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SUMMER INTENRSHIP PROJECT



CARRIED
OUT AT




“NATIONAL ENGINRRRING INDUSTRIES LTD.

JAIPUR [RAJ]”

MJRP UNIVERSITY JAIPUR

SUBMITTED BY:                 SUBMITTED TO:

Surendra Kumar Saini          CORDINATOR
                              MJRP UNIVERSITY
ACKNOWLEDGEMENT




NATIONAL ENGINEERING INDUSTRY Ltd. Is considered one of
the best bearing manufacturing firms in entire Asia. The technology
used here is considered most advanced. So training at N.E.I. has been
great experience of my life. I was exposed to new and advanced
technology and right kind of industrial training and industrial
atmosphere.

I would like to express my sincere thanks to Technical Training
Centre N.E.I for carrying out my two months industrial training at
such a prestigious organization.

I would like to pay my gratitude to Mr. D.K Sharma [Manager, HRD]
for his guidance and support. I am extremely grateful and convey my
deep sense of gratitude to Mr. Binoy Verghese ,& Mr Annunay to my
project guide ,Mrs. Monika Joshi and Mr Pradeep Dixit for their
suppprt and professional assistance because of which I have
opportunity to understand the technical aspects and appreciate the rich
professional culture more carefully.




                                                  Surendra Kumar Saini
DECLARATION




I, Surendra Kumar Saini student of B.B.A [2008-2011], MJRP University
Jaipur. Here by declare that this project report titled “Global
Marketing” has been originally prepared by me and pertains to my
original work done during the summer training tenure, for “National
Engineering Industries Ltd., Jaipur “. One copy of this project report
has been submitted to NEI other than that this report has not been
submitted to any other organization.




                                                 Surendra Kumar Saini
OBJECTIVE
“To Identify the various aspects of marketing of bearing in
Global Market & associate the opportunity in South African
Market”.




  • South Africa's automotive industry
South Africa's automotive industry is a global, turbo-charged engine
for the manufacture and export of vehicles and components. The
sector accounts for about 10% of South Africa's manufacturing
exports, making it a crucial cog in the economy.
With annual production of 535 000 vehicles in 2007, expected to rise
to 630 000 in 2008, South Africa can be regarded as a minor
contributor to global vehicle production, which reached 73-million units
in 2007.
But, locally, the automotive sector is a giant, contributing about 7.5%
to the country's gross domestic product (GDP) and employing around
36 000 people.
The government has identified the automotive industry as a key
growth sector, with the aim of increasing vehicle production to 1.2-
million units by 2020, while significantly increasing local content at the
same time.

   •   Growth
   •   Investment
   •   Ford, GM, Mercedes-Benz, Toyota, VW ...
   •   Motor Industry Development Programme
   •   Competitive advantages
   •   Auto component manufacturers
   •   Spoilt for choice

Growth
South Africa has been one of the best performing automobile markets
in the world in recent years. New vehicle sales figures soared to
record-breaking levels for three years in succession, from 2004 to
2006. In 2006, sales increased by 14.4% to just under 650 000 units,
generating revenue of R118.4-billion.
Sales dropped by 5.4% in 2007, and are expected to drop further in
2008 as higher interest rates and rising prices curb spending.
However, major export programmes are likely to keep the local
industry buoyant. Vehicle exports were around 170 000 units in 2007,
and the National Automobile Association of South Africa (Naamsa)
expects this to jump to 285 000 in 2008. This is extraordinary growth,
especially when compared to 1997, when the number of units exported
            was below 20 000.




South Africa currently exports vehicles to over 70 countries, mainly
Japan (around 29% of the value of total exports), Australia (20%), the
UK (12%) and the US (11%). African export destinations include
Algeria, Zimbabwe and Nigeria.

Investment
All of the major vehicle makers are represented in South Africa, as well
as eight of the world's top 10 auto component manufacturers and
three of the four largest tyre manufacturers. Many of the major
multinational companies use South Africa to source components and
assemble vehicles for both the local and overseas markets.




Between 2000 and 2006, the industry's investment in production and
export infrastructure quadrupled, from R1.5-billion to R6.2-billion,
before slowing to R3-billion in 2007. Capital investment is expected to
be around the R4-billion mark in 2008.
Most of this has been foreign investment, with the parent companies
of local car manufacturers expanding local operations to improve
production capacity, export facilities and supporting infrastructure.
All of the large manufacturers in the country have launched major
export programmes in recent years - the latest (in January 2008)
being Ford Motor Company of South Africa.
Ford, GM, Mercedes-Benz, Toyota, VW ...




Ford
In January 2008, Ford Motor Company of Southern Africa announced
plans to invest more than R1.5-billion to expand its operations in
South Africa for the production of Ford's next-generation compact
pickup truck and Puma diesel engine.
The local arm of the US car giant said the new investment would start
in 2009 and be split between its assembly plant in Silverton, Pretoria
and engine facility in Struandale, Port Elizabeth, with most of the
vehicles produced earmarked for export.
GeneralMotors
General Motors South Africa, which is based in Port Elizabeth in the
Eastern Cape, markets the brands Chevrolet, Opel, Isuzu, Saab,
Cadillac and Hummer. In 2005, the company was awarded a six-year
contract to assemble and export the Hummer H3, resulting in a
US$100-million investment in its Struandale plant.
GM South Africa is building a new multimillion-rand vehicle conversion
and distribution centre and is investing another R481-million in its
operations, upgrading its production facilities and tooling in 2008.

Mercedes-Benz
Mercedes-Benz    South    Africa   manufactures   Mercedes-Benz   and
Mitsubishi
vehicles at its manufacturing plant in East


London in the Eastern Cape. The company's headquarters are located
in Gauteng province, from where the



Mercedes-Benz, smart, Maybach, Mitsubishi Motors, Freightliner,
Western Star and FUSO brands are marketed and financed.
Mercedes-Benz SA recently spent about R2-billion on upgrading its
manufacturing plant, and now produces both right- and left-hand
drives versions of the latest Mercedes-Benz C-Class car for domestic
and export markets.

Toyota
Toyota South Africa recently completed a five-year, R2.4-billion
modernisation and revitalisation programme. Its Prospecton facility,
just south of Durban, is now one of the most technologically advanced
Toyota facilities in the world outside of Japan, and is capable of
producing around 220 000 units a year.
As a global production facility, Toyota South Africa has transformed
from a purely local supplier into an effective export base to supply
vehicles into markets in Europe and Africa. The company, which
exports to more than 40 destinations, says it expects to export around
140 000 units in 2008, or almost 60% of total automotive exports
from South Africa.
Volkswagen
Volkswagen South Africa is located at Uitenhage near Port Elizabeth in
the Eastern Cape. In 2007, the company celebrated its 56th
anniversary in South Africa - and its 2.5-millionth vehicle off the
production line. It is a local leader in the passenger market,
accounting for around 21% of all new vehicle sales.
Between 2000 and 2008, Volkswagen South Africa invested around
R6-billion in new models, a new paint shop and a new truck and bus
assembly plant.

Motor Industry Development Programme
The catalyst for this phenomenal growth has been the government's
Motor Industry Development Programme (MIDP). Introduced in 1995,
the programme is legislated until 2009 and will be gradually phased
out until 2012.
The MIDP has boosted exports by enabling local vehicle manufacturers
to include total export values as part of their local content total, then
allowing them to import the same value of goods duty-free. This has
allowed auto makers to concentrate on manufacturing certain vehicles
or components for export, while importing other models.
The programme also grants a production-asset allowance to vehicle
manufacturers that invest in new plants and equipment, giving them
20% of their capital expenditure back, in the form of import-duty
credits, over a period of five years.




