A Bloomberg news report has revealed that South African retailers, including The Foschini Group Ltd. and Woolworths Holdings Ltd., are increasing investment in local clothing manufacturers. Thus both reducing a dependency on Chinese imports and securing a supply chain thrown into disarray by Covid-19 restrictions.
The two companies have planned to source 65% of their goods from local manufacturers within the next decade. TFG Chief Executive Officer Anthony Thunström said Covid-19 has caused “such disruptions to the supply chain that everyone’s sitting back and saying do we ever really want to be that reliant on China ever again… I think the penny’s dropped and retailers are looking more and more to buy locally.”
TFG, which sources about 22% of its apparel locally, has hired 550 more workers across two South African factories this year and sees the potential to add several thousand more.
This development comes at the back of President Ramaphosa’s effort to revive the manufacturing industry, which has the potential to achieve a goal of creating jobs, easing an official unemployment rate that’s at a 17-year high.
“As South Africa opened to trade in the late 1990s, China came in and decimated the market as cost was the only dictating factor… But the world has changed radically and there is now so much more than just the cost. Sustainability, carbon footprints, challenges of logistics — all of these factors are going to force a rethink,” said Lawrence Pillay, head of sourcing at Woolworths.
“If we want our local retailers to get 65% of their products within the borders of South Africa, then we have to look at a broad scope of product categories. In 28 years, I’ve never seen better co-operation between retailers, government, labor, and manufacturers. In 10 years we can re-create the industry,” Pilley said according to the Bloomberg post.
Will the disruptions of global supply chains by Covid-19 revive local African manufacturing industries?
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