South Africa is gateway to a vast continent

Nation is becoming a steppingstone for Chinese investors to enter the African market

While some African countries feel uneasy about the unbalanced pattern of trade between China and Africa, Chinese manufacturers and investors see South Africa as a ticket to the continent and both sides are broadening links to help rebalance trade ties.

Two-way trade between China and Africa hit $198.49 billion in 2012, and China's trade with South Africa alone reached $60 billion, which is a fortyfold jump since 1998 when the two countries established diplomatic relations, according to figures from the Ministry of Commerce.

"As the biggest economy in Africa, Chinese companies tend to march into South Africa as a first step in going global," said Zhang Xialing, deputy director-general of the foreign trade department of the Ministry of Commerce, at the 114th Canton Fair, which ended on Nov 4 in Guangzhou, Guangdong province.

China has been South Africa's largest trading partner, the biggest export market and also the largest source of imports for four consecutive years. At the same time, South Africa is China's biggest trading partner in Africa. More than 130,000 Chinese visitors went to South Africa in 2012, up 56 percent compared with 2011.

"We are encouraging Chinese importers to buy more agricultural products, wines and chemical products from South Africa and deepen bilateral cooperation in manufacturing. It is also important for us to develop partnerships in emerging industries, such as traveling," said Cao Jiachang, deputy director-general of the department of West Asian and African affairs of the Ministry of Commerce.

In fact, China-South Africa links have broadened in recent years, rather than being limited to raw materials that some have regarded as an exploitative drive for Africa's natural resources.

Minerals have been South Africa's major exporting goods to China. However, the proportion of this sector is witnessing a steady drop and the transformation of foreign trade between China and South Africa seems to be bubbling.

In 2012, the value of South Africa's minerals shipped to China decreased 14.8 percent to $7.73 billion. The total exports of its base metals to China also declined - 27.1 percent from 2011.

However, China imported more textiles and related raw materials from South Africa, totaling $200 million, an increase of 46.5 percent compared with 2011, according to the Ministry of Commerce.

On the Chinese side, apart from exporting traditional manufactured goods to Africa, such as electronics and clothes, Chinese companies are shifting to an upper-end market and also adding direct investments.

Chinese consumer electronics company Hisense Group invested 350 million yuan ($56 million) for an electronics factory in Atlantis, north of Cape Town in June.

Hisense started manufacturing flat-screen televisions and refrigerators at the plant in February, recruiting and training 300 previously unemployed residents from the area.

South Africa was Hisense's first market in Africa, which it entered in 1995. Until now, its turnover from South Africa accounts for 16 percent of the company's total income in Africa.

"In 2010, we adjusted our strategy in South Africa, from selling low-end products to high-end ones. Right now, our pricing in Africa is almost equal to international brands such as LG and Samsung," said Zhu Dan, president of Hisense Middle East-Africa Holdings Co Ltd.

"The market is growing at an average pace of 20 percent year-on-year. Our refrigerators, televisions as well as air conditioners are very popular in the marketplace," Zhu said.

Zhu added that they simply expected to sell as many products as possible in past years. However, as the market has changed, the company decided to position itself as an international brand. It made changes in its management, product mixture and selling channels.