FairPlay founder Francois Baird says the South African government should investigate the level of state subsidies enjoyed by Chinese businesses competing with local producers.
Key takeaways:
- Subsidies drive unfair market dominance: An OECD report reveals that Chinese companies receive over half of all global industrial subsidies, heavily distorting global markets and driving unfair competitive advantages.
- Predatory trade is a global issue: Unfair trade isn’t limited to China; companies from the US, UK, Brazil, and Europe actively engage in “predatory trade” by dumping products like poultry into South Africa.
- South Africa needs to fight back: FairPlay is urging the South African government to investigate foreign subsidies and take firm action to defend local automotive and poultry industries from being squeezed out.
The Organization for Economic Co-operation and Development (OECD), an international forum where 38 member countries work together to promote economic growth, sustainable development, and global trade, recently published a company-level analysis of government subsidies across 15 industrial sectors.
The analysis found that nearly 60% of Chinese companies’ global market share gains since 2005 could be attributed to subsidies.
Overall, global subsidies hit $108bn in 2024, of which 52% were in China. The Financial Times reported that the research suggests Chinese companies received three to eight times more government support on average in 2024 than groups in the 38 OECD countries.
According to the FT, the OECD said that large and persistent industrial subsidies can distort global markets, creating unfair competitive advantages and contributing to excess supply capacity.
The FairPlay trade movement has been saying the same thing for years, calling it predatory trade. The irony of such a report from Paris is that Europe is guilty of the same predatory trade practices.
In fact, there are companies from nine countries whose chicken portions are subject to anti-dumping duties because they are guilty of dumping poultry in South Africa. These include the United States, the United Kingdom, Brazil and six European countries.
FairPlay is in favour of free trade within the World Trade Organisation (WTO) rules, which is why we fight predatory trade.
This OECD report must be a concern in South Africa, where local car and component manufacturers as well as tyre manufacturers are being pushed out of the market by imported and sometimes also locally assembled Chinese vehicles.
Food security is a major issue when it comes to predatory trade that severely harmed poultry production in the early 2000s and required firm action, led by erstwhile trade minister Rob Davies. Since then, the SA poultry industry has become the second most competitive poultry producers in the world, expanding production and creating jobs.
We call on the Department of Trade, Industry and Competition to follow the example of the OECD and commission a similar study of foreign company-level government subsidies in sectors exporting to South Africa, including the motor industry and poultry, to transparently publish the full report and analysis, and to act on its findings.
