The effect of Chinese rubber imports on the South African rubber manufacturing industry.

Abstract

ABSTRACT In recent years, the South African rubber industry has experienced a decline in output value and has faced increased pressure from imported rubber products. Chinese imports are frequently blamed as being the primary source of such imports but there have been limited academic studies which have shown that this is indeed the case. Furthermore, previous studies have not attempted to separate the industry into its two sectors – non-tyre and tyre. The present study addressed this gap and carried out a detailed and focussed analysis of the effects of importing of rubber products on each sector of the South African rubber industry between 1999 and 2014, with a particular focus on imports originating from China. The effect of imports on employment in the rubber industry was also examined. The study involved collection of secondary data from various sources such as Statistics South Africa, the South African Revenue Service and the Department of Trade and Industry and several rubber industry sources. These data were analysed using the well-documented Chenery modelling approach and the output the non-tyre and tyre sectors of the industry was decomposed to determine the sources of the changes in domestic output in each sector. A survey of the rubber manufacturing industry was also carried out using a questionnaire in order to ascertain the effect of imports, and the current economic climate, on rubber companies in South Africa. It was found that Chinese imports have had a significant and negative effect on domestic production in the rubber industry between 1999 and 2014 – especially in the non-tyre sector. The output of the tyre sector has also been negatively affected – but not to the same extent. Chinese imports of rubber products were also shown to have had a direct and negative effect on employment in the rubber industry. The questionnaire results showed that there was an overall perception within rubber manufacturing companies that the rubber industry was in decline and that imports – mostly from China and India – were the primary cause for this decline. There was a strong sentiment amongst companies that the government should be doing more to protect the industry in terms of tariffs, tax incentives and training support. Suggestions were put forward by the researcher on how the industry can take action to initiate a recovery. These included addressing the shortcomings with the tariff system, strategic collaboration between companies and a focussing on training, research and development.