Cape Town – Japan stands behind South Africa’s call for greater industrialisation and trade in higher value exports, the Minister of Trade and Industry Rob Davies said today while releasing a joint study on economic cooperation between South Africa and Japan.
The executive summary of the report, which is being put together by Japan and South Africa, was released at the fifth Tokyo International Conference on African Development (Ticad), which ended on Monday.
The study recommends that South Africa and Japan should cooperate more in three areas: mineral beneficiation, agro-processing and automotive components.
Japan is South Africa’s third largest trade partner, with 110 Japanese companies employing 150 000 people and having invested R192 billion in South Africa, mostly in the automotive, metals and chemicals sectors.
Currently, South Africa exports mainly primary products such as metals and agricultural goods to Japan, while importing largely technology-intensive goods and machinery from Japan.
Davies pointed out that 65% of world trade was through intermediate goods and that Africa needed to get a slice of this, and move away from reliance on exports of raw minerals.
The joint study calls for component manufacturers to adopt some of the lessons of the Japanese industry, such as lean manufacturing.
It recommends that Japanese master trainers in lean manufacturing and total productive maintenance could get involved with the establishment of the new supplier development organisation that the automotive sector and the SA government plans to set up.
The study also recommends that original equipment manufacturers (OEMs) extend their mandatory training and capacity building for tier-1 suppliers, to tier-2 and tier-3 suppliers as well.
Davies pointed out that Toyota and Nissan had recently increased their investments in South Africa in recent years, and that there were now plans to set up an automotive supplier park near Toyota’s plant in Durban.
He said one of the reasons Japanese car companies were looking to develop component suppliers outside of Japan was that the 2011 tsunami had shown up a weakness in their automotive sector and had disrupted operations because most of the component manufacturers were situated in Japan.
Minerals beneficiation
In the area of minerals beneficiation, Davies said his department was looking to lean on Japanese assistance in two potential Special Economic Zones (SEZs) based in the platinum sector.
He said his department had asked for a Japanese technical expert in SEZs specialising in mineral beneficiation to be deployed to South Africa, and Japan’s Ministry of International Trade and Industry (Miti) had nominated a professor with the necessary expertise.
Other potential sectors for SEZs include jewellery and the development of hydrogen fuel cells, he said.
Agro-processing sector
In the agro-processing sector, the study recommends that a market access coaching programme, incorporating export readiness assessments, be introduced, specifically focusing on Japanese tradable commodities.
The study also suggests that a channel be set up between Japan and South Africa to promote agro-processing products and opportunities between the two countries.
Davies said though Japan’s agriculture sector is quite protected, there were plans to cooperate in a number of areas, pointing out that South African wine was popular in Japan and that a South African iced-tea drink would also be launched in Japan.
He said a number of Japanese companies were bidding for some infrastructure projects.
Cooperation agreements
During his visit to Japan, Davies also held talks and fielded questions from top officials at Keidanren, the Japanese Business Federation.
Two cooperation agreements were also signed - one between the third largest bank in the world, Mizuho, and the Department of Trade and Industry’s Trade Investment South Africa (Tisa); and another between Tisa and the Japanese External Trade Organisation (Jetro), updating an existing memorandum of understanding to cater for the recommendations of the joint study.
Davies said Mizuho had already organised seminars for their client base, who might be interested in investing in South Africa, and was also keen to set up a presence in South Africa to fund joint ventures in industrial projects on the continent. – SAnews.gov.za
