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Wirtschaft, Topnews, Pressespiegel

30. September 2013

Business day: German Weeks — celebrating a partnership in all areas, by David Jackson

26.09.2013. THE start of "German Weeks", which runs from today through to October 30, will showcase the flourishing manufacturing and business partnership between South Africa and Germany, as both countries seek to further expand their trading footprints into the wider Southern African Development Community (SADC) and southern African region.

The Southern African-German Chamber of Commerce has more than 600 members and is the largest bilateral chamber of commerce and industry in South Africa. It has offices in Johannesburg — the Chamber headquarters — as well as in Durban and Cape Town. The Durban office was opened in June last year and has seen membership increase from about 16 to about 40 companies in its first year of operation.

Matthias Boddenberg, CEO of the Southern Africa-German Chamber of Commerce and Industry, explains: "The German Weeks are held to strengthen the image of Germany as a partner for South Africa, in both the national and regional context. Germany is a partner in terms of trade, investment, education and the environment, among other areas, and we try to offer South Africa a complete package. This is why the programme also includes cultural as well as economic and business aspects, for example.

"German Weeks celebrate a partnership with South Africa in every aspect of business and economic life, from training to manufacturing, and corporate social responsibility to renewable energy — these aspects are highlights of the relationship between our countries.

"The Chamber has been in South Africa for more than 60 years — with 2012 marking our 60th anniversary. We want to extend our partnership, with South Africa the starting point for regional development. We are evaluating how we can advance the footprint of the Chamber from South Africa to southern Africa and the SADC region."

Boddenberg points out that, with the exception of 2009, trade between South Africa and Germany has grown at an average of 5%-6% a year for the past 12 years.

This development is especially strong in semi-finished and finished goods. This is partly a result of increased capacity in manufacturing industry, not only in the pivotal automotive industry — Germany’s economic heartbeat in the region — but also in the supplier component industry. "The figures illustrate that South Africa is a stable partner in that respect," he adds.

While the long-term view remains encouraging, Boddenberg notes, there is a concern that short-term industrial disputes within the German motoring manufacturing industry environment, if not quickly resolved, could have an inhibiting effect on sales and marketing volumes in the manufacturing and component sectors. He says the statistics also indicate a longer-term trend in that South Africa has been moving away from being merely a commodity exporter to an exporter of semi-finished and finished products.

According to German trade statistics, South African exports to Germany declined in the first half of 2013, while German exports grew by about 6% in the first six months up to the end of June of this year, giving Germany an overall export total of €4,597,321 — with the balance of trade substantially in Germany’s favour. Total South African exports to Germany in the same period were €2,544,143.

Main import items in Germany’s shopping list from South Africa were finished products at €1,062, 410; raw materials at €601,273, followed by semi-finished products (€514,197), reflecting South Africa’s increased capability and performance in the fields of finished and semi-finished products.

Main items in South Africa’s import shopping basket were finished products at €3,864,222; primary products (€80,287) and semi-finished products (€138,517), again illustrating the dominance of finished and semi-finished export products.

South Africa is a leading exporter of catalytic converters, seen as an example of successful German-South African industrial co-operation. In another development, South Africa is becoming active in the production and export of certain agricultural products. Given that South Africa’s peak production season is different to that of Europe, including Germany, there is a natural advantage for its agricultural exports.

South Africa’s exports of finished industrial and manufactured products are also at a relatively advanced stage compared to two or three years ago, Boddenberg observes. "The development is positive. However, we have to be cautious not to endanger that. In that context, the general political situation and framework is of the utmost importance, so policies must be supportive and not counterproductive."

A prime facilitator in the growth of trade and investment between the two countries is the work done by the Southern African-German Chamber of Commerce and Industry through its various initiatives and interventions — many undertaken behind the scenes, away from the glare of publicity and fanfare.

Boddenberg says the Chamber has started various initiatives over the past two years. One is a working group that has been formed to drive renewable energy programmes, with about 140 members, demonstrating the great interest by German companies in South Africa in the field of renewable energy. These companies are active in wind energy through to solar thermal power — used most commonly in hot water heating — and also including photovoltaic and concentrated solar power (CSP). CSP is a further development of photovoltaic power, basically consisting of a mirror mechanism which focuses and directs the energy of sunlight onto a target requiring energy input.

The members of the working group consist mainly of German companies represented in South Africa which are active within the framework of the energy partnership between the two countries — itself a Chamber initiative. The Energy Partnership is set up at a political level, "and we try to fill it from the ranks of corporates and companies with content of a practical nature", says Boddenberg.

A second initiative, begun two years ago by the Chamber, is the establishment a corporate social responsibility (CSR) competence centre, which embraces Germany’s "champion" companies ranging from BASF to Volkswagen, which have all been involved in CSR projects.

"We have now moved to strengthen this initiative further by combining their efforts to help small and medium-sized companies also become active in the CSR field. The Chamber supports a number of small and medium-sized projects, including assistance with pooling of the resources of small businesses with other small and medium-sized companies.

"We have made major progress in the implementation and methodology of CSR initiatives over the past few years, given that CSR has so many facets. It has a social facet, where we look after handicapped children, for example, but CSR has even more implications in the field of training, education and social development. That is what we try to put a great deal of emphasis on — promoting and supporting selective and targeted CSR projects."

