South Africa's Washing Machine Trade War: A Complex Web of Policy and Protectionism

Strategic Insights -

South Africa's Department of Trade, Industry and Competition (DTIC) has endorsed a formal anti-dumping investigation against imports of top-loading washers from China and Thailand, following a complaint lodged by Defy Appliances. The investigation aims to protect local manufacturers and jobs, but it has sparked a complex debate on strategic policy, protectionism, and unintended consequences. Defy alleges that dumping margins of 21.48% for Chinese products and 67.11% for Thai machines have undercut local prices, slashed profits, and forced an inventory build-up.

Key Takeaways:

  • Defy Appliances has lodged a complaint with the International Trade Administration Commission (Itac) alleging dumping margins of 21.48% for Chinese products and 67.11% for Thai machines, leading to a formal anti-dumping investigation.
  • The investigation aims to protect local manufacturers and jobs, but has sparked a complex debate on strategic policy, protectionism, and unintended consequences.
  • Defy has previously lobbied for a reduction in washing machine tariffs in 2004, a 30% hike on smaller top-loaders in 2019, and is now calling for protection again to align with the DTIC's "Reimagined Industrial Strategy" on import substitution and job retention.
  • The American experience with washing machine trade wars shows how tariffs can backfire, with prices rising by nearly 12% and consumers forked out $1.5 billion more for 1,800 saved jobs.
  • The investigation will have winners and losers, including Defy, policymakers, local component suppliers, consumers, retailers, and importers, with consumers facing higher prices and low-income households bearing the brunt.

Statistics:

  • Dumping margins alleged by Defy: 21.48% for Chinese products and 67.11% for Thai machines.
  • Less than 3% market share: Defy had in the local automatic washing machine market in 2019.
  • R350-million: Invested by Hisense South Africa into its Atlantis manufacturing plant since 1996.
  • 500,000: Number of refrigerators produced annually at the Hisense Atlantis plant.
  • 1 million: Number of televisions produced annually at the Hisense Atlantis plant.
  • 10: Number of African countries that Hisense exports products to.
  • 22%: Potential increase in prices for affected washers.
  • R800,000: Cost per job, worked out by the US government to save 1,800 jobs through tariffs on washing machines.

Sources:

  • Daily Maverick: Interview with Luna Nortje, deputy general manager at Hisense SA.
  • Government Gazette: Listing of Chinese and Thai companies in the anti-dumping investigation.
  • SA Revenue Service: Import data used by Defy to calculate dumping margins.
  • Whirlpool: US trade war against Samsung and LG in 2018.
  • World Trade Organization: Global trade policies and practices on anti-dumping investigations.