South Africa - Country Commercial Guide
Selling Factors and Techniques

Identifies common practices to be aware of when selling in this market, e.g., whether all sales material need to be in the local language.

Last published date: 2021-09-11

Overview

Tools Introducing new products to the South African market requires extensive market research and mass advertising to identify potential customers’ buying patterns and preferences.  This applies particularly to unknown brand names, as South Africans are very brand conscious. The market is highly fragmented and good knowledge of market segmentation is required to understand where and how to place new products. One of the tools employed by some South African marketers is the SEM or Socio-Economic Measure https://brcsa.org.za/wp-content/uploads/2019/02/SEM-User-Guide.pdf which scores households and individuals according to what items they have in their households and what public services they have access to.

Consumer Protection Act Amendments to the Consumer Protection Act (CPA), effective since 2011, have changed many aspects of business in South Africa by introducing new legislation concerning manufacturers and service providers.  This legal framework aims to protect the consumer through controls on product liability, sales and marketing practices, and fairness in consumer contracts, among other issues.  The CPA shifts the burden of proof from the consumer to the supplier.  Importantly, the CPA also provides the same consumer protection status to a franchisee in relation to the franchisor.

Privacy The introduction of the Protection of Personal Information Act (POPIA -  https://popia.co.za) will also have an impact on direct marketing or ‘cold calling’ as companies will no longer be able to share customer information without prior consent and will also be responsible for the secure and correct storage of their customers’ personal information.

Promotions One way of launching a new product in South Africa is by exhibiting at a trade show.  Promotional “giveaways” are also very popular.  An editorial and/or advertisement in a specialized trade publication will also enhance awareness of the product.  Although South Africa has eleven official languages, English is the typical language of printed promotional materials.

1-to-1 Direct sales to individuals on a personal, one-on-one basis by freelance agents are becoming a growing niche market industry in South Africa.  Examples of products sold in this way include costume jewelry, plastic containers, lingerie and personal products, and personal health and herbal type products.

Associations Thanks to the mature nature of the SA economy, there are many industry associations that range from employers’ interests’ groups, to equipment importers, to professional service providers. Teaming up with an association is useful and in strategic sectors, often imperative.

Trade Promotion & Advertising

Agencies South Africa has a sophisticated advertising industry. Advertising agencies provide a full range of services. Larger-sized agencies are subsidiaries of prominent international agency groups. Major media outlets include television, radio, newspapers and magazines, outdoor advertisements, cinema, and the Internet. The deregulation of the airwaves has introduced more competition through additional independent television channel and radio stations.

The key figures in South Africa’s advertising industry are:

  • the Association for Communication and Advertising (ACA)  
  • the two major media bodies, the National Association of Broadcasters (NAB)
  • and the Print Media Association (PMA) and
  • the Advertising Standards Authority of South Africa (ASA), which regulates South African advertising standards.

Commissions Advertising agencies in South Africa are no longer solely remunerated by clients on a commission system. Fee arrangements are becoming increasingly common and specialist media buying companies are taking a growing market share of media purchases in South Africa.  Customarily, the various media offer 16.5 percent commission to recognized advertising agencies, provided payment is made within the stipulated 45-day period. Additional information can be obtained from the following entity:

Advertising Standards Authority of South Africa (ASASA)

Willowview, Burnside Island Office Park

410, Jan Smuts Avenue, Craighall Park, Johannesburg

Tel:  +27 (0)11 781 2006; Fax: +27 (0)11 781 1616

Names and addresses of major advertising agents, newspapers, magazines, market research companies, and public relations consultants along with their current rates, can be found in the Advertising and Press Annual of South Africa available from:

Infixion Media (PTY) Ltd.

Tel: +27 (0)11 877-6111

Major English-language South African newspapers include:

  • Business Day                        
  • The Star                                 
  • The Citizen                             
  • The Sowetan                          
  • The Times                             
  • Mail and Guardian               
  • Sunday Independent

Major English-language periodicals for business include:

  • Financial Mail                      
  • Engineering News             

Trade Shows Several trade exhibition firms operate in South Africa. The Exhibition Association of Southern Africa (EXSA) provides an overview of the Exhibitions and Trade Shows being held in South Africa.