The government plans to introduce a successor to the MIDP, which will
be aimed aimproving the domestic value chain. The new programme,
which will last until 2020, will focus on value addition while being
consistent with

South Africa's multilateral obligations. It is likely to take the form of a
subsidy to production.
The Department of Trade and Industry says the new support
programme will result in more jobs as well as the long-term
sustainability of the industry. The plan will support production and
investment plans that "intend to reach a minimum volume of output
for each platform of 50 000 units a year within a reasonable period of
time".
Competitive advantages
South Africa's automotive industry offers a number of competitive
advantages to international concerns. These include a world-beating
cost ability on short- or low-volume runs, competitive tooling costs,
and a high degree of manufacturing flexibility. The local industry also
has good access to southern hemisphere and African markets.
The South African industry boasts several unique technologies, such as
differential locks for off-road vehicles, aluminium welding technology
for radiators, and the ability to design components, such as air
cleaners and air conditioners that can cope with the higher
temperatures and dust levels in Africa.
The country's first-world production facilities are coupled with access
to raw materials and relatively cheap electricity, as well as stable
transport and telecommunications infrastructure.
The Automotive Industry Development Centre and the Gerotec testing
centre near Pretoria are world-class facilities for research, design,
testing and training.
New investment opportunities are being created for the industry by the
introduction of free trade agreements with the European Union and the
South African Development Community, as well as the US
government's African Growth and Opportunity Act.

Auto component manufacturers
There are more than 200 automotive component manufacturers in
South Africa, and upwards of another 150 that supply the industry on
a non-exclusive basis. The component industry has a turnover of about
R50-billion, or approximately 2% of the country's GDP, and is looking
to strong growth as export potential continues to increase.
South Africa exported R30.3-billion worth of auto components in 2006,
a 32% increase over 2005. Catalytic converters continued to be the
country




most exported vehicle part, accounting         for almost half of all
componenexports.
Other key exports include engines, silencers and exhausts, radiators,
wheels and tyres, stitched leather car seat covers, car radios and
sound systems, and axles, especially for heavy trucks.
Germany, Spain, the UK, the US, France and sub-Saharan Africa are
the leading destinations for South African auto parts exports.




Spoilt for choice

There are a "staggering" 1 390 variants of cars, recreational vehicles
and light commercial vehicles on South Africa's showroom floors,
according to a report by business website Fin24.com.
The choice available has more than doubled over the past 10 years. In
1997, soon after the re-entry of Alfa Romeo, Renault and Chevrolet
into South Africa - and when locals first got a taste of Mahindra,

SsangYong, Dacia, Kia, Hyundai, Daewoo, Saab and Subaru - there
were 37 manufacturers offering 595 different models.
Since then, Bentley, Cadillac, Citroën, Dodge, Maybach, Mini, Proton,
TVR, GWM, Lexus and Tata have established dealerships in South
Africa, either independently or by joining forces with established
distributors and related group companies.
However, despite the new entrants, the majority of South African
buyers tend to choose the well known, established brands such as
Toyota, Volkswagen, Ford, Mazda and BMW. These brands together
still account for more than 80% of new vehicle sales in the country.
Competitive Environment and International Business

EXTERNAL INFLUENCES                 OPERATIONS



    PHYSICAL AND
  SOCIETAL FACTORS                  OBJECTIVES


     COMPETITIVE
    ENVIRONMENT
• Major advantage in price,          STRATEGY
  marketing, innovation, or
  other factors
• Number and comparative
  capabilities of competitors
• Competitive differences
   by country                         MEANS




                                                 1-11
The Usual Pattern of Internationalism

                                                                         Internal versus
   Impetus for
                                            HIGH                         external handling of
   international A
                                                                         foreign operations
   business                                                                 B
     Active search                     MEDIUM                       Company handles
 for opportunities
                                                                    its own foreign
                                                                    operations
                           Passive          LOW        Other firms
                       response to                     handle external
                         proposals      Domestic       contracts
                                        Business               Limited foreign
                 Moderately                                    production and
                                  Quite         Limited
                 similar                                       multiple functions
                                  similar       foreign                             Mode of
         E           Very              One      functions,                   operations
Degree of                                                        Extensive C
                     dissimilar                 usually
similarity                           Several                     production
                                                export/
between                                                          abroad with
                                                import
foreign and                                                      FDI and all
                                      Many
domestic                                                         functions
countries                                D     Number of foreign countries in
                                                which a firm does business

                                                                                              1-13
Chapter Preview

• List each key factor to assess in national
  business environments
• Discuss measuring potential in emerging and
  industrialized markets
• Identify three key market research difficulties
• Explain the usefulness of each secondary data
  source
• Describe each method of primary research
Identify Basic Appeal



 Basic
 Basic            Available
                   Available
demand
demand            resources
                  resources
••Climate
  Climate           ••Labor
                      Labor
••Absolute bans
  Absolute bans     ••Materials
                      Materials
                    ••Financing
                      Financing
National Forces: Political/Legal

                Government regulation
                   Investment barriers
                   Profit repatriation



                Government bureaucracy
                   Administrative delays




                Political stability
                   Unforeseen political change
National Forces: Economic/Other

                 Country finances

                 Trade and
                  investment policies

                 Currency and liquidity


                 Logistics


                 Country image
National Forces: e-Business
              Infrastructure,
              market access
                 Internet access
                 Content and standards

              Legal matters
                 Privacy and security
                 Intellectual property



              Financial issues
                 Electronic payments
                 Tariffs and taxation
Potential: Industrialized Markets

 Demographics
 Competitors’    market shares
 Import/Export    volumes
 Distribution   network
 Marketing    approaches
 Retail   sales levels
 Income    elasticity
Department                                   of                           Commerce
Export                       Import                          Data                    Bank
Import :: Country-wise

Dated:                                                                           27/6/2008
Values in US$ Million

                                                      2007-200
                                      2006-200
S.No. Country                                  %Share 8(Apr-   %Share %Growth
                                      7
                                                      Jun)
1.    SOUTH AFRICA                    2,469.73    1.3306   1,008.98    1.7847
                                      185,604.1
      India's Total Import                                 56,535.40
                                      0
Exchange                                                                              rate:
2006-2007:            1US$            =                Rs.             45.2849
2007-2008(Apr-Jun) : 1US$ = Rs. 41.2344
Potential: Emerging Markets

   Market size
   Market growth rate
   Market intensity
   Market consumption capacity
   Commercial infrastructure
   Economic freedom
   Market receptivity
   Country risk
Select the Market or Site

      Field trips
• Engage in negotiations
• Gain firsthand exposure
• Contact customers/others



                                 Competitor analysis
                             •   Access to inputs
                             •   Competitors’ numbers/shares
                             •   Competitors’ strategies
                             •   Channel access
                             •   Customer loyalty
Market Research Difficulties




Availability   Comparability    Cultural
 of data         of data       problems
Secondary Data Sources


International organizations
Government agencies
Industry/Trade associations
Service organizations
Internet and World Wide Web
Methods of Primary Research

   Trade shows and missions

   Interviews and focus groups

            Surveys

    Environmental scanning
Review

• List each key factor to assess in national
  business environments
• Discuss measuring potential in emerging and
  industrialized markets
• Identify three key market research difficulties
• Explain the usefulness of each secondary data
  source
• Describe each method of primary research
Comparison of Foreign Market Entry Modes

             Conditions Favoring this
 Mode                                       Advantages            Disadvantages
             Mode
             Limited sales potential in
             target country; little product
                                                                  Trade barriers &
             adaptation required
                                            Minimizes risk and tariffs add to costs.
                                            investment.
             Distribution channels close
                                                                  Transport costs
             to plants
                                            Speed of entry
 Exporting
                                                                  Limits access to local
             High      target       country
                                            Maximizes      scale; information
             production costs
                                            uses         existing
                                            facilities.           Company viewed as
             Liberal import policies
                                                                  an outsider
             High political risk
             Import and investment
             barriers
                                                                 Lack of control over
                                           Minimizes risk and
                                                                 use of assets.
             Legal protection possible in investment.
             target environment.
                                                                 Licensee may become
                                           Speed of entry
                                                                 competitor.
 Licensing   Low sales potential in target
             country.                      Able to circumvent
                                                                 Knowledge spillovers
                                           trade barriers
             Large cultural distance
                                                                 License period is
                                           High ROI
                                                                 limited
             Licensee lacks ability to
             become a competitor.
 Joint       Import barriers               Overcomes             Difficult to manage
 Ventures                                  ownership
             Large cultural distance       restrictions      and Dilution of control
                                           cultural distance
             Assets cannot be fairly                             Greater risk than
             priced                        Combines resources exporting         a    &
High sales potential
                                          of 2 companies.
             Some political risk
                                                                   licensing
                                          Potential for learning
             Government restrictions on
                                                                   Knowledge spillovers
             foreign ownership
                                          Viewed as insider
                                                                 Partner may become a
             Local company can provide
                                           Less       investment competitor.
             skills,            resources,
                                                   required
             distribution network, brand
             name, etc.
                                           Greater knowledge
             Import barriers                                     Higher risk than other
                                           of local market
                                                                 modes
             Small cultural distance
                                           Can better apply
                                                                 Requires         more
                                           specialized skills
Direct       Assets cannot be fairly                             resources         and
Investment   priced                                              commitment
                                           Minimizes
                                           knowledge spillover
             High sales potential                                May be difficult to
                                                                 manage the local
                                           Can be viewed as an
             Low political risk                                  resources.
                                           insider
SOUTH AFRICA ECONOMY SYSTEM
Economy


SA recession unlikely: Old Mutual
Despite gloomy forecasts for inflation and economic growth over the
next 12 to 24 months, Old Mutual believes South Africa is unlikely to
experience a recession, due to strong public and private sector
investment, as well as fast-growing consumption spending by the
country's public sector.


