Factors That Affect Sustained Profitability In The Textile Industry Of Tshwane

Abstract

The textile industry of the City of Tshwane has been overwhelmed by cheap imports from countries such as China, India, Pakistan, Bangladesh, Malaysia, South Korea and Vietnam. Although support is provided to black entrepreneurs in the textile industry of Tshwane by institutions such as the South African National Department of Trade and Industry and the South African Small Enterprise Development Agency, local textile businesses are unable to compete favourably with foreign manufacturers, importers and distributors. The textile industry is a key contributor to the South African GDP and employs about 5% of the South African workforce. One of the key priorities of the City of Tshwane is to transform the textile industry of Tshwane so that it provides sustainable livelihood and career opportunities to black indigenous South Africans. A descriptive, cross-sectional study design was used for collecting data from a stratified random sample of size 250 textile businesses operating in the five geographical zones of Tshwane. One of the aims of the study was to assess the veracity of the theory proposed by Bansal and DesJardine (2014) in which the authors have argued that changing global circumstances would compel local industries to adapt to global changes at local level as a means of sustained survival. Data analysis was performed by using Structural Equations Modelling (SEM). The results showed that sustained viability in textile businesses was significantly influenced by the degree of entrepreneurial skills, the ability to secure loan needed for operation, and the ability to order merchandise in bulk on credit from suppliers, in a decreasing order of strength. About 32% of business operators had adequate entrepreneurial skills based on the composite index developed by Ács, Szerb and Autio (2011). A repeat of the same study as a 5-yearlong study is recommended in order to estimate theoretically reliable predictors such as hazard ratios for factors that are known to affect viability in the local textile industry.