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.
Written and Produced by Keith Warburton
This country profile has been produced to give a short overview of some of the key concepts to bear in mind when doing business with contacts in South Africa. It is intended to be an aid to business people who have commercial dealings with counterparties in the country but should not be seen as an exhaustive guide to this topic or as a substitute for more substantial research should there be a need.
With this in mind, we have covered the areas which are key to a better understanding of the cultural mindset underpinning business dealings in South Africa and which are, quite often, extremely different from the approach and thought processes associated with business in other parts of the world.
Therefore this briefing note is broken into short, bite-sized sections on the following topics: