Cheap Clothing Imports Strip Us of Ability to Add Value

Cape Times (South Africa), October 1, 2010 | Go to article overview

Cheap Clothing Imports Strip Us of Ability to Add Value


The article, "There is another side to the SA clothing industry story" by Professor Don Ross, Dean of Economics at UCT (Insight, September 27), was highly critical of the SA clothing sector.

Ross says importing cheap clothing is a plus for SA. Because it is cheap, he says, people buy more clothing and retailers have to hire more staff.

In addition, he says, SARS gets more VAT revenue and the poor have more money to spend on other necessities.

These gains, he says, offset the negative effects, like clothing factories closing down.

The history of the clothing industry in SA in the past decade is described as "an almost perfect example of the way in which the gains from international trade promote national welfare".

But Prof Ross neglects to mention the 45 percent customs tariff imposed on imported clothing. Imported clothing could be a lot cheaper than it is, and able to generate still higher sales, more VAT and the employment of more shop assistants.

A hundred years ago, South Africa was in just this happy situation. No tariffs on imports - and wonderful earnings from exports of gold, wool and diamonds.

The national welfare, then as now, did not confer equal benefits on all nationals. The SA Manufacturers' Association was founded by a small group of Cape Town factory owners in 1904 to support the development of local industries.

Local business would add value to raw materials, selling finished products and providing new sources of employment, income and economic growth. Over time, manufacturing grew to become a pillar of the economy alongside mining and agriculture.

The manufacturing sector demanded people who were educated, expanded the capacity to make use of technology and supported associated industries like construction, transport and communication. The economy that was created provided the basis for a higher standard of living.

The more value we are able to add in South Africa, the more wealth we will have to distribute.

The clothing industry, along with most manufacturing enterprises in SA, reached its peak employment before 1994. The industry, by then, had developed a range of "bad habits" as a result of isolation from international competition because of economic sanctions. But it employed a large number of people, experienced and skilled, who clothed South Africa.

In the last decade, South Africa has rejoined the international community and competition from abroad has severely challenged all of our manufacturing industry. We could not compete in clothing for two reasons. …

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