Advantages And Limitations Of The Garment Industry In South Africa

1070 Words 4 Pages
Introduction
Garment industry in South Africa’s contribution to the national Gross Domestic Product in general and to manufacturing sector is nominal due to several weaknesses and limitations. However, in the context of very high unemployment rate in South Africa as well as the high inequality within the country, garment industry remains as one of the important sectors because of its capacity to absorb labour. Besides supplying both domestic and export activities, the local producers are creating more jobs, especially in rural areas. Those manufacturers are dealing with the control by ‘lead firms’ which referred to the global and local retailers’ domination in the industry, and have become highly dependent on them. The questions were arise
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During the time, South Africa was facing economic slowdown due to the shortage of labour caused by the separation of Blacks from Whites as well as the dependence of the economy on external borrowing to fund their import substitution industrialisation (Levy, 1999, pp. 3-6). Also according to author, the government also had to deal with anti-apartheid political movements for equal rights among races. Therefore, the investors were withdrawing from the economy under the political and economic pressures. The development of garment industry was found and developed with the connection to the protection levels and international trade …show more content…
The domestic market is dominated by six major retail groups which control 4947 retail outlets. On the other hand, the industry also received Foreign Direct Investment from famous brands such as Zara (Spain), Mango (Spain) and Cotton On (Australia) in the form of retailers (Source: FDI Intelligence 2014, cited in Clothing Sector Report) with the purpose of reducing costs and expanding markets. These retailers determine orders and prices within the industry and they choose with source of supply they want, whether from domestic production, import or outward FDI to lower cost countries such as Lesotho. As a consequence, profit is not equally distributed through the value chain but ‘concentrated on the retail end’ (Westhuizen, 2006, pp.

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