Foreign direct investment in manufacturing textile and clothing industry from China to South Africa.
International business is much more complicated than domestic business because countries differ in many ways. Countries have different political systems economic systems. Cultural practices can vary dramatically from country to country, as the education and skill level of the population, and countries are at different stages of economic development. Moreover, development of multinational strategies involves consideration of threats, opportunities, key success factors, and strategy options and issues that do not appear when the analysis is restricted to operations within a single country. In particular, the evaluation of a market must take into account the political and economic risks associated with individual countries. Thus the external analysis becomes much more demanding. South Africa's trade and industrial policy has moved away from a highly protected, inward-looking economy towards an internationally competitive system that is able to capitalize on its comparative advantages. Enhancement of the competitiveness of industries on the domestic and international markets has consequently become a prime focus of the country's industrial policy. International trade in textiles and clothing is conducted on an immense scale. Textile and clothing producers were responsible for 9.3 per cent of world exports of manufacturers in 2001. Barriers to entry for new firms and exporters are low, and consequently the degree of international competition is intense. Competitive advantage is very difficult to sustain for long periods of time. Newcomers speedily challenge successful exporters of basic products, and they must redirect their activities towards the production of higher value-added textiles and clothing in order to survive and prosper. As a world's fifth largest trading power, China economy expands promptly through their expert skills on technology, management, and labour-intensive products. Today, China represents between 5 to 10% of global output, their export market will continue to grow rapidly, and not only for their labour intensive products, but also for the higher technology goods and services that are an increasing proportion of China's output as it climbs up the production ladder. Textile industry represents a main role towards China's economy. However, due to the fast-moving pace of globalisation, it has increased the maturity on the product-life cycle of the industry. Multi-national organizations from China have a choice to extend their global reach, due to the government export incentive programme, the maturity companies can diversify their firms to emerging market in order to exploit their technological advantages and invest internationally . If firm's primary goal is to maximize their shareholder's value, then they and probably the economy are better off if they invest where they can earn the best return. As they do so, change in the global macro-environment further confounds the choices inherent in building a strategic organization. Some understanding of the organization's external and internal environment always drives strategy, as an international organizational better choice. In the most general sense, the long-run monetary benefits of doing business in South Africa are a function of the size of the textile and clothing market, the present wealth (purchasing power) of consumers in the market, and the likely future wealth of consumers. Also the Chinese's multi national companies can have the opportunity to gain export market in USA, Canada, Europe and other trade countries in South Africa. In order to achieve economic growth and competitiveness in South Africa, it is recommend that the several issues cutting across the textile industrial sector need to be addressed through knowledge transfer, training, investment and management. Develop innovative technologies to strengthen the competitiveness.