Tex­tiles turn the tide

CityPress - - Business - HOPEWELL RADEBE hopewell.radebe@city­press.co.za

It has been teach­ing small and medium-sized busi­nesses how world mar­kets work to help them re­main cur­rent and rel­e­vant, and now the In­dus­trial De­vel­op­ment Cor­po­ra­tion (IDC) is slowly re­viv­ing the coun­try’s tex­tile sec­tor, and grow­ing the ob­sti­nate chem­i­cal and phar­ma­ceu­ti­cals in­dus­tries. Sha­keel Meer, the IDC’s divi­sional ex­ec­u­tive for chem­i­cals and tex­tiles, says he is “cau­tiously op­ti­mistic” about th­ese in­dus­tries be­cause they have turned the tide.

“We may not be another Bangladesh or China in terms of pro­duc­tion of goods such as cloth­ing, but we have care­fully worked with lo­cal busi­ness to iden­tify cer­tain unique niches where South Africa is be­gin­ning to be com­pet­i­tive within the coun­try and in­ter­na­tion­ally. In those niche ar­eas, op­por­tu­ni­ties are be­gin­ning to bloom for the South African cloth­ing and tex­tile sec­tor,” Meer says.

“Po­ten­tial en­trepreneurs need to iden­tify where the gaps are in the sec­tor and de­liver to sat­isfy the re­tail­ers, and blow away the end user with unique fash­ion prod­ucts,” he says.

Meer says that the IDC may not be able to keep the tex­tile sec­tor’s en­tire value chain “vi­brant, but we are cer­tainly suc­ceed­ing in build­ing and tai­lor­ing some seg­ments to re­vive it”.

He and his team are now iden­ti­fy­ing en­trepreneurs who are ea­ger to roll up their sleeves and par­tic­i­pate. For those who are in­ter­ested in get­ting in­volved, Meer says gaps ex­ist through­out the value chain from farm­ing raw ma­te­ri­als to spin­ning yarn, as well as in fin­ish­ing and dy­ing fab­ric, and pro­duc­ing end prod­ucts like cloth­ing.

The value chain stretches from the farmer to the pro­ces­sor, and from the man­u­fac­turer to the re­tailer. The IDC is tar­get­ing lo­cal part­ners to take ad­van­tage of op­por­tu­ni­ties on of­fer and gets them to up­scale, buy new equip­ment or im­prove and re­design their pro­duc­tion lines to help them be­come more com­pet­i­tive and cost-ef­fec­tive.

He says en­trepreneurs need to track fash­ion trends and iden­tify, for ex­am­ple, the sea­son’s hottest colours and styles to en­able the value chain to quickly adopt them. The IDC is en­cour­ag­ing and fund­ing com­pa­nies will­ing to ven­ture into the so-called fast fash­ion busi­ness – a con­tem­po­rary term used by fash­ion re­tail­ers who buy prod­ucts from de­sign­ers and or­der cloth­ing that moves quickly from the cat­walk to the re­tail floor.

Fast fash­ion cloth­ing col­lec­tions are based on the most re­cent fash­ion trends of­ten pre­sented at trendy events around the world twice a year. It is not re­stricted to cloth­ing only, but in­cludes ac­ces­sories as well.

“The cloth­ing sec­tor has proven to be very com­pet­i­tive, not just lo­cally but par­tic­u­larly on the in­ter­na­tional front, which puts a lot of pres­sure on the mar­gins. Un­less you have iden­ti­fied a good niche for your busi­ness, it is very hard to com­pete,” Meer says.

Although the tex­tiles sec­tor may be a tough one, some parts of the chem­i­cals sec­tor can be tougher to crack, be­cause of high bar­ri­ers to en­try.

The sec­tor is di­vided into two units at the IDC. The first is the ba­sic and spe­cial­ity sec­tor, which in­volves the bulk sup­ply of un­pro­cessed prod­ucts, which are ben­e­fi­ci­ated down­stream, such as ethanol and acids in their raw form. The sec­ond unit in­volves pro­cessed chem­i­cals and phar­ma­ceu­ti­cals. Although the ba­sic and spe­cial­ity sec­tor is dif­fi­cult to en­ter, en­trepreneurs choose to join sec­tions of the value chain by fo­cus­ing on end-user prod­ucts, such as plas­tics, house­holds clean­ing prod­ucts and cos­met­ics. This is where most en­trepreneurs jump in, and the IDC finds ways to fund or part­ner with them.

The chem­i­cal sec­tor of­ten con­tains highly spe­cialised skills and is dom­i­nated by larger com­pa­nies that fo­cus on pro­vid­ing huge vol­umes of prod­uct. A num­ber of th­ese are multi­na­tion­als tar­geted by the IDC and the depart­ment of trade and in­dus­try to come into South Africa to in­vest and cre­ate jobs.

The IDC has es­tab­lished that there is room in this com­plex and wellestab­lished in­dus­try for highly spe­cialised smaller com­pa­nies – ei­ther stand-alone firms or lo­cally based sub­sidiaries of large multi­na­tion­als – to pro­duce niche or spe­cial­ity prod­ucts.

On the phar­ma­ceu­ti­cal front, Meer says the sec­tor needs a lot of tech­ni­cal ex­per­tise be­cause the prod­ucts are of­ten medic­i­nal and the busi­ness en­vi­ron­ment is fraught with reg­u­la­tion – for good rea­son.

The in­dus­try has high safety stan­dards and many prod­ucts re­quire spe­cialised li­cences that de­tail strict spec­i­fi­ca­tions, tech­ni­cal re­quire­ments and skills, as well as the abil­ity to han­dle, pack­age and trans­port the prod­ucts.

How­ever, in the area of chem­i­cal prod­ucts used by house­holds, there are many that can be man­u­fac­tured in a garage – which is how en­tre­pre­neur Her­man Mashaba es­tab­lished Black Like Me.

While this is not typ­i­cally what the IDC would fund, says Meer, he ac­knowl­edges that it has been a start­ing point for some en­trepreneurs who have grown into for­mi­da­ble busi­nesses.

Meer says that if an en­tre­pre­neur starts with just a sin­gle piece of equip­ment to pro­duce a sin­gle prod­uct for a par­tic­u­lar cus­tomer, they should do their ut­most to be con­sis­tent, and en­sure qual­ity and a re­li­able sup­ply to cus­tomers.

“Com­pared with the ba­sic and spe­cial­ity chem­i­cals sec­tor, con­sumer prod­ucts are fairly easy to en­ter, but they are very dif­fi­cult to sus­tain,” he says.

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