Infrastructure

World-class infrastructure - including a modern transport network,
low-cost energy, and sophisticated telecommunications facilities.


Key sectors

Manufacturing, automotive, tourism, finance, agriculture, ICT and
electronics ... South Africa's economic sectors are primed for growth.


Economic policies

South Africa's macroeconomic policies, regulatory institutions, financial
system and controls, labour legislation, latest budget statements, and
more.


Economic development

Job creation, skills development, urban regeneration ... South Africa is
on an economic development drive.
South Africa's automotive industry
•   South Africa's automotive industry is a global, turbo-charged engine
    for the manufacture and export of vehicles and components. The
    sector accounts for about 10% of South Africa's manufacturing
    exports, making it a crucial cog in the economy.



Manufacturing in South Africa
South Africa has developed an established, diversified manufacturing
base that has shown its resilience and potential to compete in the
global economy.
The manufacturing sector provides a locus for stimulating the growth
of other activities, such as services, and achieving specific outcomes,
such as employment creation and economic empowerment. This
platform     of    manufacturing     presents   an    opportunity    to
significantlyaccelerate the country's growth and development.
Manufacturing in South Africa is dominated by the following industry:

    •   Automotive
Automotive industry
The automotive industry is one of South Africa's most important
sectors, with many of the major multinationals using South Africa to
source components and assemble vehicles for both the local and
international markets.
Despite its distance from some of the major markets Africa, and
particularly South Africa, produces high quality products at prices
competitive with other automotive manufacturing and assembly
centres.
The South African automotive and components industry is growing
rapidly and is perfectly placed for investment opportunities. Vehicle
manufacturers such as BMW, Ford, Volkswagen, Daimler-Chrysler and
Toyota have production plants in the country, while component
manufacturers (Arvin Exhust, Bloxwitch, Corning, Senior Flexonics)
have established production bases in the country.
The industry is largely located in two provinces, the Eastern Cape
(coastal) and Gauteng (inland). Companies with production plants in
South Africa are placed to take advantage of the low production costs,
coupled with access to new markets as a result of trade agreements
with the European Union and the Southern African Development
Community free trade area. Opportunities also lie in the production of
materials (automotive steel and components).



South Africa's aim is to become an automotive investment destination
of choice. Modernisation and upgrading of key elements in the
automotive industry are required to keep pace to achieve international
competitiveness.
Interest rates are currently at historic low levels, reducing the cost of
investments. It is significant to note that most major multinational
vehicle manufacturers are currently represented in SA, which means
that international developments also impact on the country.
The outlook for the vehicle industry is bright in terms of both exports
and the domestic market. A key challenge will be to raise local
content, particularly in the vehicles now being exported in large
volumes.



   •   National Association of Automobile Manufacturers of SA
   •   Automotive Industry Export Council Automotive Industry
       Development Centre .
   •    Following four successive record years, domestic new vehicle sales
       during 2007 fell principally on the back of substantially lower new car sales
       and, during the last quarter, progressive weakness in light commercial
       vehicle sales.

For the year as a whole, primarily due to weakness in the new car market,
NAAMSA reported sales had declined by 33 859 units or 5,2% to 612 707
vehicles compared to the 646 707 units sold during 2006.

NAAMSA annual industry sales by sector, for the past four years, were as follows
–
2007/2006
  Sector                2003     2004     2005     2006     2007
                                                                % Change
  Cars                  247 259 301 151 376 845 426 822 384 411 - 9,9%
  Light Commercials     104 884 127 629 160 723 186 664 191 227 + 2,4%
  Medium                                  12 243            15 168 + 6,5%
                        6 372    8 636             14 246
  Commercials
  Heavy Commercials/                      15 163            21 901 + 16,3%
                     9 955       12 178            18 834
  Buses
  Total Vehicles        368 470 449 594 564 974 646 566 612 707 - 5,2%

Sales of new vehicles not reported in detail through NAAMSA added 63 390 units
(2006 : 67 759 units) to the 2007 figures comprising 50 222 cars and 13 168 light
commercial vehicles. This effectively translates into a 2007 aggregate South
African domestic new vehicle market of 676 097 vehicles – which represents a
decline of 5,4%, in aggregate terms, compare to total industry sales of 714 325
units in 2006.

Despite the year on year decline, the industry’s 2007 overall sales represented
the second highest annual sales total on record. Over the past four years (2004
– 2007), nearly 2,5 million new vehicles were sold in South Africa compared to
about 1,5 million vehicles sold over the previous four years (2000 – 2003).
Currently, South Africa’s vehicle population was in excess of 8 million vehicles.

2007 industry export sales figures, compared to the previous three years, were
as follows –

                               2004      2005      2006       2007      2008
                                                                        Projection
Cars                           100 699 113 899     119 171    106 485 180 000
Light Commercials              9 360     25 589    60 149     64 128 75 000


Medium, Heavy Trucks and 448             424       539        647       750
Buses
Total Exports                  110 507 139 912     179 859    171 260 255 750

2007 industry exports at 171 260 vehicles reflected a decline of 8 599 vehicles or
4,8% compared to the 179 859 vehicles exported in 2006. The fall was primarily
due to the fact that the Mercedes-Benz factory in East London had been
refurbished during the year and as a result no vehicles had been produced for
export for about five months during 2007.
South Africa has established itself as a centre of growth in Africa and is on target
to become an increasingly important part of the global automotive industry.
South Africa’s track record as a manufacturer and supplier of vehicles and
automotive components has been firmly established over recent years. For
2008, industry export sales were projected to exceed 255 000 vehicles. The
projected substantial increase in exports of South African produced motor
vehicles would boost the industry’s total domestic production from 542 000
vehicles in 2007 to about 620 000 vehicles in 2008.




Policies

· State boost for local industry

The Department of Trade and Industry is working with state-owned enterprises to build
the competitiveness of South African suppliers, to ensure they reap the benefits of the
massive infrastructure spending programme under way in the country.

How the world rates South Africa

Despite a fair amount of local scepticism - brought on partly by political uncertainty and
the energy crisis - South Africa is maintaining its strong showing in world rankings, with
a series of recent international reports highlighting and supporting the country's strengths
    as an investment destination.


    Budget: SA 'stays the course'

    Despite a 0.5% drop in projected GDP growth for 2008/09, Finance Minister Trevor
    Manuel has once more unveiled a "sunny" Budget for South Africa, announcing another
    surplus, lowered taxes and increased spending as the government moves to tackle skills
    and infrastructure constraints.


    Non-compliant listed companies targeted


    The South African government is to embark on a drive within the next few weeks to
    ensure that companies listed on the JSE comply fully with employment equity legislation,
    with the offenders being taken to the Labour Court.




    BUDGET 2008/09
    South Africa 'stays the course'

    Despite a 0.5% drop in projected GDP growth for 2008/09, Finance Minister Trevor
    Manuel unveiled a "sunny" Budget for South Africa, announcing another surplus, tax cuts
    and increased spending to tackle skills and infrastructure constraints.


