Chinese textile quotas to stay

Cape Town - The department of trade & industry is considering continuing with its controversial quotas on Chinese textile imports next year.

The system has elicited huge criticism from retailers and it was expected that the department would do away with it.

Nimrod Zalk, chief director of industrial policy at the department says the extension is being considered because of the illegal importation of clothes from China.

"Problems with illegal imports are difficult to quantify, but a recent meeting with the South African Revenue Service (Sars) revealed the shocking picture," said Zalk.

Importers do not indicate the full value of consignments - understatement amounts to about 60% of the true value of all clothes and textile products being imported.

"This amounts to massive fraud," declared Zalk.

In January last year the department introduced the quota system to cap imports from China in an attempt to stimulate purchases of domestic products and thus employment.

Since 1996 imports from China have swelled to such an extent that by 2006 they represented almost 80% of all textile and clothing imports into South Africa.

Professor Mike Morris from the University of Cape Town's economic policy unit says the quota system has done nothing for the local clothing and textile industry. "No job-creation took place and local manufacturers suffered," claimed Morris.

A recent finding by the department showed that goods were either being smuggled in or invoiced for far less than their worth.

Zalk says the illegal importation of goods is probably the work of informal traders.

"A task team has been put together to prevent these clothes landing on the shelves of formal retailers."

He adds that the department sees the extension of the quota system as a thorny problem.

"We are definitely going to consider extending it. Large-scale fraud is taking place, but we are not sure which parties are involved. It's the responsibility of everyone in the value chain to identify those responsible.

Stuart Gottschalk, deputy chairperson of the development agency Clotex in the Western Cape clothing and textile industry, says the system was supposed to give the industry breathing space to develop, but retailers sought methods of importing more cheaply than buying locally.

Zalk says the quota ensured that fewer than 31 product ranges were imported from China.

However, more were imported from countries like Vietnam and Malaysia, and this negated the benefit of the reduction from China.

"The quota system is a necessary instrument to block these imports so that our domestic industry can grow," he maintains.

- Sake24