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Figure 17 Imports of Men’s Shirts from China and the Rest of the World

800 000 000
700 000 000
600 000 000
500 000 000
400 000 000
300 000 000
200 000 000
100 000 000
–
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Imports from China Total imports of shirts

Source: Quantec

Local industry cites the two primary factors driving imports to be electricity supply
challenges and labour costs:
• Electricity shortages, which started in 2008, negatively impacted the competiveness
of manufacturing through sharp increases in the price of electricity and issues
regarding the reliability of supply. The unpredictability and unreliability of power
supply caused significant economic wastages as hordes of employees sat idly and
the disruption of electric-powered public transport severely affected production
efficiencies as employees arrived late for work.
• Wages increased faster than inflation, and more alarmingly, wage increases
outstripped productivity increases. Higher wage increases resulted not only in higher
inflation but also negatively affected the competitiveness of key productive sectors
across the economy.

Imports from low cost destinations such as China flooded our markets with products
manufactured with factors of production that were significantly cheaper than that of
local factors. In real terms, the manufacturing sector in the province contributed less to
GDP in 2015 than in it did in 2012. Industry consensus is that costs in China continue to be
much more competitive than in South Africa. However, the reality is that key economic
developments in China, South Africa and the Western Cape have drastically eroded
Chinese production cost advantages.

Power On
From an electricity supply perspective, Eskom has realised major improvements, and
they are now easily meeting electricity peak demands without the implementation of
load shedding. While electricity consumption has decreased by about 2% year-on-year
to date, peak demand over the past twelve months was 34 899MW, which is 418MW
higher than peak demand last year. It is not average monthly or yearly consumption
that triggers blackouts, but whether peak demand exceeds peak supply. Thus,
Eskom’s ability to keep the lights on during periods of peak demand signals significant
improvements in the national utility’s ability to support households and industry.

Furthermore, during 2015, the Western Cape and City of Cape Town managed to
support the grid more effectively than any other province. This was achieved through
the effective management of public power usage and resulted in reduced power
disruption in the province. The combination of improved supply from Eskom and the

50 QUARTERLY ECONOMIC BULLETIN 2016