    Entry mode in South African market



•
    Regulations for importers
    South Africa is a member of the World Trade Organization (WTO) and
    follows the Harmonized System (HS) of import classification.
There is free exchange of trade between South Africa and the other
four countries (Botswana, Lesotho, Namibia, and Swaziland)
comprising the Southern African Customs Union (SACU). There will
also be substantially free trade between South Africa and the European
Union by 2008 as a result of a Free Trade Agreement. The Southern
African Development Community (SADC) Free Trade Agreement should
also allow the free exchange of goods among the 14 countries of the
region when it comes into full effect.
Traders are subject to exchange control approval, administered by the
South African Reserve Bank. The Department of Trade and Industry is
also empowered to regulate, prohibit or ration imports to South Africa
in the national interest but most goods may be imported into South
Africa without restrictions.
Import permits are required only for specific categories of goods and
are obtainable from the Director of Import and Export. Importers must
possess an import permit prior to the date of shipment. Failure to
produce a required permit could result in the imposition of penalties. A
summary of main import regulations are:

   •   Certain goods imported into South Africa require an import
       permit, which may be obtained from the Director of Imports and
       Exports Control.
   •   The list of goods requiring import permits is specified each year
       in the annual Import Control Program.
   •   Permits are valid for imports from any country.



   •   Foreign Trade Zones: No Foreign Trade Zones or Free Ports are
       established in South Africa.
   •   South Africa uses the Harmonised System of Classification.
   •   Samples are dutiable unless they are cut samples of cloth,
       leather, linoleum and wallpaper in book form and not for
       distribution as advertising matter. Samples that have no
       commercial value because of mutilation in some way are also
       allowed duty-free access.
   •   The South African Government has viewed countertrade as a
       second-best alternative to be engaged in only when normal trade
       cannot be conducted.
   •   Bonded warehouses are available at various points of entry.
   •   South African banks can accommodate all international
       transactions and are situated throughout the country.
•   General rebates of duty are available for specific situations, and
           duties may be rebated on goods on re-export.
       •   The Reserve Bank plays a pivotal role in the economic and
           financial sectors.
       •   Some imports may require permission from the Department of
           Agriculture, Health or Environment Affairs.
       •   Specific excise taxes are levied on alcoholic and non-alcoholic
           beverages, tobacco and tobacco products, mineral waters, some
           petroleum products and motor vehicles. South Africa is an
           adherent to the Customs Valuation Agreement negotiated under
           GATT/WTO. The dutiable value of goods imported into South
           Africa is calculated on the F.O.B. price in the country of export.
           In conformance with its WTO commitments, South Africa has
           lifted import surcharges.



    Trade with South Africa

    Trade relations
    South Africa participates in a number of preferential trade
    relationships, both regional and bilateral. It was a founding member of
    the General Agreement on Tariffs and Trade (1947), and is an active
    member of the World Trade Organisation.


    Trade with SA: who can help
    South African chambers of commerce and industry, foreign chambers in SA, and
    other trade and business organisations geared to offer assistance.




•   | Distribution & sales in South Africa
    South Africa offers foreign suppliers a variety of methods to distribute
    and sell their products, including using an agent or distributor, selling
    through established wholesalers or dealers, selling directly to
    department stores or other retailers, or establishing a branch or
    subsidiary with its own sales force.
•   Wholesalers
    Consumer goods requiring maintenance of stocks and industrial raw
    materials are often exported to South Africa through established
    wholesalers.

•   Retail organisations
    Many exporters of consumer goods sell directly to South African
    retail organisations - including consumer corporations, department
    stores, chain stores, and co-operative groups of independent
    retailers - which assume the functions of wholesale buying, selling
    and warehousing.

•   Consumer retail
    South Africa offers the full spectrum of retail outlets: neighborhood
    convenience stores; small general dealers; specialty stores handling
    a single product line (such as clothing, electronics, or furniture);
    exclusive boutiques; chain stores (groceries, clothing, toiletries,
    household goods); department stores; cash and carry wholesale-
    retail outlets; and co-operative stores serving rural areas.
   About 90% of the consumer trade inventories of these stores are
domestically sourced.
A major phenomenon in South Africa has been the evolution of
supermarketes or hypermarkets, which sell large quantities of almost
all consumer goods on a self-serve basis.
The hypermarkets, located in suburban shopping centres, have
disrupted the traditional distribution chain by purchasing directly from
manufacturers and bypassing the wholesaler, with low margins
achieving high turnover, thereby placing price pressure on all
competing outlets.

    •   After-sales agents
        For products of a technical nature, it maybe necessary to appoint
        an official after-sales agent in South Africa. This may be a
        company that does not import or market the product in question,
        but rather, because of its geographical reach, technical ability
        and goodwill in the market, acts as the certified service agent.
Appointing an appropriate after sales agent is crucial in ensuring that
the product develops a respected reputation in the South African
market.
The US Commercial Service's Country Commercial Guide South Africa
2003 offers more information on selling factors and techniques.
•   Agents & distributors
       In South Africa, the terms "agent" and "distributor" have a very
       specific meaning.
Agents. In the strict legal sense, "agent" means a person who, for and
on behalf of a principal, either introduces a third party to the principal
by soliciting orders from the third party, or concludes contracts with
the third party on behalf of the principal. The normal reward for an
agent is a commission, which is received from the principal.
Key considerations in appointing an agent in South Africa are:

   •   You need to appoint an agent who knows your market well. The
       South African business sector is relatively small, and companies
       have established methods of procurement that differ from sector
       to sector.
   •   You need to consider national distribution. South Africa is a large
       country, with nine provinces. Smaller agents tend to operate
       provincially, as they do not have the infrastructure to support
       operations in other provinces. You may need to appoint an agent
       in each of the larger cities - Johannesburg, Cape Town, Port
       Elizabeth and Durban - to cover each of the respective
       provinces. Larger companies who take on agencies often have an
       office in each of the major centres, making any agency
       agreement easier to control.
   •   For certain products, South Africa is a trading hub for the
       southern African region, and you need to consider whether your
       South African agent should handle business in these countries on
       your behalf.


Distributors. A distributor buys and holds stock of a product. In
return, s/he is usually granted an exclusive right to sell the product in
a particular area or to a particular type of customer. An agreement
with a distributor is similar to an agreement with an agent, except that
price and delivery terms will differ because the distributor is a
principal. When appointing a distributor in South Africa, the same
considerations apply as when appointing an agent.
• Various Bearing companies in South africa


  • Company Profile

The SKF Group is the leading global supplier of products, customer
solutions, and services in the business of rolling bearings and seals.
The Group's main competencies include technical support,
maintenance services, condition monitoring and training. SKF also
holds an increasingly important position in the market for linear
motion products, as well as high precision bearings, spindles and
spindle services for the machine tool industry and lubrication systems.

The SKF business is organized into three divisions; Industrial,
Automotive and Service. Each division serves a global market, focusing
on its specific customer segments.
SKF has 100 manufacturing sites distributed all over the world. With
its own sales companies in 70 countries, supported by some 15 000
distributors and dealers worldwide, its e-business marketplace and
global distribution system, SKF is always close to its customers for the
supply of both products and services.

SKF supplies the following products:
  •   Ball and Roller Bearings          •   Needle Roller Bearings
  •   Ball Bearings Units               •   O-Rings
  •   Bearings Bushes                   •   Piston Seals
  •   Bearings Housings                 •   Precision Bearings
  •   Bearings Seals                    •   Radial Shaft Seals
  •   Combined      Needle     Roller   •   Rod Seals
      Bearings                          •   Roll End Bearings
  •   Cylindrical Roller Bearings       •   Roller Ball Bearings
  •   Cylindrical   Roller    Thrust    •   Shaft Seals
      Bearings                          •   Slewing Bearings
  •   Deep Groove Ball Bearings         •   Slewing Rings
  •   Double Row Deep Groove            •   Spacing Washers
      Ball Bearings                     •   Spherical Bushings
  •   Hybrid Bearings                   •   Spherical Roller Bearings
  •   Hydraulic Seals                   •   Spherical     Roller   Thrust
  •   Industrial Shaft Seals                Bearings
  •   Linear Ball Bearings              •   Taper Roller Bearings
  •   Magnetic Bearings                 •   Taper Roller Thrust Bearings
  •   Mechanical Seals                  •   Thrust Ball Bearings
  •   Mechanical Shaft Seals            •   Y-Bearings
  •   Mechatronic Bearings Units        •    Needle Roller Ball Bearings
Creating stable processes
Six Sigma is about creating stable processes

Design for Six Sigma and Lean Six Sigma
Six Sigma at SKF has been extended to incorporate Design for Six
Sigma (DfSS) and Lean Six Sigma besides the well established
traditional Six Sigma.