A third Chamber initiative will start on September 20, in the form of a working group on training and education. The Chamber already has an established training company in place called the Southern African German Training Services and it is envisaged that the working group will create a platform to evaluate the needs of German companies with regard to training, "so that we can adjust our training programmes to what the companies really require".

Says Boddenberg: "One of the spheres of activity that we have identified is the practical training of graduates in companies." He explains that many graduates have no practical exposure at the workplace level — a common concern among the employing companies — and that up to now little has been done to provide a practical solution to the issue.

"We need to get the companies and the graduates together to not only get to know each other but also to find out whether they fit together. We try to achieve this through our Job Fair, as well as on a systematic basis with our working group."

Boddenberg says there is an obvious and critical demand for practically-trained engineers in South Africa and the wider region. "We need to facilitate a platform whereby companies and graduates can get together, filling the vacancies that arise in companies, while at the same time providing employment for graduates."

He says that on the overall investment front, barriers to inward investment into South Africa are both of a psychological nature as well as a result of more material and practical hurdles. "The discussions over land reform and nationalisation, for example, as well as a deviation away from willing-seller willing-buyer principle, is detrimental. It has an effect on companies’ and investors’ willingness to invest in South Africa.

"The same applies to the discussions around the proposed cancellation of the bilateral investments treaty. Bilateral investment treaties are important for creating confidence among foreign investors.

"The current situation is that South Africa has bilateral investment treaties with several countries. To have the European Union (EU) as the basis of an investment protection treaty — seeing that there are 27 member countries in that organisation — could result in protracted and lengthy negotiations to achieve results.

"It is always easier and more practical to have a bilateral treaty rather than a multilateral treaty, even if that treaty is between the EU and South Africa.

"We believe the bilateral investment treaty must be kept alive as long as there is no EU-South Africa treaty in place. Otherwise South Africa will be sending out the wrong signal to potential investors, especially in the context of the debate around nationalisation and other issues.

"Similarly, the discussions around employment equity and broad-based black economic empowerment (BBBEE) are not conducive to creating investor confidence. It is issues such as these we discuss with the Department of Trade and Industry on a regular basis. These discussions help create psychological confidence among would-be investors. This is not only true in terms of the wider American and global economy, but is also true in the case of economic relations between Germany and South Africa.

"We are in favour of BBBEE, but there are certain aspects that are not conducive to investor confidence and engagement. As friends, we need to discuss these viewpoints openly and try to reach agreement on areas in which we may differ to some degree."

On investment input into South Africa, he says: "We have seen some encouraging level of new investment. Two major investments made recently have been in the chemical industry — one near Durban in paint industry pigments, and another through Evonik Acrylics, which has recently opened a production facility at Elandsfontein on the East Rand, where Evonik Acrylics produces flexiglass."

Boddenberg says investments have tended to focus on expansions of existing activities and are mainly industry-related and mostly in the manufacturing sector.

It is estimated investment volumes from German companies have totalled about ¤5.5bn to ¤6bn (about R80bn) in the period dating from 1994, when accurate statistics first became available.

However, he points out, the statistics are somewhat misleading in that they do not reflect re-investments that companies may have been making, such as upgrades or expansions to existing facilities, for example. In real terms, he says, the total German investment may be much higher.

Within this investment framework, the German automotive industry remains a lynchpin, he adds. In general, inward German investment is mainly focused on the manufacturing and industrial sectors, such as metalworking, the ICT and chemical industries, with renewable energy showing potential for the future.

As for future trade and investment trends, Boddenberg foresees enhanced regional activity on the part of German companies. "German companies already established in South Africa are now looking to the neighbouring African countries. At the same time, I believe that the integration of this country into the global economy requires South African companies to become more involved in the global supply chain. This is important because the depth of the production process is greatly determined by the number of suppliers you have. The more that South Africa is integrated into the global supply chain, the better its economy will develop — provided that the world does likewise. This is a trend that has continued over the past two decades and it is likely to continue for a number of years more."

He says a further likely influential trend is that regional development will facilitate and necessitate co-operation between South African and German companies in developing the required regional infrastructure to support rising economic growth on the continent.

"If the southern African region wants to develop, it will need to do so within the context of more regional co-operation — and, in certain cases, this will need the co-operation of an overseas partner, especially in infrastructure development. Infrastructure will play a major role in the future and we as a Chamber have tried to facilitate co-operation in regional infrastructure development projects — for example, through the International Investment Infrastructure Conference (IIIC) that we held last year on the occasion of the Electra Mining exhibition in Johannesburg, where we brought together infrastructure developers, finance organisations and the suppliers of machinery. That will also be the case in 2014 when we will host the second IIIC conference, an event we plan to stage every second year in future."

Boddenberg cautions that while the rest of Africa is achieving higher percentage growth at present, this is coming off a low base. "South Africa remains a giant in the region and its GDP is relatively big, so even a 1% to 3% annual growth rate places the importance of South Africa as a manufacturing and trading partner in perspective. For many years to come, South Africa and South African companies — and with them the German companies — will have opportunities to develop the region.

"There are big opportunities in the mining industry in the rest of Africa, so why should South African and German companies not utilise these together?"

He points to Mozambique and its capital, Maputo, as a country offering great opportunities for good co-operation between South African and German companies, as does Zambia and the Botswana-Namibia axis, not only from the transport corridor perspective, but also as a result of the many spin-off benefits that regional inter-cooperation is set to offer.

Source: |+| Business Day

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