Current Trading Environment 2007

The South African textile environment is currently facing extremely difficult trading conditions. Employment in the industry has declined from 70 500 in 2003 to just below 50 500 in 2006. In addition a number of textile mills have recently closed and have been forced to retench staff.

Imports are at an all time high. Imports of yarns have increased from 77 000 tons in 2001 to 99 000 tons in 2006 an increase of 29% while imports of fabrics have remained relatively constant with 94 900 tons in 2001 and 95 300 tons in 2006. Much larger increases were recorded by imports of made up textiles which have increased from 4 900 tons in 2001 to 28 700 tons in 2006 an increase of nearly 500% and imports of clothing which increased from 139 million items in 2001 to 567 million items in 2006 an increase of over 300%.

Historically textile and clothing imports into South Africa originated from a wide range of countries chief amongst which were Taiwan, South Korea and Europe. However since 2001 imports have increasingly been sourced in the main from China. In the case of clothing imports, 89% currently originates from China, 3% from India and the remaining 8% from the rest of the world while 60% of all made up textiles (blankets, bed sheets, towels and curtains) originate from China.

Strategic Issues

China Restraint Arrangement

This arrangement was introduced on 1 Jan 2007. There have been subsequent changes to the original quota regulations and these were introduced on 27 March 2007. The changes included the following:

  • A tightening of the definition of “foreign brands”;
  • A provision for additional quota for special purpose clothing e.g. firemen’s gear and specialised sporting gear; and
  • A provision for additional quota for special strategic circumstances whereby increased quota will be granted subject to written commitments by importers to increase local procurement over a 5 year time period and to support technology upgrading and skills development in the local industry.

The latest import statistics on quota usage for the first two months of 2007 show the following:

CategoryQuota Usage
Textiles6% utilized (range 2% to 15%)
Clothing10% utilized (range 2% to 31%)

The low quota usage is due to imports being brought in ahead of the quota regime during November and December 2006.

The quota has had positive effects. The trading environment of the textile industry has seen an upturn in business as a result of the quotas but this is not universal across all sectors of the industry. Much stock is being laid on the special strategic circumstance provision (third bullet point above) whereby it is envisaged that benefits beyond the two year term of the quotas will be leveraged. A summary of the quotas is set out below:

China Quota Summary

DescriptionUnitsImportsQuotasQuota %
Jan 05-Jun 062007200820072008
Total Fabric'000kg17 38413 93016 304120%141%
Knitted Clothing'000No.170 68474 90781 66666%72%
Woven Clothing'000No.211 297101 084109 93172%78%
Curtains'000kg6 1224 7785 151117%126%

Customised Sector Programme (CSP)

The CSP was finalised in August 2006. However since that time the Retail Sector has withdrawn its support for the CSP and consequently the programme has not yet been introduced. The CSP is intended to develop and modernise the textile and clothing industries and to put them on a path to higher competitiveness. It embraces the following aspects:

  • Domestic market development;
  • Promoting exports;
  • Competitiveness by upgrading technology and investments;
  • Upgrading skills;
  • Empowerment; and
  • Pursuing a partnership approach.

At this stage the only progress under the CSP is that some of the projects contained within the programme are being advanced. These are:

  • Country of Origin labelling;
  • Replacement for the DCC Scheme.
  • Developing a capital upgrade provision for the sector.
Clothing and Textile Interim Development Programme (CTIDP)

The previous export promotion scheme for the textile and clothing industries, the Duty Credit Certificate Scheme” expired at the end of March 2007. No replacement scheme has yet been introduced. The resultant uncertainty has a negative impact on exporters.

Trade Agreements

The following trade agreements are currently in effect.

  • Africa Growth and Opportunity Act
  • South Africa/European Union (EU) Trade Development and Cooperation Agreement
  • Southern African Development Community (SADC) Free Trade Agreement

The following trade agreements are under negotiation.

  • South African Customs Union (SACU)/European Free Trade Association (EFTA) Free Trade Agreement (soon to be implemented)
  • SACU/Mercosur Preferential Trade Agreement
  • SADC Free Trade Agreement Mid-term Review
  • SADC(8)/EU Economic Partnership Agreement (EPA)
  • World Trade Organization Doha Development Round
  • SACU/India Preferential Trade Agreement

Textile Industry Statistics

Volume of Production (2000=100)103.1111.798.8101.392.892.3
Sales (R'billion)16.920.419.219.719.018.4
Employment ('000)64.165.570.561.752.850.5
Imports (R'billion)
Exports (R'billion)