SOUTH AFRICA POUNDED BY

GREAT MAUL OF CHINA

Alpine Lounge

South Africa’s factories are locked in an increasingly daunting struggle in the teeth of Chinese import penetration, says an executive of the country’s premium and longest surviving furniture manufacturer.

And in a call for a hard line shift away from the country’s open door trade policies, he warns that a strong large manufacturing sector is essential if South Africa is to make inroads into its massive jobless issue.

“We have a huge unemployment problem in South Africa,

probably 30% to 35% at least, and it’s absolutely essential for us, to maintain some sort of stability, to get these people into jobs,” says Lawrence Van Der Merwe of Alpine Lounge, Cape Town. “Only the large employers can do this on the necessary scale. It’s our duty, but we are finding it increasingly difficult to do this, bombarded as we are with imports from the East.”

His analysis is backed by a report this month from a British university which says that, in the ten years up to 2010, 77,000 South African jobs and $900m in revenue from trade were lost to the influx of Chinese products into Africa.

Chinese competition says Professor Rhys Jenkins from the School of Development Studies at the University of East Anglia, negatively impacts South Africa’s manufacturing sector, crowds out exports to other African countries and aggravates unemployment.

In a report out this month, a British university says massive and escalating Chinese import penetration is hitting South African manufacturing and employment. Lawrence Van Der Merwe of Alpine Lounge, Cape Town has seen it all, and tells Ben Walker that open border trade must be replaced by a hard line pro-South African manufacturing strategy.

Alpine Lounge

Van Der Merwe is unsurprised. Operations and Technical Director at Alpine Lounge which is part of the Bravo manufacturing Group – the company he joined as a trainee 38 years ago - he has seen the domestic furniture-making sector reel under the impact of Chinese imports whose overall local market share he puts at over 50%.

“The Chinese have been active in South Africa since 2003-2004. In the early period what was coming in was a relatively inferior product – local manufacturers were not too concerned - but over the following years the improvement in product quality has been phenomenal. That competition is hitting us hard and we are facing an enormous challenge.

“Loyal customers we had had for so many years now import freely, and we are finding it increasingly difficult to stay afloat. You just have to try all avenues to available markets – we’ve tried most - and it’s becoming more and more difficult to survive as a manufacturer.”

As Van Der Merwe says, adaptability in the face of constant market challenge is reflex strategy for Alpine Lounge. From modest beginnings in 1969, its impressive growth and reputation has been driven by flexible response as well as design, high product quality and innovation. A specialist supplier to the retail sector, it long ago switched away from entry and middle market lounge furniture into the niche, premium quality high-end sector, focussing since 1996 on leather upholstered lounge products.

Alpine Lounge’s Cape Town facility is world class, with sustained investment in computer-aided design and cutting

dromedar@dromedar.com www.dromedar.com

Alpine Lounge

equipment delivering predictable quality and minimal cutting waste. “You could take our factory and put it anywhere in today’s technologically advanced manufacturing environment. Technologically we are proud to be in line with what is happening in the most modern of factories, and we manufacture as cost-effectively as possible while at the same time employing a large workforce of 650 people.”

With Chinese products now competing at the highest level of quality and innovation, Alpine Lounge is focussing on motion furniture – reclining chairs – and Africa-specific leathers. “What differentiates us is that as far as possible we concentrate on using local African bovine leathers, whereas most of those used on imports, are developed from India’s water buffalo. Our leather range is uniquely African, a rustic-type, full aniline range which bears all the scars and marks, and so in a sense tells a story about the animal and its habitat.

“The hides used are predominantly from free-ranging sustained cattle herds. We also use game skin namely Oryx Gazella, which is a Namibian desert antelope. Quantities are limited due to a strict controlled culling program, which is necessary and in keeping with our country’s wild life policies.

Britain’s commercial lounge market took 40% of the Alpine Lounge output until ten years ago - “when we got blown out by the Chinese”-this is one export market showing early growth. “Discerning lounge customers want something different, natural and good.”

Alpine Lounge entered the motion of reclining

furniture niche in early 2000, buying in mechanisms from a US manufacturer which itself became victim of Far East imports, with job losses running into thousands. Now in a recent move Alpine has won the all-Africa manufacturing and distribution licence with the US global name, La-Z-boy “Most of the larger international manufacturers have taken the direct route to market, selling to the end consumer. We haven’t done this and our brand is still with the retailer. But it is a key challenge going forward and we believe that La-Z-Boy is going to give us the momentum to expand the brand as we move into the future”

Up until three years ago Alpine Lounge’s market was principally South Africa and Namibia. Since then it has moved into Mozambique, Angola and Zimbabwe, and is now looking at Zambia and Ghana. “We are pushing northwards but it’s not an easy market; you’ve got to get your connections right to be able to trade successfully in Africa. But so far so good.”

Meantime, with this month’s figures showing another rise in manufacturing job losses, and Professor Rhys Jenkins report on South Africa and the China Factor, Lawrence van der Merwe says enough is enough.

“Where do we go from here? We have to realise the Chinese are here to stay. They are now mass-manufacturing products as good as – if not better than – any Western company, and their quality is steadily improving… and the reason is simple: they employ the Best in the West to guide them in development and design.

“The Chinese have grown on the back of western imports.

Alpine Lounge

The West has fuelled the Chinese economy by sending in the latest techniques and best expertise available and instructing them. They have capitalised out of the Chinese imports - the USA has been the main instigator here – and of course now it’s turned around and bitten them.”

Does he see a contradiction between the Government’s job creation priority and its open door import policy? “Yes I do. Take Brazil as an example of a country on the same level as us, a country with a major unemployment problem. Over the past four years they have seen a major improvement in their economy. And to get more Brazilians into work they have simply banned the importation of products that they themselves can manufacture. As a result they’ve got the juices flowing, their shoe and clothing industry is back on track, and the economy is on the road to recovery.

“South Africa should copy the example of Brazil and other countries with a similar approach. As it is we have very free trading rules in place - the Government is very pro-China in this respect - and all in all I think it’s too free. We could do with a more stable currency to encourage exports, and import duties on furniture should be in line with clothing and shoes which have recently been increased to revive local manufacturing. When you create jobs people have a bit of dignity. They can feed their families, put a roof over their heads, and ultimately contribute to the tax burden borne by so few tax payers. If we want to employ people in this country we will have to take the hard line.”

Vitafoam SA is the largest producer of Flexible Polyurethane Foam in South Africa and has been in existence for over 35 years. Its range of products is comprehensive and offers solutions to a multitude of technical problems in a variety of markets. www.vitafoam.co.za

South Africa’s largest producer of Flexible Polyurethane Foam

Vitafoam SA is the largest producer of Flexible Polyurethane Foam in South Africa and has been in existence for over 35 years. Its range of products is comprehensive and offers solutions to a multitude of technical problems in a variety of markets. www.vitafoam.co.za

South Africa’s largest producer of Flexible Polyurethane Foam

Vitafoam South Africa is proud to be associated with Alpine Lounge, a premier brand in the furniture industry in South Africa. As the leading producer of polyurethane foam in South Africa we offer our customers innovative solutions that assist in product development and improvement. Vitafoam has been a major supplier to Alpine Lounge for many years and congratulate Alpine on their success and look forward to making new contributions to Alpine Lounge’s future success.

Alpine Loungewww.alpinelounge.co.za+27 21 951 7150Written by Ben Walker

www.littlegatepublishing.com