Marketing companies in South Africa – introduction to how to start a successful business – company

 

A recent survey by The Economist Intelligence Unit ranked South Africa as highly cost effective (10th out of 31 countries surveyed).

South Africa’s exchange rate makes it one of the least expensive countries in which to do business – particularly one with a first-world infrastructure and high living standards. Even though stronger local currency has strengthened against other major currencies in recent years, the rand exchange rate still makes commercial and residential property, quality hotels and restaurants inexpensive by world standards.

South Africa’s energy costs are also among the lowest in the world. Eskom supplies most of Africa with electricity, and is known for its superior supply quality. The country also compares favourably for petroleum prices, with private sector and multinational oil companies refining and marketing nearly all imported petroleum products in southern Africa.

The licensing of a second fixed-line operator is expected to bring down the cost of telecommunications in South Africa. The new operator is due to begin operating by the end of 2006, giving state company Telkom its first taste of real competition.

South Africa’s unit labour costs are significantly lower than those of other key emerging markets, including Mexico, Hungary, Malaysia and Singapore. In addition, recent years have seen a surge in the country’s labour productivity. South Africa has a comprehensive labour legislation in place, facilitating labour relations and contributing to a marked decline in the number of man-days lost due to industrial action since 1994.

South Africa’s corporate tax rate – down to 29% for 2005/06 – compares favourably against a number of developing companies, and the prospects of further reductions are good.

Ease of doing business in South Africa:

South Africa is among the top 30 countries in the world for ease of doing business, according to a 2005 World Bank report. The finding suggests that South Africa is making progress in creating an environment conducive to investment, which the government has identified as key to achieving a 6% growth rate.

The survey ranked 155 countries according to the number of procedures, time and costs involved in: starting a business; dealing with licences; hiring and firing workers; registering property; getting credit; protection for investors; paying taxes; trading across borders; enforcing contracts; and closing a business.

South Africa ranked 28th, ahead Spain (ranked at 30), Austria (32), France (44), Russia (79), China (91) and Brazil (119). Overall, SA had the highest ease-of-business ranking on the African continent.

Industrial capability, cutting-edge technology:

South Africa’s industrial production growth is well above the average for developing markets.

The country’s manufacturing output is becoming increasingly technology-intensive, with high-tech manufacturing sectors – such as machinery, scientific equipment and motor vehicles – enjoying a growing share of total manufacturing output since 1994.

SA’s technological research and quality standards are world-renowned. The country has developed a number of leading technologies, particularly in the fields of energy and fuels, steel production, deep-level mining, telecommunications and information technology.

Competitiveness:

A number of industrial support measures have been introduced since 1994 to enhance the competitiveness of South Africa’s industrial base. These include placing more emphasis on supply-side than demand-side measures (such as tariffs and expensive export support programmes).

The government has provided incentives for value-added manufacturing projects, support for industrial innovation, improved access to finance, and an enabling environment for small, medium and micro enterprise (SMME) development.

Industrial development zones have been established in close proximity to major ports and airports, offering world-class infrastructure, dedicated customs support and reduced taxation.

South Africa has a well-developed and regulated competition regime based on best international practice. The Competition Act of 1998 fundamentally reformed the country’s competition legislation, strengthening the powers of the competition authorities along the lines of the European Union, US and Canadian models.

The law places various prohibitions on anti-competitive conduct, restrictive practices (such as price fixing, predatory pricing and collusive tendering) and “abuses” by “dominant” firms (firms with a market share of 35% or more).

Authorities have been appointed to monitor implementation and adherence to the law, and regulators have been assigned to oversee natural monopolies and promote universal access to utilities.

 

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