Buy South African, but trade has to be a two-way affair
In his bestseller, What They Don’t Teach You at Harvard Business School, Mark McCormack calls “common sense” the most important personal asset in business. He proceeds to say that “if you don’t have it, you probably never will”, and there’s nothing he can say in the book that’s going to change that.
I was reminded of this part of one of my favourite books as I listened to the various speakers at this year’s instalment of the Buy Local Summit hosted by government agency Proudly South African, which was established to promote local production and influence consumers to buy local while stimulating job creation.
Common sense should dictate that all South Africans would want to buy locally manufactured goods, as it serves them directly to do so. Well, there is another problem with common sense that McCormack didn’t touch on. It is not always common.
For many years since the adoption of localisation policies, the government has been promoting the procurement of locally manufactured goods at all costs and at times ignoring the compelling commercial and common sense attached to buying from the best in the world.
The upside of being a globally connected player is that you are exposed to a network of potential customers from all over the world and, in that way, have more export opportunities. The downside is that they also get to export to you. This forces you to up your game and be more competitive because end users will simply import what is cheaper and better quality, no matter how hard you try to convince them that “local is lekker”.
Razeen Sally, associate professor at the Lee Kuan Yew School of Public Policy at the National University of Singapore, makes the point that while protectionism has not surged since the 2008-09 crisis, there is evidence of creeping protectionism, especially with increasing non-tariff barriers to trade.
“No country has developed successfully in modern times without harnessing economic openness — to international trade, investment and the movement of people — for its development. Trade and investment integration increases the size of the market available to domestic firms as well as driving potential value chains with which they could link up their own production.
“And it drives productivity and innovation by exposing firms to international competition, expertise and technology. Through these two channels, external openness makes a significant contribution to poverty reduction, helping to unleash the potential of the private sector to create jobs — as the East Asian ‘miracle economies’ have demonstrated.”
The CEO of Nampak and chairman of the Manufacturing Circle, Andre de Ruyter, bravely made the point at the Buy Local Summit that we, as South Africans, must tread with caution in our call for all manufacturing to be sourced from South Africa.
He stressed the need for South African suppliers to strive to be and remain globally competitive if we want to sustain the Buy Local narrative. Using Hulamin as a good example of the clear benefits of having locally based yet globally competitive suppliers, De Ruyter presented a balanced and realistic outlook to how we can make local really lekker.
Companies and consumers will continue to seek bang for their buck. They will look for good value at great prices, even if it means going abroad to find it. Why? Because it’s common sense.
So instead of trying to fight against nature, we should make it compelling for our customers to buy our Proudly South African products. We must be so competitive that common sense drives customers our way. We must be globally competitive but locally relevant. We must use our home-ground advantage to beat the global players, by enhancing elements such as customer service, responsiveness and after-sales service.
But we must also be realistic. There are certain products that the likes of Germany and China will always beat us at, and that’s okay. Just as we now have them as customers, they have us as customers too. It’s the other side of the international trade coin.
As South African companies and entrepreneurs, we must focus on our strengths and seek to “wow” our customers beyond belief, and stop obsessing about the global players.
There’s a reason retailers believe “the customer is always right”.