Indicative of fast-improving relations between South Africa and China was a recent visit to by assistant minister of foreign economic relations and trade, Lui Shanzai.
This was China's first ministerial visit to South Africa and comprised a six-day stay to officially open the Johannesburg offices of the Great Wall Group, a trading company founded by the mainland Chinese government.
Lui headed a delegation of seven and met South Africa's deputy minister of trade and industry, David Graaff, and deputy minister of foreign 'affairs, Renier Schoeman. Other meetings took place with a number of business and political leaders.
Although no agreements were concluded, Lui said the opening of the Great Wall Group in South Africa was intended to improve bilateral economic relations between the two countries. The group's main focus will be to boost trade. Other activities include tourism, technology interchange, engineering products and consulting.
The group's business manager, Qingguo Jiang, said, "We came here with the express purpose of facilitating trade and economic cooperation with South Africa. Apart from our offices, we have US$636,618 in other assets and are looking into further real estate opportunities and joint investments with local business. We are also hoping to invest in factory and manufacturing plants."
The Great Wall Group has invested R9m (US$2.84m) in its Johannesburg headquarters which is believed to be the first financial commitment from a communist country in South Africa.
China's trade with South Africa was previously conducted on a discreet basis through Hong Kong. Political changes have since prompted China to introduce direct trading links and exhibitions are planned in both countries.
They started in Johannesburg last month with a trade expo organised by the China Council for the Promotion of International Trade (CCPIT). The Great Wall Group will also be involved in an exhibition in South Africa in September this year when 100 corporations will display a variety of goods including textile, chemical and hardware products.
South African businesses will be invited to exhibit in Beijing in March 1994. The event is expected to attract up to 300 South African exhibitors involved in heavy and light industrial products, mining equipment, consumer goods and services.
The exhibitions should go some way toward boosting trade between the two countries. In the period between January and June 1992, the value of South Africa's exports to China was reported to be R150m (US$47.34). Imports from China amounted to R259m (US$81.74).
One of the more significant deals concluded between the two countries in recent times was an export contract for Volkswagen of South Africa (VWSA) to deliver cars to China. In the process, it became the first South African motor manufacturer to build left-hand drive vehicles especially for the export market.
At the time of the initial order for Jetta cars VWSA chairman and managing director, Peter Searle said, "This order is the first step in what we see as an on-going business relationship between VWSA and our parent company's joint venture in China.
"We will be expecting the Jettas in semi-knocked down (SKD) form in order to comply with China's local content programme which is aimed at job creation. As the requirement for local content increases, we will develop completely knocked down (CKD) kits to comply with their requirements."
VWSA won the contract in competition with other VW subsidiaries around the world. FAW/VW Automotive Company in Chang Chun City is a joint venture between Volkswagen AG in Germany and the Chinese government.
Two prototype Jetta built in South Africa were sent by air freight to China early last year. The cars underwent testing witnessed by a team from VWSA to ensure that the engineering, quality, assembly and commercial aspects of the contract were in place.
Searle said it would not have been possible to accommodate the contract had VWSA not purchased an old Ford plant in Port Elizabeth. "The activities at this export dedicated plant are becoming a major factor in our total business.
"The development of the left-hand drive production facilities and expertise o en up new export possibilities for V SA. Until now we have been limited to markets which use right-hand drive cars."
Last year, soon after announcing the supply of 6000 Jettas worth R182 million (U5$57.44m) to China, VWSA said the order had been increased to 8,900 cars valued at R287m (US$90.58m). The first consignment was shipped in May 1992 with the balance following at a rate of 1,300 units a month.
On the heels of the export deal came the announcement that VWSA was to invest a further R252m (US$79.53m) in its Eastern Cape plant. Said Searle, "The China contract was a major boost not only for VWSA, but for the country as a whole and especially for the Eastern Cape region.
?It lifted morale and had a ripple effect on job creation, local suppliers and the Port Elizabeth harbour. We have discussed with FAW their requirements for 1993 and will do everything within reason to remain a supplier to China, whether for built-up cars, CKD units or for individual components." *
