The following research report contains market research, analysis, statistics and business intelligence relating to research on Textile Industry In South Africa.

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ABSTRACT
The textile and apparel industry is South Africa's sixth largest
the manufacturing sector employer and eleventh largest exporter
of manufactured goods. After the mines, it is the second largest
user of electricity and second largest source of tax revenue.

The textile and apparel industry directly employs 230,000 and
another 200,000 in dependent industries such as transport and
packaging. The Industrial Development Corporation (IDC) has
calculated that for every worker in the textile industry, 2.5
jobs are generated in related industries.

In 1997, total South African retail apparel sales exceeded R24.1
billion. This figure represents a 258% increase in retail sales
since 1990 and a 146% growth since the elections in 1994. In
1997, the textile industry sales were R 11.9 billion.

Economy

The current volatility of global financial markets and
realignments of emerging market economies has impacted on South
Africa heavily, making the government's ambitious reform and
restructuring process difficult. The Asian Financial Crisis hit
South Africa particularly hard, as Japan and Taiwan are South
Africa's two largest trade and investment partners. As a direct
result, the South African Rand has lost 25 percent of its value
against the dollar since January 1998. South Africa is
experiencing an economic slowdown, which began in the 3rd quarter
of 1997. During the second quarter of 1998, GDP increased at .03
percent. Current conditions suggest that the economic slowdown
will continue into 1999. The economic slowdown combined with the
dollar/rand exchange rate may present challenges to U.S.
companies seeking to export to South Africa.

South Africa is, at once, a first world and a third-world economy
living side by side.
Per capita income statistics may be misleading unless the
substantial gap between reasonably well-off middle class and the
masses of poor are taken into account.

Tariff Structure

In 1992, the South African Government instituted a program to
drastically reduce tariffs for textiles and apparels over a
twelve-year period. The tariff reduction timetable gives the
non-competitive domestic producers a grace period in which to
increase efficiency. Textile tariffs will be reduced over twelve
years from 100% to 45% on clothing, from 50% to 25% on fabrics,
from 35% to 17.5% on yarn, from 15% to 10% on fibers, and from
60% to 30% on household textiles.

South African Customs Union Textiles and Clothing: Tariff
Phase-Down Program *1992*1993*1994*1995*1996*1997*1998*1999*2000*2001*2002**

Synthetic fiber *15%*25%*25%*23%*21%*19%*17%*15%*13%*11%*7.5%**
yarn *35%*32%*32%*30%*28%*26%*24%*22%*29%*18%*15%**
fabric *50%*45%*45%*42%*39%*36%*33%*30%*27%*24%*22%**
Clothing *100%*90%*90%*84%*78%*72%*66%*60%*54%*47%*40%**
Household made-up
textiles *60%*55%*55%*52%*49%*46%*43%*40%*37%*34%*30%**

Source: South African Government, Department of Trade and Industry

Although the government seems intent on conforming to the
standards of the WTO, the legacy of an import substitution policy
supported by high tariffs and import permits has left the South
African apparel industry largely non-competitive on the world
market. Due to this lack of competitiveness coupled with the
high unemployment rate in South Africa, the government has
vigorously explored WTO-permissible supply-side measures designed
to facilitate worker re-training and technological innovation.
Market Access

Since 1989, when import penetration escalated to around 40% of
local production, import control measures were removed and tariff
levels were reduced. The Structural Adjustment Program (SAP),
which for years offered duty-free imports based on export
volumes, was introduced in 1989. At the same time, the General
Export Incentive Scheme (GEIS) was introduced which offered
textile manufacturers an export incentive based on the export
value. In 1994, the Duty Credit Certificate (DCC) which offers a
customs duty credit for export performance replaced SAP.

The South African Textiles and Apparel Industry has embraced the
General Agreement of Trade and Tariffs (GATT) and the philosophy
of trade liberalization and is striving to become more efficient
and competitive. The textile industry has plans to dedicate R3
billion of investment over a five-year period. Large capital
investments have already been made and the improving financial
performance of some of the industry's major companies provides
concrete evidence of the textile industry's determination to
succeed.

Possibility of quota-free and duty-free U.S. entry of Sub-Saharan
African textiles and apparel Legislation introduced into the U.S.
Congress in 1997, the African Growth and Opportunity Act, would
eliminate quotas and duties on all Sub-Saharan African textiles
and apparel. This region includes South Africa. If both quotas
and tariffs were removed, the U.S. International Trade Commission
estimates U.S. imports of apparel from Sub-Saharan Africa would
increase by $100-$175 million. For textiles, it is estimated
that the removal of duties would result in an increase in U.S.
imports from $2.5-$4 million. This influx of capital into
Sub-Saharan Africa, may provide South African firms with capital
to purchase U.S. products.