Awarding work
During the year of 2006, SKF received a number of awards and forms of
recognition for its work with Six Sigma.




    NSK South Africa (Pty) Ltd
Products & Services
Mechanical > Bearings, Bushes & Wheels >

  •   Automotive Bearings
  •   Ball and Roller Bearings
  •   Ball Bearing Units
  •   Bearing Grease
  •   Conveyor Bearings
  •   Hanger Bearings
  •   Linear Way Bearings
  •   Needle Roller Bearings
  •   Pillow Block Bearings
  •   Plane Bearings
  •   Plummer Blocks
  •   Rod and Spherical Bearings
  •   Roll End Bearings
  •   Screw Conveyor Bearings
  •   Screw Conveyor Hanger Bearings
  •   Self Lubricating Bearings
  •   Sleeve Bearings
  •   Slewing Rings
  •   Split Roller Bearings
  •   Steel Balls & Rollers
  •   Super Precision Bearings
  •   Taper Roller Bearings
  •   Thin Section Bearings
  •   Thin Walled Bushes
  •   Turntable Bearings

Power Transmission > Plain Bearings >

  •   Air Bearings
  •   Dry Bearings
  •   Magnetic Bearings

Power Transmission > Rolling Bearings >

  •




  •   Ball Bearing Slewing Rings
  •   Ball Bearings: Angular Contact Ball Bearings
  •   Ball Bearings: Deep Groove Ball Bearings
Summer  _intership__project

