"So being in that place is not the place you need to be. We need to move up the value chain. We need to industrialize. We need to add value." he says.
Davies says industrialization is something South Africa insists on: Railway equipment that is used in Africa can be made in South Africa.
"So those are the kinds of opportunities as well as the direction we have been moving in," he says.
Davies says South Africa has been working with the support of Ministry of Commerce of China on value-added trade missions, and two such missions backed by the ministry have been visiting different parts of China.
"We have been bringing exhibitors and people who can supply value-added products." Another tactic is to have buyers from China visit South Africa.
Even though Chinese investment in terms of quantity is still below investment in South Africa from Europe and the United States, Davies says he anticipates a great increase from China.
"Likewise, although we have seen some results from the trade missions, I think there could be a very significant increase in value-added trade," he says.
He says the world's recognition of South Africa's industrialization is very important.
"It is not universal. Not everyone around the world acknowledges this. Sometimes they think it is in their interest that we remain where we were. It is in their interest that we simply supply them with minerals that they process and transform and add value to their own economy," he says. "So I think the recognition and the willingness to work toward and support our industrialization is important, but we have got a long way to go."
He says that the biggest challenge for South Africa at the moment is energy, where large quantities of affordable energy are needed.
"One of the biggest social programs we had in South Africa in the last 20 years is that we brought electricity to many, many households. It was a major, life changing experience. Poor households that ... got electricity usually got two things－one is television, which brings information, and the second one is a refrigerator, which means now they have food more regularly," he says.
He says South Africa is working on power plants, but electrical supplies will remain tight for at least the next two years.
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