Interview: South Africa's current reindustrialization needs Chinese investment: experts

South Africa's current reindustrialization programmes need investment from countries like China as the international situation around manufacturing has changed completely, said Henk Langenhoven, Chief Economist at Steel and Engineering Industries Federation of South Africa.

"In terms of the biggest countries that are exporting to South Africa, China has not been in that list 10 years ago. However, in the past five years China has dominated the list of exporters to South Africa," said Langenhoven.

Official data showed that two-way trade volume between China and Africa exceeded 220 billion U.S. dollars for the first time in 2014, and China has been Africa's largest trade partner for the past five years in a row.

"We are now in a situation where Europe is now like an old sick man because its economy is shrinking," Langenhoven said in a recent interview with Xinhua.

The capacity of China is also seen in steel production where it contributes two thirds of the world's capacity, he said.

He said however that there are a number of challenges that South Africa will need to confront in order for the reindustrialization programme to be successful.

"The worrying matter is that the South African economy is currently not growing. Last year the economy grew by only 1.4 percent. The recurring strikes by employees have also had a negative impact on the economy," he said.

"The energy crisis currently facing the country also means industries can not produce as much goods as they should. The estimate is that the metal and engineering sector may lose a quarter of their production this year as a result of electricity shortage," said Langenhoven.

On the other side, Langenhoven believes the challenges are providing direct investment opportunities for countries like China.

"The investment that needs to take place, needs to focus on those areas where there is already a need like in the energy sector," he said.

Martin Solomon, Senior Vice President at Sasol Limited, agreed and said those intending to invest in Africa and South Africa in particular need to move with speed.

"Africa is super rich in hydrocarbons. It is awash with hydro- power and this should bring excitement to potential players. The oil and gas industry is also full of opportunities," he said.

"The most important thing is knowing how to make deals, knowing how to partner and having the right set of skills. There is an opportunity, but it needs to be found and a correct approach applied," Solomon said.

This, he said, is in line with South Africa's National Development Programme which is positioned for business that aims at creating value.

Meanwhile, the Department of Trade and Industry Deputy Minister Mzwandile Masina said China will be the best partner in South Africa's reindustrialization journey.

"The geopolitical and economic situation is no longer in favor of the Euro-zone and the U.S. and that means we must be looking for new markets.

"When we are kicked out of AGOA (the African Growth and Opportunity Act) in America we must be able to know what it is and we will pursue so that we do not produce goods that have no takers, " Masina said.

Masina praised China for its advanced knowledge in beneficiating its minerals and said South Africa will follow in the steps of China in that area.

This is particularly important when South Africa will soon embark on a massive reindustrialization programme to ensure the country's economy grows at a rate that will create the desperately needed jobs, Masina added. Endi