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Summer _intership__project

  • 1. SUMMER INTENRSHIP PROJECT CARRIED OUT AT “NATIONAL ENGINRRRING INDUSTRIES LTD. JAIPUR [RAJ]” MJRP UNIVERSITY JAIPUR SUBMITTED BY: SUBMITTED TO: Surendra Kumar Saini CORDINATOR MJRP UNIVERSITY
  • 2. ACKNOWLEDGEMENT NATIONAL ENGINEERING INDUSTRY Ltd. Is considered one of the best bearing manufacturing firms in entire Asia. The technology used here is considered most advanced. So training at N.E.I. has been great experience of my life. I was exposed to new and advanced technology and right kind of industrial training and industrial atmosphere. I would like to express my sincere thanks to Technical Training Centre N.E.I for carrying out my two months industrial training at such a prestigious organization. I would like to pay my gratitude to Mr. D.K Sharma [Manager, HRD] for his guidance and support. I am extremely grateful and convey my deep sense of gratitude to Mr. Binoy Verghese ,& Mr Annunay to my project guide ,Mrs. Monika Joshi and Mr Pradeep Dixit for their suppprt and professional assistance because of which I have opportunity to understand the technical aspects and appreciate the rich professional culture more carefully. Surendra Kumar Saini
  • 3. DECLARATION I, Surendra Kumar Saini student of B.B.A [2008-2011], MJRP University Jaipur. Here by declare that this project report titled “Global Marketing” has been originally prepared by me and pertains to my original work done during the summer training tenure, for “National Engineering Industries Ltd., Jaipur “. One copy of this project report has been submitted to NEI other than that this report has not been submitted to any other organization. Surendra Kumar Saini
  • 4. OBJECTIVE “To Identify the various aspects of marketing of bearing in Global Market & associate the opportunity in South African Market”. • South Africa's automotive industry South Africa's automotive industry is a global, turbo-charged engine for the manufacture and export of vehicles and components. The
  • 5. sector accounts for about 10% of South Africa's manufacturing exports, making it a crucial cog in the economy. With annual production of 535 000 vehicles in 2007, expected to rise to 630 000 in 2008, South Africa can be regarded as a minor contributor to global vehicle production, which reached 73-million units in 2007. But, locally, the automotive sector is a giant, contributing about 7.5% to the country's gross domestic product (GDP) and employing around 36 000 people. The government has identified the automotive industry as a key growth sector, with the aim of increasing vehicle production to 1.2- million units by 2020, while significantly increasing local content at the same time. • Growth • Investment • Ford, GM, Mercedes-Benz, Toyota, VW ... • Motor Industry Development Programme • Competitive advantages • Auto component manufacturers • Spoilt for choice Growth South Africa has been one of the best performing automobile markets in the world in recent years. New vehicle sales figures soared to record-breaking levels for three years in succession, from 2004 to 2006. In 2006, sales increased by 14.4% to just under 650 000 units, generating revenue of R118.4-billion. Sales dropped by 5.4% in 2007, and are expected to drop further in 2008 as higher interest rates and rising prices curb spending. However, major export programmes are likely to keep the local industry buoyant. Vehicle exports were around 170 000 units in 2007, and the National Automobile Association of South Africa (Naamsa) expects this to jump to 285 000 in 2008. This is extraordinary growth, especially when compared to 1997, when the number of units exported was below 20 000. South Africa currently exports vehicles to over 70 countries, mainly Japan (around 29% of the value of total exports), Australia (20%), the
  • 6. UK (12%) and the US (11%). African export destinations include Algeria, Zimbabwe and Nigeria. Investment All of the major vehicle makers are represented in South Africa, as well as eight of the world's top 10 auto component manufacturers and three of the four largest tyre manufacturers. Many of the major multinational companies use South Africa to source components and assemble vehicles for both the local and overseas markets. Between 2000 and 2006, the industry's investment in production and export infrastructure quadrupled, from R1.5-billion to R6.2-billion, before slowing to R3-billion in 2007. Capital investment is expected to be around the R4-billion mark in 2008. Most of this has been foreign investment, with the parent companies of local car manufacturers expanding local operations to improve production capacity, export facilities and supporting infrastructure. All of the large manufacturers in the country have launched major export programmes in recent years - the latest (in January 2008) being Ford Motor Company of South Africa. Ford, GM, Mercedes-Benz, Toyota, VW ... Ford In January 2008, Ford Motor Company of Southern Africa announced plans to invest more than R1.5-billion to expand its operations in South Africa for the production of Ford's next-generation compact pickup truck and Puma diesel engine. The local arm of the US car giant said the new investment would start in 2009 and be split between its assembly plant in Silverton, Pretoria and engine facility in Struandale, Port Elizabeth, with most of the vehicles produced earmarked for export.
  • 7. GeneralMotors General Motors South Africa, which is based in Port Elizabeth in the Eastern Cape, markets the brands Chevrolet, Opel, Isuzu, Saab, Cadillac and Hummer. In 2005, the company was awarded a six-year contract to assemble and export the Hummer H3, resulting in a US$100-million investment in its Struandale plant. GM South Africa is building a new multimillion-rand vehicle conversion and distribution centre and is investing another R481-million in its operations, upgrading its production facilities and tooling in 2008. Mercedes-Benz Mercedes-Benz South Africa manufactures Mercedes-Benz and Mitsubishi vehicles at its manufacturing plant in East London in the Eastern Cape. The company's headquarters are located in Gauteng province, from where the Mercedes-Benz, smart, Maybach, Mitsubishi Motors, Freightliner, Western Star and FUSO brands are marketed and financed. Mercedes-Benz SA recently spent about R2-billion on upgrading its manufacturing plant, and now produces both right- and left-hand drives versions of the latest Mercedes-Benz C-Class car for domestic and export markets. Toyota Toyota South Africa recently completed a five-year, R2.4-billion modernisation and revitalisation programme. Its Prospecton facility, just south of Durban, is now one of the most technologically advanced Toyota facilities in the world outside of Japan, and is capable of producing around 220 000 units a year. As a global production facility, Toyota South Africa has transformed from a purely local supplier into an effective export base to supply vehicles into markets in Europe and Africa. The company, which exports to more than 40 destinations, says it expects to export around 140 000 units in 2008, or almost 60% of total automotive exports from South Africa.
  • 8. Volkswagen Volkswagen South Africa is located at Uitenhage near Port Elizabeth in the Eastern Cape. In 2007, the company celebrated its 56th anniversary in South Africa - and its 2.5-millionth vehicle off the production line. It is a local leader in the passenger market, accounting for around 21% of all new vehicle sales. Between 2000 and 2008, Volkswagen South Africa invested around R6-billion in new models, a new paint shop and a new truck and bus assembly plant. Motor Industry Development Programme The catalyst for this phenomenal growth has been the government's Motor Industry Development Programme (MIDP). Introduced in 1995, the programme is legislated until 2009 and will be gradually phased out until 2012. The MIDP has boosted exports by enabling local vehicle manufacturers to include total export values as part of their local content total, then allowing them to import the same value of goods duty-free. This has allowed auto makers to concentrate on manufacturing certain vehicles or components for export, while importing other models. The programme also grants a production-asset allowance to vehicle manufacturers that invest in new plants and equipment, giving them 20% of their capital expenditure back, in the form of import-duty credits, over a period of five years. The government plans to introduce a successor to the MIDP, which will be aimed aimproving the domestic value chain. The new programme, which will last until 2020, will focus on value addition while being consistent with South Africa's multilateral obligations. It is likely to take the form of a subsidy to production. The Department of Trade and Industry says the new support programme will result in more jobs as well as the long-term sustainability of the industry. The plan will support production and investment plans that "intend to reach a minimum volume of output for each platform of 50 000 units a year within a reasonable period of time".
  • 9. Competitive advantages South Africa's automotive industry offers a number of competitive advantages to international concerns. These include a world-beating cost ability on short- or low-volume runs, competitive tooling costs, and a high degree of manufacturing flexibility. The local industry also has good access to southern hemisphere and African markets. The South African industry boasts several unique technologies, such as differential locks for off-road vehicles, aluminium welding technology for radiators, and the ability to design components, such as air cleaners and air conditioners that can cope with the higher temperatures and dust levels in Africa. The country's first-world production facilities are coupled with access to raw materials and relatively cheap electricity, as well as stable transport and telecommunications infrastructure. The Automotive Industry Development Centre and the Gerotec testing centre near Pretoria are world-class facilities for research, design, testing and training. New investment opportunities are being created for the industry by the introduction of free trade agreements with the European Union and the South African Development Community, as well as the US government's African Growth and Opportunity Act. Auto component manufacturers There are more than 200 automotive component manufacturers in South Africa, and upwards of another 150 that supply the industry on a non-exclusive basis. The component industry has a turnover of about R50-billion, or approximately 2% of the country's GDP, and is looking to strong growth as export potential continues to increase. South Africa exported R30.3-billion worth of auto components in 2006, a 32% increase over 2005. Catalytic converters continued to be the country most exported vehicle part, accounting for almost half of all componenexports. Other key exports include engines, silencers and exhausts, radiators, wheels and tyres, stitched leather car seat covers, car radios and sound systems, and axles, especially for heavy trucks.
  • 10. Germany, Spain, the UK, the US, France and sub-Saharan Africa are the leading destinations for South African auto parts exports. Spoilt for choice There are a "staggering" 1 390 variants of cars, recreational vehicles and light commercial vehicles on South Africa's showroom floors, according to a report by business website Fin24.com. The choice available has more than doubled over the past 10 years. In 1997, soon after the re-entry of Alfa Romeo, Renault and Chevrolet into South Africa - and when locals first got a taste of Mahindra, SsangYong, Dacia, Kia, Hyundai, Daewoo, Saab and Subaru - there were 37 manufacturers offering 595 different models. Since then, Bentley, Cadillac, Citroën, Dodge, Maybach, Mini, Proton, TVR, GWM, Lexus and Tata have established dealerships in South Africa, either independently or by joining forces with established distributors and related group companies. However, despite the new entrants, the majority of South African buyers tend to choose the well known, established brands such as Toyota, Volkswagen, Ford, Mazda and BMW. These brands together still account for more than 80% of new vehicle sales in the country.
