However, SA will not provide all the answers.
Industry has suffered in a country itself long blighted by power shortages and prone in some sectors to labour disputes, while raw materials such as fabrics are sourced by South African suppliers from Asia.
Retailability’s Drieselmann said that while it is looking to grow its local vendor base by placing more orders from local manufacturers instead of abroad, it is also shifting sourcing from China to other existing offshore suppliers.
The company has “started to engage more actively with India as an alternative, particularly from a fabric-sourcing perspective,” Drieselmann added.
US to revitalise its relations with Africa
By William Clowes
Secretary of state Antony Blinken pledges a strengthening of relations and a summit of African leaders to foster closer co-operation.
President Joe Biden’s top envoy signalled the US’s intent to revitalise its long-neglected relations with Africa, where it has steadily been losing influence to China and other global powers.
“Too many times, the countries of Africa have been treated as junior partners — or worse — rather than equal ones,” secretary of state Antony Blinken said in a speech on Friday in Abuja, Nigeria’s capital. “We want to make your partnerships with us even stronger.”
Africa has always been near the bottom of the US foreign-relations priority list, with the world’s poorest continent accounting for less than 2% of its total two-way trade. Relations reached a low ebb during president Donald Trump’s tenure, during which he made disparaging remarks about African countries and high-level diplomatic engagements were few and far between.
Blinken is the highest-ranking official from the Biden administration to visit Africa. He spent a day in Kenya before visiting Nigeria and plans to stop in Senegal before returning home.
US policy towards Africa has focused on building trade tries, encouraging democracy and development and combating terrorism — tenets that Blinken said would remain, along with countering climate change and improving access to healthcare.
The US’s flagship economic programme for the continent is the African Growth and Opportunity Act, which was enacted in 2000 and eliminated import levies on more than 7,000 products ranging from textiles to manufactured items. To qualify, countries must cut barriers to US investment, operate a market-based economy, protect workers’ rights and implement policies to reduce poverty.
While the act, which is due to expire in 2025, has bolstered two-way trade, Africa has nurtured even closer relations with China, which has largely steered clear of domestic politics and offered aid, loans and investment with few strings attached.
Blinken acknowledged that many African countries “are wary of the strings that come with more engagement, and fear that in a world of sharper rivalries among major powers, countries will be forced to choose” between them.
“The US doesn’t want to limit your partnerships with other countries,” he said. “We don’t want to make you choose. We want to give you choices.”
Blinken also announced that Biden intends to host a summit of African leaders to increase engagement and foster closer co-operation.
He noted that the US had provided more than 50-million coronavirus vaccine doses to Africa with no strings attached and that more are en route. The US has given more than $1.9bn in Covid-19-related assistance to fund emergency food provisions and other humanitarian support, Blinken said.
The us also supported the suspension of debt for 32 African countries to help their economies recover from the pandemic, he said.
Blinken expressed concern about a global rise in authoritarianism, with governments becoming less transparent, technology being used to silence dissent, corruption on the rise and elections becoming flashpoints for violence.
The military has seized power in Sudan, Chad, Guinea and Mali over recent months, planned elections in Somalia have twice been delayed, while Ethiopia has been embroiled in a yearlong civil war.
“The recession of democracy in many places in Africa cannot be denied,” Blinken said. “I want to emphasise that democratic backsliding is not just an African problem — it’s a global problem. My own country is struggling with threats to our democracy. And the solutions to those threats will come as much from Africa as from anywhere.”
When it came to addressing instability and violent extremism, Blinken said the solution lay in having effective, professional and well-equipped security forces and local law enforcement, while simultaneously addressing the root causes of conflict.
“We think we can achieve better results in confronting insecurity if we work together to expand economic opportunity, especially for young people and others who might be drawn into criminal activity out of desperation,” he said. He committed the US to supporting diplomatic efforts to resolve conflicts in Africa, as it is currently doing in Ethiopia, Sudan and Somalia. Bloomberg
SA streetwear brand Loxion Kulca partners with Pep
Pep, Africa’s largest single brand retailer, has struck a deal with Loxion Kulca that will see the fashion brand’s latest collection exclusively available in Pep stores.
The new Loxion Kulca range is being sold in over 1,000 Pep stores across the country, making the streetwear brand more easily accessible to customers.
“We will be rolling out this collection exclusively to most of our Pep stores nationwide, following a very successful pre-launch in a few Pep stores last year. We always aim to make fashion as affordable and accessible as possible and having Loxion Kulca in more of our stores will make this renowned brand more accessible to our remarkable customers,” said Pep chief marketing executive Beyers van der Merwe.
The original Mzansi township brand, Loxion Kulca, was co-founded 21 years ago as a brand by the people, for the people. As a proudly South African clothing label, Loxion Kulca is an important part of the country’s streetwear heritage, culture and fashion scene.
Pep said partnering with a local brand such as Loxion Kulca forms part of its efforts to continuously improve and evolve to stay relevant to delight customers. Bizcommunity
“We’ve had a recent enquiry for a manufacturer/supplier of tulle/netting/veiling fabric. Please contact me with your company details if this is a product you can offer” email@example.com
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