Business Report, August 30th 2010
By Ethel Hazelhurst
Quoted: Dr Martyn Davies, Chief Executive Officer – Frontier Advisory; Abdullah Verachia, Director – Frontier Advisory
The ties between China and South Africa have received a further boost,
thanks to several new deals struck last week as President Jacob Zuma visited
the Asian country.
According to Abdullah Verachia, a director at consultancy Frontier Advisory and
a faculty member at the Gordon Institute of Business Science, the deals were
done in the mining, power transmission, finance and nuclear energy sectors,
among others.
Zuma visited China with 13 cabinet ministers and a 370-strong business
delegation to strengthen ties between South Africa and what has become the
world's second-largest economy, with gross domestic product (GDP) worth $1.3
trillion (R9.5 trillion) in the second quarter.
A comprehensive strategic partnership agreement was also concluded during the
trip.
While trade and investment between the two countries was expected to rise
steadily, South Africa's broader ambition to play an important role among
emerging economies would come at a cost, warned Martyn Davies, the chief
executive of Frontier Advisory and a member of the business delegation that
accompanied Zuma.
He said on Friday that there would have to be "greater alignment of the
domestic policy agenda and these global commercial ambitions".
The visit took place while striking public sector workers created havoc at
home.
"If we are so internally divided as a country, we will never be
internationally competitive vis-à-vis the emerging market challengers,"
said Davies.
Zuma's visit to China is part of a push to be
part of the Bric grouping of countries, which includes Brazil, Russia, India
and China, and follows trips to the other three countries.
Zuma last week called for China to import
value-added goods as well as raw materials and to invest in the manufacturing
sector instead of focussing solely on projects involving commodities.
But Davies said it would be unrealistic to expect
investment in manufacturing unless the government offered incentives so the
country could compete as a destination for foreign direct investment.
A number of high profile business people were part
of the delegation. Among them was Standard Bank chief executive Jacko Maree.
In 2008 the Industrial and Commercial Bank of
China (ICBC) took a 20 percent stake in the local bank for $5.5 billion.
Verachia said that Standard and ICBC last week signed a memorandum of
understanding to promote nuclear co-operation between the two countries.
Another deal he identified was Discovery's $27.9
million purchase of a 20 percent stake in a Ping An health insurance venture.
Discovery chief executive Adrian Gore was a member of the delegation.
Verachia also highlighted a e240m (R2.2bn) loan
agreement between Cell C and the China Development Bank.
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