Jacques Magliolo
Listen closely to rumour mongers at the Johannesburg Stock Exchange and you will hear joyous cries of “The multi-nationals are coming back.”
If statistics provided by the Washington-based Investor Responsibility Research Centre are anything to go by, foreign investment is definitely bound for our shores.
Distributed in South Africa by McGregors, the research shows that since the official lifting of federal sanctions in July 1991, 60 US companies have returned. This brings the number of US firms invested here to 164.
In addition, the Centre indicates that 15 new US and eight other foreign companies have re-entered South Africa since July this year. These include Novell, Apple Computer, Lotus and Quickpath Systems.
CPC International, Honeywell, IBM and Sara Lee have announced the reacquisition of some or all of the equity in former South African subsidiaries. Other companies which were previously invested in South Africa and are to return include Cummins Engine Co, Dow Jones, Measurex Corp and Procter & Gamble.
The question being asked by analysts is whether these companies will set up factories and retail outlets or just open up offices to sell products manufactured in their countries.
For instance, Apple Computer has a joint venture with HNR Computers, whereby that company will use its national infrastructure to market and sell Apple products. Only when the company has paid for the product in advance, does Apple ship the equipment to South Africa.
McGregors’ figures confirm that total direct assets do not amount to much, but it stresses that a vast number of companies do have a presence in South Africa.
Says McGregors: “Although the total direct assets of US companies are only R844-million, a further 469 US companies maintain a visible presence in South Africa through franchises, agencies, distribution agreements and loans.”
A number of analysts are more optimistic. One indicates that Procter & Gamble has “never simply opened up an office in another country. It brings its own staff, marketing agents and other experts and usually rips through its competitors.” He adds that, in this case, Unilever would finally have a worthwhile competitor.