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Massmart and dtic localisation drive puts more SA products on shelves

Nine months in, and the collaboration is paying off.
Among the success stories, previously imported pots and pans have made way for locally manufactured cookware. Image: Supplied

Since teaming up with the Department of Trade Industry and Competition (dtic), Massmart, the second-largest distributor of consumer goods in South Africa, has increased its local supplier base as well as the number of made-in-SA products it offers.

The collaboration reviewed the group’s top imported products and determined which had the potential to be manufactured more competitively by local manufacturers.

The process involved retaining industrial engineers to review 600 products and selecting those with the highest potential for local manufacture based on local manufacturing capability, opportunity to achieve target pricing, and local availability of raw materials.

Massmart, which owns brands such as Makro and Game, localised the supply of cookware products for Makro’s private brand, Primaries. This means that previously imported pots and pans are now manufactured locally by Africa Cookware.

Local suppliers

“In this case the dtic played an important role by assisting Massmart to engage a local aluminium supplier to supply previously imported base materials for these items,” the company said in a statement.

Massmart has also localised a variety of previously imported products, including baby cots, flat pack office furniture, pool accessories and instant noodles.

One of its “most successful” projects has been the localisation of multi-density fibreboard (MDF) toilet seats, which involved investing in capital equipment such as hydraulic presses, raw material milling machines and paint lines for local manufacturer Active Factory.

Other localised products include nails, wheelbarrows, gym equipment weight disks, brackets for boxing bags, heating gel and clothing accessories.

Local growth

“Locally manufactured products present significant supply chain benefits by reducing supply lead times so that stock arrives in our stores faster and more reliably which translates directly into improved sales,” says Von Stander, Massmart sourcing optimisation executive.

“Localisation means more investment in local manufacturers which creates opportunities for growth for those companies,” he added.

Stander says the group is currently exploring opportunities in the housewares, garden tool and office furniture merchandise categories to manufacture locally in the near future.

Palesa Mofokeng is a Moneyweb intern.

COMMENTS   6

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A beautiful story indeed, until someone asks “Who pays for the politicized localization efforts?” If the DTI or the IDC provides funding for “emerging industrialists”, then some efficient business is taxed to support the new uncompetitive business model.

The local manufacturer won’t have the same scale benefits as larger international manufacturers. It is great if the business develops organically because of an existing arbitrage opportunity, but if it is the result of a decision by central planners, then someone will have to foot the bill. Then the arbitrage opportunity is between the taxpayer and the new socialist central planning pet project.

At the going costs of capital, cost of electricity, cost of labor laws and union demands, the municipal rates and taxes, the cost of the crime rate, the lack of electricity, and the implosion of municipalities, how will the new local entrant into the market be able to compete with his Chinese counterpart who has a huge competitive advantage?

Somewhere they will tax an efficient taxpayer, the import agent may be, who is now forced by SARS and the DTI to subsidize his competition. In the end, the consumer will bear the cost of the actions of central planners.

Can Massmart and dtic please let the ANC know this before they procure more Cuban water engineers or doctors. 🙂

Ja right, like the SA version of Rice Krispies. It is so far from the original that it is downright unhealthy, vanilla flavour and all.

Thanks Massmart hope this works well for for all stakeholders including the taxpayer.

Fact: Chinese Govt applies countervailing to squeeze competitors out.
Local Producers start with a negative margin of around 20% .

Fact: Chinese dump on markets in SA

Fact :If the local producer is part of a global group, the will threaten you that they will shut your Chinese operation down.

So, how will SA producers ever be competitive ? Never unless we ALL stop imports from China or we increase import duties to at least 100%

Really now?

Where’s that sentiment when Ramaphosa says he nominated the CUBAN doctors for the Nobel Prize?????

So our OWN health workers and doctors who are taking care of us during Covid, many having paid with their lives – unselfish acts of food and health protection products by Gift of the Givers – these South Africans don’t qualify in the mind of President Rhamaphosa to be nominated????????

No thanks – buy NOTHING locally produced!

End of comments.

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