South Africa: SATMC tyre group says Chinese anti-dumping duties can lift domestic industry

By David Whitehouse
Posted on Wednesday, 14 September 2022 06:00

SATMC says higher duties on tyre imports from China would benefit the development of South Africa's automotive industry. REUTERS/Siphiwe Sibeko

Higher duties on tyres imported from China can help stimulate the development of South African automotive and tyre export industries, Nduduzo Chala, managing executive of the South Africa Tyre Manufacturers Conference (SATMC), tells The Africa Report.

SATMC represents ContinentalBridgestoneGoodyear and Sumitomo in South Africa. The group in January applied to the International Trade Administration Commission (ITAC) to impose additional duties of between 8% and 69% on passenger, taxi, bus and truck vehicle tyres imported from China. ITAC has found prima facie evidence of dumping of passenger, truck and bus tyres imported from China and this month imposed provisional payments of 38.3% on Chinese tyres to run for six months until March 2023. A final decision is due by the end of July 2023.

About half of South Africa’s tyres are imported, most of them coming from China. The initial ruling is a “step forward” and a final positive ruling would allow the companies to “determine business cases for more investment,” which will create jobs, Chala says. “We can create economies of scale of local tyre manufacturing. We need to have an industrial base.”

That view is far from uncontested. Charl de Villiers, chairman of the Tyre Importers Association of South Africa (TIASA), said that the interim tariffs will have a “crippling” impact on consumers. The result will be to “destroy jobs, add an excruciating financial burden on every motorist in the country, every bus company, every taxi owner and every commuter.” De Villiers has argued that the result of the higher tariffs will simply be to shift the source of tyre imports from China to more expensive markets in Europe.

  • “Our aim is not to increase prices,” Chala says.  “Our aim is to stabilize the market” and ensure fair trade.
  • Chala says that the four manufacturers invested more than $15bn ($880m) into South Africa between 2019 and 2021. “That shows the commitment local tyre manufacturers have.”
  • He says that about 70% of the tyres sold in South Africa by the four companies in 2021 were made domestically, with the rest imported from unspecified regions.
  • Increased local tyre supply can help South African carmakers export, Chala argues.

‘Fair process’

Tyre-user groups including taxi drivers oppose the higher duties, arguing that higher prices at a time of rising inflation will force many to use after-market tyres, so compromising safety on the road. South Africa’s annual consumer inflation reached a 13-year high of 7.8% in July, and tyres are the third-biggest cost driver in domestic transport, after wages and fuel.

The tyre importers association TIASA in August made a court application to seek to compel SATMC to disclose information behind their request. TIASA argues in its application that it is being deprived of information including on tyre imports by the SATMC companies, which hampers its ability to participate in the ITAC probe.

  • “We have submitted all of the information that is required by ITAC,” Chala says. “It’s a fair process.”
  • The ultimate goal, he says, is for South Africa to have a globally recognized automotive sector. “We need to invest in the industry and the value chain.”

Bottom line

SATMC group investments into South Africa will be keenly watched if ITAC finally rules in its favour.

Understand Africa's tomorrow... today

We believe that Africa is poorly represented, and badly under-estimated. Beyond the vast opportunity manifest in African markets, we highlight people who make a difference; leaders turning the tide, youth driving change, and an indefatigable business community. That is what we believe will change the continent, and that is what we report on. With hard-hitting investigations, innovative analysis and deep dives into countries and sectors, The Africa Report delivers the insight you need.

View subscription options