You can also visit the Commercial Service South Africa’s website for links to upcoming trade events and business service providers at: https://www.trade.gov/south-africa.

Pricing

Determinants Prices are generally market-driven, except for petroleum products, certain agricultural goods, and prices administered by SOEs. South Africa applies a 15 percent Value Added Tax (VAT) (as opposed to General Sales Tax) on all goods and services, except for some basic staple diet items.  Exports are zero-rated, and no VAT is payable on imported capital goods. In Industrial Development Zones (IDZ) there is a VAT suspension on imports and exports, provided the finished product is exported.

The South African Revenue Service (SARS), a division of the South African Department of Finance/Treasury, administers VAT:

SARS

Tel: +27 (0)12   422 4000

Fax: +27 (0)12 422 5181

website:   http://www.sars.gov.za

Sales Service/Customer Support

Customer Support In the South African consumer market, after-sales service is extremely important to prospective clients, especially in the case of technical and spare part services.  Many South African consumers base purchasing decisions on reliable after-sales service, especially for high-end luxury goods such as electronic equipment. Appointing a central distributor who stocks spare parts and provides maintenance and repair service is advisable for existing brands and new brands breaking into the market. As the South African market becomes more competitive, South African consumers are more concerned about quality and after-sales service. Foreign companies that bring strong customer support systems to this market will have a competitive edge.

Due Diligence

Proper due diligence information should form the starting base for any business negotiation with South African concerns. U.S. companies should act prudently in completing due diligence reports prior to any proposed business deals. The U.S. Commercial Service can provide valuable background information on South African firms through our International Company Profile (ICP) service. Further information can be obtained by visiting our website at    https://www.trade.gov/south-africa or by contacting your local U.S. Export Assistance Center or the U.S. Commercial Service directly in Johannesburg (see contact numbers at the end of this guide).

Corruption

Please see the section on corruption in the Investment Climate Statement of this document.

New-to-market U.S. companies should insist on extensive due diligence on order to minimize risks of new partnerships and transactions.

Local Professional Services

U.S. companies seeking legal representation in South Africa should contact the Commercial Service office in South Africa for a list of local attorneys.  For more specific information, please contact:

Law Society of the Northern Provinces

Tel: +27 (0)12 338 5800; Fax: +27 (0)12 323 2606

Principal Business Associations

South Africa has a myriad of business associations that wield varying degrees of regulatory influence. They act as think tanks, umbrella organizations, and special interest groups; some are keen to support accelerated socio-economic and political transformation of the South African economy.

Many of the leading business association are detailed here:

https://brandsouthafrica.com/

U.S. companies in South Africa are also actively encouraged to become members of the American Chamber of Commerce in South Africa, which has more than 250-member companies and represents the broad interests of more than 600 U.S. companies actively doing business in South Africa.  See www.amcham.co.za.

Limitations on Selling U.S. Products and Services

New-to-market U.S. exporters in general do not face a more onerous trading environment than would be the case for other foreign market players.  The same ascriptive government non-tariff barrier-based buying requirements affect all companies doing business in South Arica (exceptions are the European Union and the United Kingdom which have Economic Partnership Agreements with South Africa, commonly referred as a Free-Trade Agreement). The self-evident alternative for most foreign entities has been to team up with qualified local importer-resellers and service providers who act as the prime contractor to the South African Government and other large economic partners.

Resources

  • Association for Communication and Advertising                                            
  • Department of Trade, Industry and Competition (the dtic)                      
  • Exhibition Association of Southern Africa                                                    
  • Franchising Association of South Africa                                                         
  • Law Society of South Africa                                                                                                 
  • National Association of Broadcasters                                                              
  • Print Media Association                                                                                       
  • South African National Treasury                                                                      
  • South African Revenue Service