Manufacturing Competitiveness in Times of China: Evidence from South Africa

The main objective of this thesis is to shed new light on the effects of the dramatic increase in China’s export and production capacity on the competitiveness of the South African manufacturing sector. The analysis focuses on the post-apartheid period, when China’s global expansion accelerated and its bilateral relations with South Africa intensified, giving rise to widespread concerns about the effects on South Africa’s development prospects. This thesis adopts a multi-methods research strategy. Its main body consists of three chapters, each taking a distinct approach to providing new evidence on the research subject. First, two econometric studies, incorporating key aspects of evolutionary and structuralist economics, analyse the impact of Chinese import penetration on the growth dynamics of South Africa-based manufacturing firms (Chapter 3) and on South African exports of medium- and high-technology products to third countries (Chapter 4). Second, a mixed methods case study explores the effects of the rise of China on South African mining equipment suppliers (Chapter 5). This analysis is the result of nine months’ fieldwork and builds on a novel analytical framework integrating insights from global value chain research, the technology capability framework, and international business and general management literature. Chapters 3 to 5 are preceded by an introduction (Chapter 1) and some methodological considerations (Chapter 2), and followed by conclusions (Chapter 6). This thesis finds that the rise of China has exerted a strong competitive pressure on the South African manufacturing sector. South Africa-based firms have seen their growth potential constrained due to the increasing penetration of Chinese imports. South African exports of medium- and high-technology products to third markets have experienced a decline, due to increasing Chinese exports in the same product categories and destinations. Finally, the rise of China has been identified as a key factor behind the ongoing marginalisation of South Africa as a strategic location for innovation in, and the production of, mining-related technologies. Although this thesis focuses on a specific, and admittedly limited, set of trade- and investment-related impacts of the rise of China, it shows that this phenomenon has intensified the challenges faced by South African manufacturing, increasing the urgency for strengthening domestic capabilities, particularly in some more technology-intensive sectors, by means of targeted industrial policy measures