The export promotion of South African craft products

Thesis (Ph.D. (International Trade))--North-West University, Potchefstroom Campus, 2009.Exports are a key to the growth of the economy and therefore very important to any country. Exports are also important to SMEs, and international trade is responsible for most countries' prosperity. Due to the importance of exports, it is important for a country to promote trade and it is no longer a question of 'if government should be involved in the allocation of resources and the promotion of trade, but the principal questions are 'how much?' and 'what kind?' of government involvement there should be. If governments get involved in export promotion, it is important for those governments to realise two things: firstly, national resources are scarce and secondly, due to this scarcity, great selectivity is needed in developing and implementing export promotion strategies and activities. Therefore the challenges faced by governments are to choose specific sectors for export promotion and to allocate their limited resources among these sectors. The Department of Trade and Industry (DTI) of South Africa is aware of the importance of effective trade promotion and the effect that the focusing of specific sectors of the economy for trade promotion purposes could have on export growth. As a result of this, the DTI started to emphasise the importance of certain priority sectors and has begun to assign greater support to the promotion of these sectors. Crafts are such a priority sector and government's vision for the craft sector is to have an efficient, formalised, globally competitive South African craft sector by 2014. For the craft sector to become globally competitive, the South African government (through the DTI) should contribute more effectively to the promotion of craft exports. Since craft SMEs internationally and in South Africa face many export barriers, this is not an easy task. If government, through the DTI, wishes to enhance craft exports, they need to promote craft trade more effectively. This can be done firstly by identifying the challenges faced by craft SMEs and exporters in South Africa, and, secondly, by strategically removing these export barriers or assisting craft SMEs to overcome them. There are many barriers that stand in the way of successful exporting, but this study will focus on only two of these barriers. The first barrier relates to the fact that different craft SMEs face different export challenges in the different stages of their export process and, as a result, they need different export promotion programmes. The second barrier relates to the fact that SME exports are hampered by a lack of accurate market information, especially market information that concentrates on product and market identification. Both these barriers form the basis of the problem statement of this study and will be discussed subsequently. International studies have suggested that government's assistance should focus on different types of programmes to reach the specific needs that different SMEs face in different stages of the internationalisation process. Since South African craft SMEs have different developmental needs or export challenges during different export stages, it is important for the DTI, South Africa's leading trade promotion organisation, to identify and assist these SMEs with specific export promotion programmes. This study identifies the developmental needs or export barriers that are faced by craft SMEs in South Africa and recommends certain export promotion programmes that the DTI could use to make their trade promotion efforts more effective. The second problem this study addresses is the lack of accurate market information that is found within the craft sector. Two of the most prominent factors to influence non-exporting and exporting craft SMEs not to export is the fact that they have no time to research new markets and lack proper market information. In South Africa, the development of craft exports is hampered by a lack of accurate market information that concentrates specifically on product and market identification. The lack of accurate market information that is found within the craft sector can be ascribed to the fact that it is difficult to calculate and analyse craft data because craft is not being exclusively identified in the HS coding system. As a result of this, it is difficult to distinguish the international trade flows of craft products and this hinders any efforts of countries to recognise and develop the export potential of crafts. Many governments, while acknowledging the importance of crafts in their national development policies, have found it difficult to develop and fund programmes for the sector due to the absence of sufficient statistics. This study attempts to solve the market information problem by providing a method to calculate craft flow. One of the greatest contributions of this study is that, during this process, it provided some of the first available craft market information to be analysed and interpreted. The data provided an overview and analysis of the international craft market and craft flow, the South African craft market, and craft flow to and from South Africa as well as South Africa's contribution to craft trade. The data also identified and analysed the craft products (and markets) with the highest trade potential and compared these products and markets to the same products that were traded by South Africa. The availability of this data makes it possible for the DTI to use its limited resources to develop and implement export promotion strategies and activities specifically targeted to promote the trade of the products and markets with the highest export potential. This will ensure that government resources are used with maximum return on investment and will increase South African craft exports.Doctora