  • 11. Competitive Environment and International Business EXTERNAL INFLUENCES OPERATIONS PHYSICAL AND SOCIETAL FACTORS OBJECTIVES COMPETITIVE ENVIRONMENT • Major advantage in price, STRATEGY marketing, innovation, or other factors • Number and comparative capabilities of competitors • Competitive differences by country MEANS 1-11
  • 12. The Usual Pattern of Internationalism Internal versus Impetus for HIGH external handling of international A foreign operations business B Active search MEDIUM Company handles for opportunities its own foreign operations Passive LOW Other firms response to handle external proposals Domestic contracts Business Limited foreign Moderately production and Quite Limited similar multiple functions similar foreign Mode of E Very One functions, operations Degree of Extensive C dissimilar usually similarity Several production export/ between abroad with import foreign and FDI and all Many domestic functions countries D Number of foreign countries in which a firm does business 1-13
  • 13. Chapter Preview • List each key factor to assess in national business environments • Discuss measuring potential in emerging and industrialized markets • Identify three key market research difficulties • Explain the usefulness of each secondary data source • Describe each method of primary research
  • 14. Identify Basic Appeal Basic Basic Available Available demand demand resources resources ••Climate Climate ••Labor Labor ••Absolute bans Absolute bans ••Materials Materials ••Financing Financing
  • 15. National Forces: Political/Legal Government regulation  Investment barriers  Profit repatriation Government bureaucracy  Administrative delays Political stability  Unforeseen political change
  • 16. National Forces: Economic/Other  Country finances  Trade and investment policies  Currency and liquidity  Logistics  Country image
  • 17. National Forces: e-Business Infrastructure, market access  Internet access  Content and standards Legal matters  Privacy and security  Intellectual property Financial issues  Electronic payments  Tariffs and taxation
  • 18. Potential: Industrialized Markets  Demographics  Competitors’ market shares  Import/Export volumes  Distribution network  Marketing approaches  Retail sales levels  Income elasticity
  • 19. Department of Commerce Export Import Data Bank Import :: Country-wise Dated: 27/6/2008 Values in US$ Million 2007-200 2006-200 S.No. Country %Share 8(Apr- %Share %Growth 7 Jun) 1. SOUTH AFRICA 2,469.73 1.3306 1,008.98 1.7847 185,604.1 India's Total Import 56,535.40 0 Exchange rate: 2006-2007: 1US$ = Rs. 45.2849 2007-2008(Apr-Jun) : 1US$ = Rs. 41.2344
  • 20. Potential: Emerging Markets  Market size  Market growth rate  Market intensity  Market consumption capacity  Commercial infrastructure  Economic freedom  Market receptivity  Country risk
  • 21. Select the Market or Site Field trips • Engage in negotiations • Gain firsthand exposure • Contact customers/others Competitor analysis • Access to inputs • Competitors’ numbers/shares • Competitors’ strategies • Channel access • Customer loyalty
  • 22. Market Research Difficulties Availability Comparability Cultural of data of data problems
  • 23. Secondary Data Sources International organizations Government agencies Industry/Trade associations Service organizations Internet and World Wide Web
  • 24. Methods of Primary Research Trade shows and missions Interviews and focus groups Surveys Environmental scanning
  • 25. Review • List each key factor to assess in national business environments • Discuss measuring potential in emerging and industrialized markets • Identify three key market research difficulties • Explain the usefulness of each secondary data source • Describe each method of primary research
  • 26. Comparison of Foreign Market Entry Modes Conditions Favoring this Mode Advantages Disadvantages Mode Limited sales potential in target country; little product Trade barriers & adaptation required Minimizes risk and tariffs add to costs. investment. Distribution channels close Transport costs to plants Speed of entry Exporting Limits access to local High target country Maximizes scale; information production costs uses existing facilities. Company viewed as Liberal import policies an outsider High political risk Import and investment barriers Lack of control over Minimizes risk and use of assets. Legal protection possible in investment. target environment. Licensee may become Speed of entry competitor. Licensing Low sales potential in target country. Able to circumvent Knowledge spillovers trade barriers Large cultural distance License period is High ROI limited Licensee lacks ability to become a competitor. Joint Import barriers Overcomes Difficult to manage Ventures ownership Large cultural distance restrictions and Dilution of control cultural distance Assets cannot be fairly Greater risk than priced Combines resources exporting a &
  • 27. High sales potential of 2 companies. Some political risk licensing Potential for learning Government restrictions on Knowledge spillovers foreign ownership Viewed as insider Partner may become a Local company can provide Less investment competitor. skills, resources, required distribution network, brand name, etc. Greater knowledge Import barriers Higher risk than other of local market modes Small cultural distance Can better apply Requires more specialized skills Direct Assets cannot be fairly resources and Investment priced commitment Minimizes knowledge spillover High sales potential May be difficult to manage the local Can be viewed as an Low political risk resources. insider
  • 28. SOUTH AFRICA ECONOMY SYSTEM Economy SA recession unlikely: Old Mutual Despite gloomy forecasts for inflation and economic growth over the next 12 to 24 months, Old Mutual believes South Africa is unlikely to experience a recession, due to strong public and private sector investment, as well as fast-growing consumption spending by the country's public sector. Infrastructure World-class infrastructure - including a modern transport network, low-cost energy, and sophisticated telecommunications facilities. Key sectors Manufacturing, automotive, tourism, finance, agriculture, ICT and electronics ... South Africa's economic sectors are primed for growth. Economic policies South Africa's macroeconomic policies, regulatory institutions, financial system and controls, labour legislation, latest budget statements, and more. Economic development Job creation, skills development, urban regeneration ... South Africa is on an economic development drive.
  • 29. South Africa's automotive industry • South Africa's automotive industry is a global, turbo-charged engine for the manufacture and export of vehicles and components. The sector accounts for about 10% of South Africa's manufacturing exports, making it a crucial cog in the economy. Manufacturing in South Africa South Africa has developed an established, diversified manufacturing base that has shown its resilience and potential to compete in the global economy. The manufacturing sector provides a locus for stimulating the growth of other activities, such as services, and achieving specific outcomes, such as employment creation and economic empowerment. This platform of manufacturing presents an opportunity to significantlyaccelerate the country's growth and development. Manufacturing in South Africa is dominated by the following industry: • Automotive Automotive industry The automotive industry is one of South Africa's most important sectors, with many of the major multinationals using South Africa to source components and assemble vehicles for both the local and international markets. Despite its distance from some of the major markets Africa, and particularly South Africa, produces high quality products at prices competitive with other automotive manufacturing and assembly centres. The South African automotive and components industry is growing rapidly and is perfectly placed for investment opportunities. Vehicle
  • 30. manufacturers such as BMW, Ford, Volkswagen, Daimler-Chrysler and Toyota have production plants in the country, while component manufacturers (Arvin Exhust, Bloxwitch, Corning, Senior Flexonics) have established production bases in the country. The industry is largely located in two provinces, the Eastern Cape (coastal) and Gauteng (inland). Companies with production plants in South Africa are placed to take advantage of the low production costs, coupled with access to new markets as a result of trade agreements with the European Union and the Southern African Development Community free trade area. Opportunities also lie in the production of materials (automotive steel and components). South Africa's aim is to become an automotive investment destination of choice. Modernisation and upgrading of key elements in the automotive industry are required to keep pace to achieve international competitiveness. Interest rates are currently at historic low levels, reducing the cost of investments. It is significant to note that most major multinational vehicle manufacturers are currently represented in SA, which means that international developments also impact on the country. The outlook for the vehicle industry is bright in terms of both exports and the domestic market. A key challenge will be to raise local content, particularly in the vehicles now being exported in large volumes. • National Association of Automobile Manufacturers of SA • Automotive Industry Export Council Automotive Industry Development Centre . • Following four successive record years, domestic new vehicle sales during 2007 fell principally on the back of substantially lower new car sales and, during the last quarter, progressive weakness in light commercial vehicle sales. For the year as a whole, primarily due to weakness in the new car market, NAAMSA reported sales had declined by 33 859 units or 5,2% to 612 707 vehicles compared to the 646 707 units sold during 2006. NAAMSA annual industry sales by sector, for the past four years, were as follows –
  • 31. 2007/2006 Sector 2003 2004 2005 2006 2007 % Change Cars 247 259 301 151 376 845 426 822 384 411 - 9,9% Light Commercials 104 884 127 629 160 723 186 664 191 227 + 2,4% Medium 12 243 15 168 + 6,5% 6 372 8 636 14 246 Commercials Heavy Commercials/ 15 163 21 901 + 16,3% 9 955 12 178 18 834 Buses Total Vehicles 368 470 449 594 564 974 646 566 612 707 - 5,2% Sales of new vehicles not reported in detail through NAAMSA added 63 390 units (2006 : 67 759 units) to the 2007 figures comprising 50 222 cars and 13 168 light commercial vehicles. This effectively translates into a 2007 aggregate South African domestic new vehicle market of 676 097 vehicles – which represents a decline of 5,4%, in aggregate terms, compare to total industry sales of 714 325 units in 2006. Despite the year on year decline, the industry’s 2007 overall sales represented the second highest annual sales total on record. Over the past four years (2004 – 2007), nearly 2,5 million new vehicles were sold in South Africa compared to about 1,5 million vehicles sold over the previous four years (2000 – 2003). Currently, South Africa’s vehicle population was in excess of 8 million vehicles. 2007 industry export sales figures, compared to the previous three years, were as follows – 2004 2005 2006 2007 2008 Projection Cars 100 699 113 899 119 171 106 485 180 000 Light Commercials 9 360 25 589 60 149 64 128 75 000 Medium, Heavy Trucks and 448 424 539 647 750 Buses Total Exports 110 507 139 912 179 859 171 260 255 750 2007 industry exports at 171 260 vehicles reflected a decline of 8 599 vehicles or 4,8% compared to the 179 859 vehicles exported in 2006. The fall was primarily due to the fact that the Mercedes-Benz factory in East London had been refurbished during the year and as a result no vehicles had been produced for export for about five months during 2007.
  • 32. South Africa has established itself as a centre of growth in Africa and is on target to become an increasingly important part of the global automotive industry. South Africa’s track record as a manufacturer and supplier of vehicles and automotive components has been firmly established over recent years. For 2008, industry export sales were projected to exceed 255 000 vehicles. The projected substantial increase in exports of South African produced motor vehicles would boost the industry’s total domestic production from 542 000 vehicles in 2007 to about 620 000 vehicles in 2008. Policies · State boost for local industry The Department of Trade and Industry is working with state-owned enterprises to build the competitiveness of South African suppliers, to ensure they reap the benefits of the massive infrastructure spending programme under way in the country. How the world rates South Africa Despite a fair amount of local scepticism - brought on partly by political uncertainty and the energy crisis - South Africa is maintaining its strong showing in world rankings, with