Market Assessment

Following the long period of stability, the sharp decline in the
value of the Rand since mid-February 1996 has caught analysts by
surprise and nullified most forecasts of the exchange rate. The
devaluation of the Rand, from 3.65/USD in 1995 to 6.5/USD in
September 1998, gave the South African textile industry a
short-term advantage against imports. The price of imported
textiles will rise and make local textiles more attractive to
purchasers. The exchange rate adjustment will also enable
exporters to achieve genuine profit margins without having to
depend of GEIS and DCC export incentive schemes. This will not,
however, make up for the unilateral decision by the government to
slice GEIS benefits by one half and to impose new conditions on
the DCC scheme participants.

Factors that will influence the manufacturing industry in general
and the textile industry in particular will include: political
stability, labor relations, wage controls, training, new
technology, research and development, competition (local and
international) and the cost of money.

Interest rates and exchange rates will have an effect on new
capital investments and upgrading of technology. Inflation has
fallen from double digit to 6 percent. Real interest rates have
dropped but are still high by international standards at 25.5 in
September 1998.

Companies willing to make a 5-10 year investment in South Africa
will enter into a market with huge potential. American firms
must be willing to invest in infrastructure, computers and
logistic capability and be willing to market a specific brand to
create product demand.

Apparel Industry

In 1995, the South African apparel industry had actual sales of
approximately $2 billion accounting for approximately 3.7% of
GDP. The apparel industry employs approximately 170,000 directly
and an additional 200,000 indirectly. In 1995, South Africa
imported approximately $103 million and exported approximately
$123 million apparel products. The South African apparel
industry has vast export potential. In 1995, world apparel
exports totaled $170 billion and South Africa captured less than
one percent.

South Africa experienced a huge increase in smuggling and fraud
which needs to be effectively controlled through customs patrol.
More efficient and effective control could be achieved by
improving systems and procedures, rather than increasingly the
amounts of human and capital resources to the problem.

South Africans spend, on average, 7 percent of their annual
income on clothing.

Imports and Exports of Textiles

The change in the unit of measurement for fabrics from square
meters to kgs makes it difficult to directly compare imports of
fabrics during 1995 and 1996 with previous years. It appears
that imports of yarns stabilized during 1996, being slightly
higher than in 1995. However, imports of yarns under rebate of
duty increased. It is expected that this trend will continue.
During 1996, 45% of the total volume of yarns imported into the
country were cleared under rebate of duty. Approximately 60% of
all imported yarns were man-made filament yarns and 20% were
yarns of man-made staple fibers.

During 1996, the total value of textile imports (R3.54 billion)
was 5.1% higher than in 1995. The value of clothing imports
increased by 65.8% from 1995-1996. Turkey supplies 30% of all
imported textile.

Outlook

The continuing weakness of the Rand might inhibit importers from
placing orders overseas. The total textile industry will suffer
from business lost to duty-free imports due to the various rebate
facilities, fraudulent imports and possible increased imports due
to the general reduction in customs duties.

Volume of production will be under pressure. Soft consumer
demand and reduced disposable income will lead to fierce price
competition and therefore a decline in local sales is expected.
It is expected that exports of South African textiles will
increase as a result of the weak Rand and the fact that South
African manufacturers are increasingly breaking into foreign
markets.

Although production costs will be under pressure, an increase is
expected due to increases in the price of raw material and higher
wages. It is expected that technology and machinery will
continue to be upgraded which will improve quality and
productivity.

Best Sales Prospects - Textiles
Textile machinery remains a significant potential market for U.S.
companies. While South African import figures are not available
for textile machinery and equipment imported from the U.S., the
following areas have been identified by the textile industry as
having the best potential for U.S. exporters:
Spinning and Twisting Machinery for Natural and Man-made fibers.
Winding and Reeling Machinery.
Weaving and Weaving Preparatory Machinery.
Knitting and Hosiery Machinery.
Bleaching, Dying, Printing and Make-up Machinery.

In addition, the following service areas are of major concern and
importance to the Textile Industry:
Training and skills development.
Technology upgrades.
Small Business Development.
Industry Database.
Textile Consultants.

Best Sales Prospects u Apparel

A leading South African Department Store chain and an industry
association stated that the combination of the existing tariffs
and unfavorable exchange rate made U.S. apparel quite expensive
for the South African market. In order to be price competitive,
many retail outlets source from the Far East where American
styles are imitated.

