Business in South Africa
As an investment destination, South Africa can be ranked on a par with countries such as India and Brazil. The country may be described as “developing”, as opposed to the “developed” nations of the world, and is characterised by both first-world economic features and third-world poverty.
South Africa’s GDP per capita is not among the highest in the world, measuring approximately $3500 per person per annum. However, South Africa produces roughly a quarter of Africa’s entire GDP and more than two fifths of Africa’s manufactured output. The South African economy is the continent’s largest by some way, and attracts immigrants from other areas in Africa.
The most significant event in the South Africa economy in recent times was the demise of the apartheid regime, and all the change that came with the transition to a democratic government. However, although apartheid as a racially based system has been destroyed, racial issues continue to permeate business developments in South Africa, depending on the industry, and this is something that it would be wise to take note of if you are planning to invest in the country.
The stock exchange in South Africa is known as the Johannesburg Stock Exchange (JSE) and is located in that city. Until recent times about 70% of market capital on the Exchange was in the possession of just four massive companies, and more than half of the country’s fixed assets were state owned. Needless to say, this type of amalgamation of economic influence was the perfect breeding ground for immense organisations that wielded almost monopolistic economic power.
The focus in post-apartheid times has been the privatisation of state operations (although only in some areas, and not in others) and the sale of market share to black-owned corporations. Once again, especially regarding the latter it is important to keep in mind that race still plays a role in business relations in South Africa. Another post-apartheid development has been the arrival of multinational companies in South Africa, who steered clear during the apartheid era, but are now competing in full force. For these reasons, it is not always easy to know what kind of organisational culture you will be dealing with, so it is important to do proper research on this matter. Each organisation tends to have its own culture.
In general, you should arrange meetings in the usual fashion. Take time to prepare an agenda, and have it delivered before the time, so that your hosts know what exactly you want to discuss with them. Do not try to set up important fixtures during the Christmas (lasting until mid-January) and Easter periods, as this is when many people in South Africa are on vacation. During a meeting, be patient. Small talk is almost obligatory, and the agenda is not seen as cast in stone, so don’t be surprised by stray comments and banter. If you are going to make a presentation, make sure that you can give your audience hard facts and figures. In South Africa, the language of business tends to be English. However, if you want to make a good impression, it can be to your advantage to present any written material in both English and the local indigenous language of the management structure you are targeting. Once again, proper research is important.
Also be aware of the trade unions. Large companies employing South African workers sometimes have to deal with trade unions regarding issues of remuneration and service conditions.
Click through to the sections below to get to know how to launch your business in South Africa.