  • 33. a series of recent international reports highlighting and supporting the country's strengths as an investment destination. Budget: SA 'stays the course' Despite a 0.5% drop in projected GDP growth for 2008/09, Finance Minister Trevor Manuel has once more unveiled a "sunny" Budget for South Africa, announcing another surplus, lowered taxes and increased spending as the government moves to tackle skills and infrastructure constraints. Non-compliant listed companies targeted The South African government is to embark on a drive within the next few weeks to ensure that companies listed on the JSE comply fully with employment equity legislation, with the offenders being taken to the Labour Court. BUDGET 2008/09 South Africa 'stays the course' Despite a 0.5% drop in projected GDP growth for 2008/09, Finance Minister Trevor Manuel unveiled a "sunny" Budget for South Africa, announcing another surplus, tax cuts and increased spending to tackle skills and infrastructure constraints. Entry mode in South African market • Regulations for importers South Africa is a member of the World Trade Organization (WTO) and follows the Harmonized System (HS) of import classification.
  • 34. There is free exchange of trade between South Africa and the other four countries (Botswana, Lesotho, Namibia, and Swaziland) comprising the Southern African Customs Union (SACU). There will also be substantially free trade between South Africa and the European Union by 2008 as a result of a Free Trade Agreement. The Southern African Development Community (SADC) Free Trade Agreement should also allow the free exchange of goods among the 14 countries of the region when it comes into full effect. Traders are subject to exchange control approval, administered by the South African Reserve Bank. The Department of Trade and Industry is also empowered to regulate, prohibit or ration imports to South Africa in the national interest but most goods may be imported into South Africa without restrictions. Import permits are required only for specific categories of goods and are obtainable from the Director of Import and Export. Importers must possess an import permit prior to the date of shipment. Failure to produce a required permit could result in the imposition of penalties. A summary of main import regulations are: • Certain goods imported into South Africa require an import permit, which may be obtained from the Director of Imports and Exports Control. • The list of goods requiring import permits is specified each year in the annual Import Control Program. • Permits are valid for imports from any country. • Foreign Trade Zones: No Foreign Trade Zones or Free Ports are established in South Africa. • South Africa uses the Harmonised System of Classification. • Samples are dutiable unless they are cut samples of cloth, leather, linoleum and wallpaper in book form and not for distribution as advertising matter. Samples that have no commercial value because of mutilation in some way are also allowed duty-free access. • The South African Government has viewed countertrade as a second-best alternative to be engaged in only when normal trade cannot be conducted. • Bonded warehouses are available at various points of entry. • South African banks can accommodate all international transactions and are situated throughout the country.
  • 35. General rebates of duty are available for specific situations, and duties may be rebated on goods on re-export. • The Reserve Bank plays a pivotal role in the economic and financial sectors. • Some imports may require permission from the Department of Agriculture, Health or Environment Affairs. • Specific excise taxes are levied on alcoholic and non-alcoholic beverages, tobacco and tobacco products, mineral waters, some petroleum products and motor vehicles. South Africa is an adherent to the Customs Valuation Agreement negotiated under GATT/WTO. The dutiable value of goods imported into South Africa is calculated on the F.O.B. price in the country of export. In conformance with its WTO commitments, South Africa has lifted import surcharges. Trade with South Africa Trade relations South Africa participates in a number of preferential trade relationships, both regional and bilateral. It was a founding member of the General Agreement on Tariffs and Trade (1947), and is an active member of the World Trade Organisation. Trade with SA: who can help South African chambers of commerce and industry, foreign chambers in SA, and other trade and business organisations geared to offer assistance. • | Distribution & sales in South Africa South Africa offers foreign suppliers a variety of methods to distribute and sell their products, including using an agent or distributor, selling through established wholesalers or dealers, selling directly to department stores or other retailers, or establishing a branch or subsidiary with its own sales force.
  • 36. Wholesalers Consumer goods requiring maintenance of stocks and industrial raw materials are often exported to South Africa through established wholesalers. • Retail organisations Many exporters of consumer goods sell directly to South African retail organisations - including consumer corporations, department stores, chain stores, and co-operative groups of independent retailers - which assume the functions of wholesale buying, selling and warehousing. • Consumer retail South Africa offers the full spectrum of retail outlets: neighborhood convenience stores; small general dealers; specialty stores handling a single product line (such as clothing, electronics, or furniture); exclusive boutiques; chain stores (groceries, clothing, toiletries, household goods); department stores; cash and carry wholesale- retail outlets; and co-operative stores serving rural areas. About 90% of the consumer trade inventories of these stores are domestically sourced. A major phenomenon in South Africa has been the evolution of supermarketes or hypermarkets, which sell large quantities of almost all consumer goods on a self-serve basis. The hypermarkets, located in suburban shopping centres, have disrupted the traditional distribution chain by purchasing directly from manufacturers and bypassing the wholesaler, with low margins achieving high turnover, thereby placing price pressure on all competing outlets. • After-sales agents For products of a technical nature, it maybe necessary to appoint an official after-sales agent in South Africa. This may be a company that does not import or market the product in question, but rather, because of its geographical reach, technical ability and goodwill in the market, acts as the certified service agent. Appointing an appropriate after sales agent is crucial in ensuring that the product develops a respected reputation in the South African market. The US Commercial Service's Country Commercial Guide South Africa 2003 offers more information on selling factors and techniques.
  • 37. Agents & distributors In South Africa, the terms "agent" and "distributor" have a very specific meaning. Agents. In the strict legal sense, "agent" means a person who, for and on behalf of a principal, either introduces a third party to the principal by soliciting orders from the third party, or concludes contracts with the third party on behalf of the principal. The normal reward for an agent is a commission, which is received from the principal. Key considerations in appointing an agent in South Africa are: • You need to appoint an agent who knows your market well. The South African business sector is relatively small, and companies have established methods of procurement that differ from sector to sector. • You need to consider national distribution. South Africa is a large country, with nine provinces. Smaller agents tend to operate provincially, as they do not have the infrastructure to support operations in other provinces. You may need to appoint an agent in each of the larger cities - Johannesburg, Cape Town, Port Elizabeth and Durban - to cover each of the respective provinces. Larger companies who take on agencies often have an office in each of the major centres, making any agency agreement easier to control. • For certain products, South Africa is a trading hub for the southern African region, and you need to consider whether your South African agent should handle business in these countries on your behalf. Distributors. A distributor buys and holds stock of a product. In return, s/he is usually granted an exclusive right to sell the product in a particular area or to a particular type of customer. An agreement with a distributor is similar to an agreement with an agent, except that price and delivery terms will differ because the distributor is a principal. When appointing a distributor in South Africa, the same considerations apply as when appointing an agent.
  • 38. • Various Bearing companies in South africa • Company Profile The SKF Group is the leading global supplier of products, customer solutions, and services in the business of rolling bearings and seals. The Group's main competencies include technical support, maintenance services, condition monitoring and training. SKF also holds an increasingly important position in the market for linear motion products, as well as high precision bearings, spindles and spindle services for the machine tool industry and lubrication systems. The SKF business is organized into three divisions; Industrial, Automotive and Service. Each division serves a global market, focusing on its specific customer segments.
  • 39. SKF has 100 manufacturing sites distributed all over the world. With its own sales companies in 70 countries, supported by some 15 000 distributors and dealers worldwide, its e-business marketplace and global distribution system, SKF is always close to its customers for the supply of both products and services. SKF supplies the following products: • Ball and Roller Bearings • Needle Roller Bearings • Ball Bearings Units • O-Rings • Bearings Bushes • Piston Seals • Bearings Housings • Precision Bearings • Bearings Seals • Radial Shaft Seals • Combined Needle Roller • Rod Seals Bearings • Roll End Bearings • Cylindrical Roller Bearings • Roller Ball Bearings • Cylindrical Roller Thrust • Shaft Seals Bearings • Slewing Bearings • Deep Groove Ball Bearings • Slewing Rings • Double Row Deep Groove • Spacing Washers Ball Bearings • Spherical Bushings • Hybrid Bearings • Spherical Roller Bearings • Hydraulic Seals • Spherical Roller Thrust • Industrial Shaft Seals Bearings • Linear Ball Bearings • Taper Roller Bearings • Magnetic Bearings • Taper Roller Thrust Bearings • Mechanical Seals • Thrust Ball Bearings • Mechanical Shaft Seals • Y-Bearings • Mechatronic Bearings Units • Needle Roller Ball Bearings
  • 40. Creating stable processes Six Sigma is about creating stable processes Design for Six Sigma and Lean Six Sigma Six Sigma at SKF has been extended to incorporate Design for Six Sigma (DfSS) and Lean Six Sigma besides the well established traditional Six Sigma. Awarding work During the year of 2006, SKF received a number of awards and forms of recognition for its work with Six Sigma. NSK South Africa (Pty) Ltd
  • 41. Products & Services Mechanical > Bearings, Bushes & Wheels > • Automotive Bearings • Ball and Roller Bearings • Ball Bearing Units • Bearing Grease • Conveyor Bearings • Hanger Bearings • Linear Way Bearings • Needle Roller Bearings • Pillow Block Bearings • Plane Bearings • Plummer Blocks • Rod and Spherical Bearings • Roll End Bearings • Screw Conveyor Bearings • Screw Conveyor Hanger Bearings • Self Lubricating Bearings • Sleeve Bearings • Slewing Rings • Split Roller Bearings • Steel Balls & Rollers • Super Precision Bearings • Taper Roller Bearings • Thin Section Bearings • Thin Walled Bushes • Turntable Bearings Power Transmission > Plain Bearings > • Air Bearings • Dry Bearings • Magnetic Bearings Power Transmission > Rolling Bearings > • • Ball Bearing Slewing Rings • Ball Bearings: Angular Contact Ball Bearings • Ball Bearings: Deep Groove Ball Bearings