Opportunities for high-end U.S. manufacturers lie with boutiques,
rather than department store chains. South Africans are very
brand conscious and a strong niche market exists for designer
labels. The following areas have been identified by apparel
retailers and manufacturers as having the best potential for U.S.
exporters:
There may be an opportunity for off-season merchandise because
South Africa's are opposite those in the U.S.
Opportunities exist for licensing agreements to manufacture U.S.
branded products in South Africa.

U.S. apparel has a reputation in South Africa for superior
quality. South Africans are prepared to pay top dollar for
American products because they get value from American products.
South African consumers follow U.S. fashion and culture very
closely. The "American image" sells.

Additional Opportunities for American Apparel companies
American consulting firms could teach South African retailers,
designers and merchandisers U.S. marketing practices.
Joint Venture opportunities exist and, in light of the current
economic condition, may be the advisable strategy for companies
interested in a long-term presence in South Africa.
Retailers may be interested in establishing partnerships with
U.S. department store chains.
Organizations/Associations

Textile Federation
P.O. Box 16278
Doornfontein
2028
Tel: 27-11-404-2423
Fax: 27-11-404-2101
Executive Director: Mr. Brian Brink

The Textile Institute of South America
SA Textile Advisory Committee
67 Harrison Drive
Glen Hills
Durban North
4051
Tel: 27-31-840 427

The SA Wool Textile Council
P.O. Box 2201
North End
6056
Tel: 27-41-545252
Fax: 27-41-545629

CSIR: Division of Textile Technology
P.O. Box 1124
Port Elizabeth
6000
Tel: 27-41-532131
Fax: 27-41-532325

Textile Manufacturers
Berg River Textiles
P.O. Box 306
Paarl
7630
Tel: 27-2211-682230
Fax: 27-2211-683504

Da Gama Textiles
P.O. Box 753
East London
5200
Tel: 27-431-451124
Fax: 27-431-451410

Romatex
Private Bag x3054
Worcester
6854
Tel: 27-231-70814
Fax: 27-231-28142

Importers of Equipment
TEXMACO
Tel: 27-21-252520
Fax: 27-21-4191295
Contact: H. Bhurer

Bermaco
3 Hunt Rd.
Brianston
2060
Tel: 27-11-463-3762
Fax: 27-11-7066429

D. Coopers & Sons
Howard Studios
Sheldon Way
Howard Place
Pinelands
7450
Tel: 27-21-531-7930
Fax: 27-21-531-8690
Contact: Ian Cooper

EREX
P.O. Box 984
Cape Town
8000
Tel: 27-21-242430
Fax: 27-21-221365
Contact: Manfred Valasek

Apparel Associations
Clothing Institute
Tel: 021-9335210
Fax: 021-9324955

Mr. Sebastion Janssens
Clothing Industries Training Board
Tel: 021-4482470
Fax: 021-479159

Mr. Peter Riches
National Clothing Association
Tel: 021-761-8000
Fax: 021-761-0852
Contact: Mr. Bernard Richardson

Retail Outlets
Edgars Stores
P.O. Box 100
Crowns Mines
2025
Tel: 011-4956000
Fax: 011-8373219

O K Bazaars Ltd.
P.O. Box 3171
Johannesburg 2000
Tel: 011-3330910
Fax: 3333623

Hyperama
P.O. Box
Parow 7500
Tel: 021-9302430
Fax: 021-929245

Woolworths
P.O. Box 680
Cape Town 8000
Tel: 021-4079111
Fax: 021-4621769

Truworths Ltd
P.O. Box 600
Cape Town 8000
Tel: 021-4079112
Fax: 021-4617641

Stuttafords Stores
P.O. Box 75322
Gardenview 2047
Tel: 011-6162045
Fax: 011-616-1660
U.S. International Trade Commission, Likely Impact of
Providing Quota-Free and Duty-Free Entry to Textiles and Apparel
from Sub-Saharan Africa, Publication 3056

DISCLAIMER
Information in this report relies on sources including Government Publications, Opinions of industry experts and other public sources. Infomat can accept no responsibility for the accuracy or completeness of such information or for loss or damage caused by any use thereof. All prices subject to change without notice.

$3500 USD
For the 2008 Edition

Published: 2006 August
Market: Mens Womens Childrens
Region: South Africa
Industry: Textiles
Pages: 45
Delivery: 7-12 Business Days
SKU: infre0000240