A new year often brings renewed optimism and hope. 2012 ended strongly, world stock markets had a solid run, China appeared to avoid a sharp contraction, the Euro survived to live another day and the US avoided falling off the fiscal cliff.
One month on, and let’s look at the reality.
At the end of January, we learned that the US economy contracted in the final quarter. The UK is heading for an unprecedented triple dip recession. The Eurozone is forecast to contract by 0.2% in 2013 with its peripheral economies remaining in recession; and Japan is still fighting a deflationary spiral as it tries in vain to get its consumers to spend. In short, the global economy remains in trouble, debt overhangs, property bubbles, deleveraging, whatever you want to call it, the boom boom days are still a long way away.
So how can South African businesses maximize their success in troubled times?
Here in South Africa, GDP growth has leveled off at around 2.5%, higher than the developed world but still, much lower than what we have been used to; and much less than is required to meaningfully reduce unemployment and widespread poverty. So for your business to outgrow this, you either create brand new market with a new product or you take market share from your competitors. Better still, you grow your sales internationally through exporting goods and services.
The world economy might be a hard place to do business, but the Rand is presently at a 44 month low. It has weakened by around 30% in the last 18 months and is now at its weakest since the aftermath of the 2008 banking crisis. This is great news for exporters who immediately have a price advantage over their competitors. South Africa is renowned for its exports of platinum, gold, citrus and wine but it also has world class expertise in catalytic converters, mohair, other automotive and IT. Increasingly, South Africa is winning the battle with India and the Philippines in becoming a first choice outsourcing destination for call centres, so don’t always assume that we are inferior to our Western competitors, in many cases, we do it better and cheaper.
With the Port of Ngqura and the Coega Industrial Development Zone on our doorstep, we have a world class port, strategically positioned on the Global East West trade route and an IDZ that offers exceptional infrastructure and custom developed space for global and local businesses to locate to. In support of that, we have all the leading freight and logistics firms in our region shipping out of both the ports as well as via airfreight.
And for those businesses who have a fear of stepping into the unknown, there is a support organization specifically set up to assist emerging and existing exporters through the processes.
Tradepoint SA Nelson Mandela Bay is a not for profit organisation supported by the Municipality and Eastern Cape Development Corporation and specifically targeted to the export sector. The Tradepoint programme is part of an initiative from the United Nations to assist and expand small and medium enterprise participation in global trade and was brought into South Africa by SEDA, the Small Enterprise Development Agency. The programme is managed locally by David Hamer, based from at the Business Chamber, and provides end to end assistance and facilitation for businesses that need to understand how to go about exporting, whether it be identifying new markets or clients, or how to participate in a trade mission. In the last 6 months, Tradepoint has assisted Bay based businesses to participate in trade missions to Brazil, China, UK, Paris, Germany, Turkey, USA and Saudi Arabia. R 1 million of township fine art was exported to USA in September, and recent export orders from Hong Kong and Egypt worth R 1 million each have been secured. Tradepoint also hosted inbound trade missions from China, USA and Romania.
To kick off the New Year, Tradepoint is offering businesses an export readiness assessment to businesses with the ambition to grow and expand.