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Johannesburg Business Profile
Johannesburg Business Overview - TravelPuppy.com
Despite the ongoing negative influences of the apartheid economic policies of the past, a high (but diminishing) crime rate, erratic oil prices and a low rand gold price, South Africa still has the strongest economy on the African continent. Indeed, the 40% appreciation of the rand against the United States dollar over the past year confirms this. Gauteng Province, of which Johannesburg is the capital city, supplies over 40% of South Africa’s Gross Domestic Product (GDP), while covering only 7% of its surface area. A sophisticated 1st world economy is exemplified by the JSE (Johannesburg Stock Exchange, recently renamed Johannesburg Securities Exchange), which is the 10th richest in the world.

A struggling 3rd world economy, however, coexists alongside, as shown by large squatter settlements in the city. Unemployment in Johannesburg is 30% up from 27% 3 years ago. There are 4,500 homeless people in Johannesburg. About 116,827 families live in shack settlements, whilst around 108,000 families live in illegal backyard shacks. Unemployment rates, at 36.4% in 2003, were still lesser than the national average, which stood at 40%.

Johannesburg is South Africa’s centre for all rail and road connections, it also has the chief container terminal at Kaserne and the busiest international airport. Greater Johannesburg and its neighboring areas attracts approximately 76% of foreigners visiting South Africa from the rest of Africa and 60% of those visit Johannesburg mainly to shop and look for capitalist opportunities, over and above leisure pursuits. Johannesburg is the economic epicentre of South Africa and the government has recognised that in order to attract domestic and foreign investment, it must essentially be a clean, functioning city.

Much of downtown Johannesburg has been victim of capital flight to the (perceived) safer, less overcrowded and cleaner suburbs and satellite towns, such as Midrand and Sandton. Indicative of this growing inner city decay is the fact that the JSE has recently followed the path of several major corporations, by migrating from the Central Business District (CBD) to Sandton, 10 kilometres (6 miles) north. Efforts are being made to attract investment back into the city centre and national rail provider Spoornet’s relocation here already suggests a degree of success. A programme labelled iGoli 2002, which aims to once more make the Central Business District secure and attractive to businesspeople and tourists alike, has been introduced. Managers are being put on performance contracts, while workers are being transferred to new, private enterprises that will run the several municipal services along business lines. This is being strongly opposed by unions, such as SA Municipal Workers Union (SAMWU), which has rejected the restructuring due to numerous jobs that will be lost.

Black Economic Empowerment and Affirmative Action are still debatable issues, both in the business and political arenas. Business is still largely dominated by white people, however, there are numerous black controlled groups on the JSE and several JSE stockbroker firms are black owned. Major black empowerment acquisitions include JCI and Johnnic (from Anglo American) and Zenex Oil (from the Zenex Trust). Several companies have well designed programmes of Affirmative Action, intended to correct the inequities of the past and accelerate the development of historically disadvantaged employees. However, others make ‘politically correct’ affirmative action appointments, which are very well paid but often secluded from real decision making.

Through its growth, employment and redistribution (GEAR) policy, the South African government has shown its dedication to privatisation, free trade and the fostering of a favourable investment climate. The heavy industry (Iscor Vanderbijlpark, AECI) and mining (Anglo American has its African head office in Johannesburg) sectors are fast being eclipsed by financial services (First National, Johannesburg Stock Exchange, ABSA, Barclays, Western Union and Standard banks), telecommunications (Vodacom, Telkom, MTN), retailing (Pick’n’Pay / Wooltru Holdings) and technology (PQ Holdings, IBM, Dimension Data). The tourism sector’s contribution to the Gross Domestic Products of South Africa (presently around 11%) continues to be damaged by crime. Throughout August 2003, figures show that a total of 160,470 foreign travellers visited South Africa by air alone (80% via Johannesburg International), down 3.5 % on the record 2002 figures.

The most successful way for one to become familiar with business practice and opportunity in Johannesburg is to contact the Johannesburg Chamber of Commerce and Industry (JCCI, founded in 1890). Their website is reliable, respected and informative. Detailed information and statistics regarding Johannesburg’s and the rest of South Africa’s business and economic climate can be found online, while the City of Johannesburg also publishes its procurement needs online.

Business Etiquette

The South African population is characterised by heterogeneity. This is more evident in cosmopolitan Johannesburg than anywhere else, where some areas have the feel of a large European city, while other parts are clearly 3rd world Africa. South Africa has 11 official languages, although English is the most largely used language in government (both national and provincial) and commerce. Normal business hours are 8.00 am to 5.00 pm, although not much happens after 3.00 pm on Fridays.

Although South African business people have, in the past, been regarded as quite conservative and formal in both manner and dress, the influence of newly empowered black entrepreneurs has introduced a business culture that is more informal, friendly and comfortable. Businessmen and women in Johannesburg tend to wear suits, although ethnic outfits are gradually more obvious. It can, however, become bitterly cold during winter and extremely hot during summer and in this part of South Africa, so this should be taken into account, lightweight materials in the warm months (October to April) and heavy overcoats for the cold period (May to September).

Punctuality is still highly prized and it is recommended to address hosts as ‘Mr’ or ‘Ms’ until requested to use 1st names, which generally happens soon after the formal greetings. The triple handshake is usual among black businesspeople, although, even in these situations, the standard handshake may well take preference with an international visitor. Gifts are not expected in either social or business situations. Business cards are often exchanged where businesspeople meet informally, such as in airport lounges, hotel lobbies and at product launches. Most initial business related social contact is along the lines of ‘let’s do lunch,’ while dinner and breakfast appointments are far less regular.