Black economic empowerment as a concept works when the lone consumer is not involved in the procurement decision.
Perhaps that was a little vague - what I mean is that the BEE status of a certain vendor/supplier/manufacturer etc is almost completely irrelevant to the average consumer. An example is the power failure we experienced yesterday (which strangely enough cannot be blamed on City Power). We had no power so we called our favourite electrician - Cooks Electrical. We use Cooks because they are good, reliable and reasonable. The last thing I would ever enquire about is their BEE status - I don't care, I want my electricity fixed. And I'm willing to be that every home-owner in this country feels the same way (including Zoomersheengat).
This same behaviour happens in my daily grocery and other purchases. I use Woolworths for certain things and Pick 'n Pay, Shoprite and Spar for other things. Never once have I ever bothered to enquire from the shop manager as to their BEE status - it has absolutely no bearing on whether I will shop there or not.
This factor has now been brought to the fore with the Walmart purchase of Massmart. There seems to be an issue with local procurement. (By the way - welcome back Lionel.)
Last week the deputy DG in trade & industry, Lionel October said in parliament, "We want to make a clear stand at the tribunal that [procurement] is an issue...It is not to prevent [Wal-Mart] from entering the South African market but to try and get a voluntary commitment from their side that they will try to procure locally.”
Massmart's CEO, Grant Pattison, took (vehement?) exception to this
“it would be against the tenet of the Competition Act to hold Massmart to procurement targets, but not the rest of the industry. If Massmart is held to that condition, and our competitors are not, then the one factory in SA that makes lawnmowers can sell us product that is 20% more expensive than others are importing them. “You cannot have asymmetric regulation. It’s terminal from a competition point of view.”
He is absolutely correct. It's a ludicrous concept - Massmart owns a bunch of retail/wholesale stores. This is where people like me come in and buy stuff for our personal and in some cases, business use. We shop there because we believe (often incorrectly) that we will find the best prices for what we are looking for. In order to cater for this, Massmart must negotiate the best price for each item.
If they are now forced to start procuring locally and the consumer does not like the product or the price then they won't buy it. They will probably head off to other stores to buy those products that Massmart used to sell.
The fact remains that BEE is irrelevant in the retail space and suppliers of consumer goods are probably very aware of this. There is no way that any of the retailers are going to stop purchasing from a supplier who provides goods that consumers want to buy because of their BEE status. And these consumers include the likes of jungle jim and all his ANC cronies.
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