Feature: Rainbow rising

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MEI takes a look at business opportunites and commercial protocol in South Africa, host of the 2010 FIFA World Cup.

South Africa is ultimately a nation of many facets. Its people, languages and cultures have experienced a turbulent history that turned the corner in the early 1990s with the end of apartheid. Since then, the South African government's goal has been to end racial discrimination and develop a unique 'Rainbow Nation' identity for its country based on being South African. In global terms, South Africa offers a unique and compelling package to overseas businesses and investors: the stability of a developed country, the opportunities of a vibrant emerging market, and a cultural climate that fosters growth. When it comes to conducting business in South Africa, according to the World Bank, South Africa is ranked 32 out of 181 economies in terms of ease of doing so in those markets. It requires six procedures, takes 22 days, and costs 5. 99% GNI per capita to start a business in South Africa. Although the South African government officially recognises 11 languages – Afrikaans, English, Ndebele, Pedi, Shangaan, Sotho, Tsona, Tswana, Venda, Xhosa and Zulu – English is the language of commerce. This commonality in language, as well as similar legal systems and business cultures between South Africa and the UK, means that the latter is one of South Africa's most significant trading partners with over £8bn in two–way trade in goods and services. In recent years, there has been significant investment in South Africa by household UK names such as Barclays Bank, Rolls Royce, Cadbury's, Vodafone, Virgin Mobile and Associated British Foods. This demonstrates that South Africa has enormous potential as an investment destination for UK companies and businesses from other nations, and with the 2010 FIFA World Cup in South Africa just around the corner, overseas companies are already active in the country in the build–up to the world's biggest sporting event. South Africa is designated as a High Growth Markets by UK Trade and Investment (UKTI), a UK–government funded organisation that helps UK businesses maximise opportunities in overseas markets. UKTI has identified five priority sectors in South Africa:• Agri–Technology • Education and Skills • Water and Environment • Power • Sports and Leisure Seven opportunity sectors have been identified in South Africa:• Advanced Engineering • Construction • Creative Industries • Financial Services • Life Sciences • Rail • AirportsDoing business in South AfricaSouth African people are, on the whole, fairly relaxed and informal in the business environment. When meeting South African business people, it is considered good form to engage in some personal dialogue based around one another's health, family, leisure time or sport. Getting straight down to business and rushing through these social niceties marks business people as ill–mannered and may cause them to be perceived as uninterested. Business cards are normal practice but little ceremony surrounds their exchange. The usual rules apply, i. e. treat the card with respect and store away properly rather than in a pocket. A short comment on the card is also polite. Generally speaking, South Africans are direct (and often loud) communicators but they are also very aware of what, how and to whom something is being said. People will be conscious of what may or may not make someone uncomfortable. The communication style is very much dependent on the level of a relationship; the closer people are the more comfortable they will be with speaking openly and honestly. Relationships in their infancy require more tact and diplomacy. Although South Africa is a transactional culture, meaning South Africans do not require a history with people in order to do business with them, they are a personable people that have deeply routed traditions. This means it if often a good idea to try and build a rapport as well as furnish counterparts with some background information about oneself or company. South Africans follow the European approach to personal space, meaning people keep their distance when speaking. Unlike Latin or Arab cultures they do not appreciate touching and invasion of personal space. South Africa is an ideal place for good conversation. South African people enjoy a lengthy chat on a number of subjects. Being an outdoor nation, South Africans love sport and this is always a good place to start when it comes to building a rapport. The most popular sports in the country are rugby, football and cricket. Other good topics of conversation include food, wine and international travel. Topics to avoid include comparing cities as people are very proud of their own cities and do not look kindly upon being told that another city is better. Business people are advised not to raise controversial subjects such as race relations or local politics. The legacy of 2010According to an economic impact study carried out by Grant Thornton, the 2010 FIFA World Cup was due to contribute at least R51. 1bn to the gross domestic product (GDP) of South Africa between 2006 and 2010, with the majority of this coming from construction and related activity. Grant Thornton estimates that construction jobs sustained by the event will amount to 218, 600 jobs and additional contribution to GDP as a result of hosting the tournament will amount to the equivalent of 116, 600 annual jobs. Tourism is the sector that will benefit most during the event. It is estimated that around 400, 000 people will visit South Africa for the FIFA World Cup. The potential for growth in this industry in Africa is significant–Africa still only garners 2% of the global travel and tourism market. For the first time, for 2010, FIFA will be contracting non–hotel accommodation, such as national parks, bed and breakfasts, lodges, backpackers and guesthouses, to ensure that the benefits of the tournament are spread more widely. Furthermore, hotel developments and resorts estimated at R20bn are being built across South Africa in the run up to 2010. However, benefits will not be confined to the construction and tourism sectors. Virtually all of South Africa's musicians and performers will be called upon to entertain a watching world in 2010 and South Africa's retail, design and property industries are gearing up to take advantage of 2010 opportunities. It is expected that 2010 spend and growth projected to flow from it will attract new investments from within and outside the country. Private sector fixed investment has grown by 72% and business confidence has increased by 16% since South Africa was named as the host nation for the 2010 World Cup in 2004. The real and meaningful benefits are only expected after 2010 in the form of rising asset prices, tourism and trade. The citiesNine South African cities will host FIFA World Cup games in 2010, namely Johannesburg, Durban, Cape Town, Mangaung – Bloemfontein, Tshwane – Pretoria, Nelson Mandela Bay–Port Elizabeth, Nelspruit, Polokwane and Rustenburg. Each has devised detailed plans around stadium provision, transport, accommodation, urban renewal and security. Importantly, all of the host cities have ensured that empowerment companies and small medium and micro enterprises benefit from 2010–related projects and that skills transfer takes place. Construction is taking place on five new stadiums, one major upgrade and four minor upgrades. At least 25 smaller stadiums are being upgraded for use as training grounds. A revolutionised public transport system is seen as one of the most important legacies that South Africa will secure from hosting the FIFA World Cup. Durban, Johannesburg, Cape Town and Tshwane are all spending well over a billion rand on public transport projects ahead of the FIFA World Cup with the smaller cities not far behind. The focus is on bus rapid transit systems, improved rail facilities, the integration of existing transport services, public transport lanes and on pedestrian and non–motorised transport facilities. The massive investment in football infrastructure will leave a lasting legacy for local football teams and for the areas in which they are situated. However, the 2010 FIFA World Cup is about more than football infrastructure, it is about youth programmes and grassroots development. A major part of the sports and recreation programme are the 'Leave a Legacy' projects. FIFA itself will host the Football for Hope Festival 2010 during the World Cup to highlight the social responsibility of football. The 2010 FIFA World Cup is expected to attract a cumulative television audience of 30bn people. So if 2010 does not put South Africa on the map, nothing will. It presents a significant opportunity both for social cohesion and for building confidence in South Africa and the African continent. South Africa has committed that the 2010 World Cup will not be a South African World Cup but rather an African World Cup. An African Legacy Programme has been devised to ensure that benefits of the World Cup are spread throughout the continent.

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