South African restrictions on imports of Chinese textiles and clothing have not come to the rescue of the country's ailing textile sector as effectively as had been hoped. Brian Brink, executive director of South African industry group Textile Federation (Texfed), tells just-style why firms continues to struggle.
Instead of reducing imports, the new quota system has merely resulted in South African clothing manufacturers seeking alternative suppliers for restricted Chinese inputs rather than turning to the local sector for their needs.

India, Indonesia and Malaysian exporters have been the big winners instead, he says.

Even the tiny island states of St Kitts & Nevis, in the Caribbean, and Tuvalu, in the Pacific - population of just 42,000 people and 12,000 respectively - and Mongolia have now emerged as significant South African textile suppliers.
"India and Indonesia were advantaged but so too was Malaysia," Mr Brink told just-style in an interview.

"But other countries were also advantaged: Oman, Mongolia, the Cocos and Keeling Islands, the Cayman Islands, St Kitts and Tuvalu amongst others have all recently emerged as suppliers of clothing to South Africa."

Fresh doubts over the restrictions
This failure to divert demand to the South African textile sector has also cast fresh doubts over whether these import restrictions are actually watertight.

Either Chinese firms are using a host of new business addresses to circumvent the South African restrictions or South Africa has unwittingly sparked clothing industries in some of the remotest corners of the planet, notes Mr Brink.

The growth of textile and clothing imports from India and Indonesia - while almost certainly legitimate - is also expected to continue.
"That the quotas would be so readily and easily circumvented was not foreseen.

"Safeguard measures [adding temporary protective duties to imports of items involved in an import boom] would have been a better option.

"The [South Africa government's] Department of Trade and Industry (DTI) certainly must have believed that the quota measures they introduced would halt the surge in imports from China on items under quota," he says.

And although "in this regard they were proved correct," Brink adds, it was far from being the whole story. 

"The advantage of a targeted quota is that it is very specific and can be designed and tailored to arrest specific product import surges from a particular origin. The disadvantage is that if not adequately administered it is easily circumvented by both genuine and fraudulent source switching."
More problems
And yet more problems may be looming for South African textile producers.

Under World Trade Organisation (WTO) rules, the existing Chinese quotas are expected to expire in December 2008, lifting the flawed protection offered by the quotas to South Africa textile producers, who have struggled to match the Chinese combination of low costs with reliable quality. 

Yet to some extent, Texfed has little to grumble about.

It supported the DTI's decision to impose quotas on imported Chinese textiles and clothing in January 2007.

As the representative of all cotton, wool and worsted yarn and woven fabric textile manufacturers in South Africa and about 70% of the country's fabric knitting mills, it acts as the voice and spokesman for its members on key industry issues. 

The need for import restrictions was highlighted by the parlous state of the South African textile sector.

Employment has collapsed from 70,500 in 2003 to below 50,500, whilst a number of textile mills have recently closed and have been forced to retrench staff. Imports are at an all time high.
Action plan
Meanwhile, the DTI has announced an action plan to recapitalise and upgrade the South African clothing and textiles industry.

The ministry intends to fund research and development and upgrading of skills and the state will step up efforts to curb illegal imports, which many manufacturers consider the biggest threat to the industry. But this initiative may be too little too late.
"Our position is that the breathing space that was afforded by the imposition of quotas should have been used to boost investment in upgrading and technological improvements of manufacturing plants.

"Investment incentives have only recently in July been introduced just prior to the termination of the quotas," says Brink.
The problem is highlighted by difficulties encountered by cut, make and trim operations (CMTs) who previously used imported fabric and did switch to local suppliers because of the quotas.

Some local manufacturers, already struggling with rising costs, electricity cuts and a drop in consumer spending within South Africa, have complained to the South African media about local fabric supplies being often of an inferior quality, a higher price and suffering from problematic delivery schedules.

The result: some CMT contracts have been lost because of local supply problems.
Meanwhile, the DTI has initiated a plan to improve the South African clothing industry's competitiveness by launching a review that may being new import duties on textiles, streamlining the existing complex system and maybe bringing positive benefits to a beleaguered sector.

By Steven Swindells.