Recent local and foreign business owner tensions:

If by-laws are enforced ‘there is no way we can have what we are having now.’

SIKI MGABADELI: Time now for our SME feature and my colleague, Tumisang Ndlovu, speaks to Tshepo Thipe, a local shop owners’ representative, about the recent tensions between local and foreign business owners, and how this is affecting our small business sector.

TSHEPO THIPE: Since it’s now happening in Soweto the government is starting to pay attention. It started in 2008. So there have been pockets of it happening all over. The government is only now starting to take it seriously because it’s happening in Soweto. But this thing has been there for so long. I am happy that the government realises we have a problem and realises that it’s got a problem that it needs to solve. There is a space for foreigners to come and trade, but we are saying level the ground, let everybody play by the rules. If I have to comply as a South African, let the foreigners comply. If the foreigners comply the South Africans must comply.

TUMISANG NDLOVU: As part of an organisation of local business owners, what are your concerns?

TSHEPO THIPE: I think my concern to be honest is the fact that the whole thing has been misunderstood. I think business people have never really come out to state their part of the story. So I’m thinking on behalf of business people and businesses are not actually speaking their minds to say this is what we think should be happening, and this is how we feel you are doing with me now. And I’m worried that we are going to be regarded as criminals, and that’s not who we are. So my worry is our reputation is actually at stake and people are going to think that we want to make our businesses on the back of the foreigners and after the foreigners have worked so hard we now want to reap the benefits of what they’ve got. That’s not the point.

TUMISANG NDLOVU: Having said that, Tshepo, do you agree with issues raised around foreign nationals selling their goods [at less than]… cost?

TSHEPO THIPE: There is a bit of truth to that, to say they are a bit cheaper than everybody else, but it’s not entirely true. I think whenever they go into a new area which they are not dominating, they create what you can maybe call a price war. They will then come in and try and squeeze you out.
   I’ll give you an example. I actually challenged them on this issue and they couldn’t come up with an answer. They will come in and try and run a business at a margin of between 5 and 7%, because I’ve studied them and I’ve seen what they do. So they will come in and mess up the market price. I’ll give you an example. Everybody knows a loaf of bread is R10, that you are selling it at R10. So you are not overcharging anybody as a South African, because that’s the going rate for bread. They will then come in and charge people R8.50. We know, all of us, that R8.50 is not sustainable because you are basically making 5% or 4%. So that’s 4c for every rand.
   Then, when you lose business to them and everybody starts shopping with them, you do one of two things. You are either going to drop your prices to try and save your business, or you will just see there is no point in opening – I will rather close the shop and go. And then, once you close, they will take their bread and charge R10. So it’s a model that they try and use to squeeze South African business out of business. But once you close down they go back to what the real market price is.

TUMISANG NDLOVU: Small Business Development Minister Lindiwe Zulu has announced plans to set up a task team to help bolster relations between local and foreign business owners. How have you, as an organisation, responded to the minister’s efforts?

TSHEPO THIPE: In fact I am very sceptical, to be honest with you. I’ll tell you the reason why. Whenever we have a problem in this country we set up all these commissions and task teams and what have you. But at the end of the day they don’t produce. Nobody goes back to check what they have done. I said to the minister to try and solve this problem you don’t need a task team. It’s simple – enforce by-laws. Every municipality has by-laws. If you enforce by-laws there is no way we can have what we are having now, because now we have a sector that is unregulated. You have people who will come into the place, open businesses, not pay tax, and do whatever they are doing. But if you enforce by-laws, one of the bylaws is you have to register for VAT, you have to register for tax, you have to pay the business rates for rates and taxes.

TUMISANG NDLOVU: Gauteng Premier David Makhura has also indicated that tensions between local and foreign business owners threaten the dream to bolster his vision or the local government’s vision of propelling what he terms the township economy. Do you agree with this?

TSHEPO THIPE: I don’t think David Makhura knows what to do either, to be honest. I went to his roadshow. He said what I heard from the previous people 10 years ago. He said the same thing – we need to start manufacturing, we need to do all of those things. He’s not coming with something concrete to say we, as the government, this is what we are saying we are going to do to boost black business or boost small business.

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