In the early 1990s I was a lad growing up in Newcastle, KwaZulu-Natal. My folks owned a knitwear factory employing about 50 mama mabhodini — Zulu women working in textile factories — from Madadeni and Osizweni.
In the factory, my father would maintain the machinery and deliver the finished products to his customers in Durban and Johannesburg, and my mother managed production. My brother and I would go in and help over weekends with odd jobs. At university in Cape Town I would have a laugh with friends whose parents were proudly in the struggle. As a son of owners of the means of production, I was clearly part of the capitalist, exploitive class!
As President Cyril Ramaphosa marshals ANC bigwigs, all of whom have stellar “struggle credentials” and now head patronage networks, to try to fulfil the promise of a better life for all, he has begun to look to China for lessons.
China overcame even greater odds than SA’s, transforming from a backward, rural economy to the thriving mixed economy it is today. As Chairman Mao would have said, Ramaphosa is “seeking truth from facts”. Sure, no-one, least of all the Chinese, will ever say they have all the answers, especially to questions about sustained economic growth and containing corruption, but the Chinese experience does offer SA valuable lessons.
However, Ramaphosa got the wrong end of the stick when he looked to China for lessons in how to run state-owned enterprises (SOEs). As deputy president he led a delegation to China’s equivalent of our public enterprises ministry to learn how the Asian giant manages its strategic SOEs, which are leaders in energy, aerospace, finance and other strategic sectors.
We know why he went — SA’s SOEs are a shambles and China’s are comparatively well run. As a specialist on China and leading SA business school study tours to China, I have visited the headquarters of many Chinese SOEs, and they are indeed impressive. They are always marble and glass affairs, and young ladies in uniform politely usher international visitors from one slick presentation to the next where histories of a humble past and grand plans for a bright future are declared.
However, the source of China’s economic success these past decades does not lie in reformed SOEs run by comrades with advanced degrees. Nor does it lie in promoting cadres who have performed and severely disciplining those guilty of corruption, though this is one lesson we do need to emulate. China’s economic success lies in private enterprise, in government providing basic infrastructure, both physical and regulatory, then getting out of the way so private enterprise can grow and thrive.
The Chinese model is one where the government is pragmatic and willing to provide spaces such as special economic zones where private enterprises, both international and local, are given the freedom to innovate, work together and be profitable. If the special economic zones work, the government will tweak and regulate to try to sustain the growth. If things don’t work out, which is often the case, something else is tried.
Even for the gargantuan Chinese economy the source of sustained economic growth is the hundreds upon thousands of “mom and pop” factories and workshops like the one my folks owned in Newcastle. Being small and owner run, the businesses are nimble and quick to make decisions to supply market demands.
A problem with SA is the comrades have no experience of business and are suspicious of free enterprise. This is understandable, as most of their people were for a long time prevented from owning and running their own businesses.
Despite Covid-19 and the IMF sounding the alarm, SA today is still in a far better place ideologically and economically than China in the 1970s. If Deng Xiaoping can abandon communist ideology and suspend his suspicion of the market economy and business people, so can SA’s governing tripartite alliance.
• Dr Kuo, a former lecturer at the Shanghai International Studies University in China, is adjunct senior lecturer in the University of Cape Town’s Graduate School of Business.
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