South African Business Structures

Until very recently 70% of the market capitalization of the Johannesburg Stock Market was in the hands of just four huge corporations and over 50% of the country’s fixed assets were in government hands.

This centralisation of power led to the creation of large, hierarchical and bureaucratic organisations where power was vested at the top.

The post-apartheid governments have sought to both reduce the influence of state holdings and to encourage the large, native South African conglomerates to sell off some of their business to local black consortiums. When these changes are coupled with the fact that a great many international operations (who avoided South Africa during the apartheid years) are now actively trading in the country, a much more diverse business landscape is developing.

These changes make it difficult to predict with any great certainty what type of structure your South African counterparts may have embraced. Research is necessary – but if in doubt it is probably still best to assume that hierarchy and bureaucracy will be evident.

One other issue worth mentioning at this point is the power and influence wielded by the Trade Union movement in South Africa. This power is a residual effect of the important role played by the Unions during the years of struggle against apartheid. It is hoped that, as the country develops, union militancy will decrease as the level of labour unrest is often quoted as a break to inward investment.

A brief overview of some key concepts to consider when doing business in South Africa

Written and Produced by Keith Warburton

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Overview

If central Africa is poised to take off from an economic perspective then South Africa should be seen as the continent’s engine. South Africa takes on super-power qualities when looked at from an African perspective. South Africa is far and away the largest economy in Africa and the economic health of so many of its neighbours are intrinsically linked with the robustness of South Africa’s commercial sector.

The transition from the previous apartheid-led policies to a fully functioning democracy, offering equal opportunity for all, was never going to be an easy one. The birth pangs of the new rainbow nation are still being felt and political corruption and in-fighting have not helped the process. Nonetheless, South Africa has made significant progress in most areas and, critically, has not descended towards social chaos and economic meltdown as many predicted. South Africa survives and South Africa grows. Its future will be fascinating to watch and its future could, to a large measure, determine the future of Africa.

If you are considering doing business in Africa (and more and more companies are moving into Africa), then it is probably a good idea to do business in South Africa first as a stepping stone to the rest of the continent.

However, South Africa is complex. It is a complex mix of cultures, races, languages and differing approaches to business. You need to be flexible in South Africa and you need to be observant. You need to know that there is no ‘one size fits all’ process that will work in such a complicated environment. Learn about the country before you go on a business trip to – it makes commercial sense to do so (and its fascinating at the same time.)

This country profile provides an overview of some of the key aspects of South African business culture in a concise, easy to follow-format. The document includes information on:

  • Background to business
  • Business Structures
  • Management style
  • Meetings
  • Teamwork
  • Communication
  • Women in business
  • Entertaining
  • Top tips