Newcastle is the hub of the “Cut, Make and Trim” (CMT) business, which involves manufacturing clothing for retailers in KwaZulu-Natal province. Almost all CMT businesses are owned by citizens of Taiwan and the People’s Republic of China, who have permanent residency in South Africa and rely on immigrant labor. “Our sector will collapse one hundred percent if migrants suddenly disappear from our factories,” said Ismail, a third-generation clothing manufacturer who employs 150 workers, of whom only 30 are South African citizens.
Exposure of “Sweatshop” Conditions and Retailer Exodus
The city’s CMT sector is currently suffering from the ongoing exposure of “sweatshop” working conditions in factories following high-profile government inspection raids in September 2025 and February 2026. The raids uncovered wages significantly below basic rates, neglected worker dormitories, unsafe production facilities, and a reliance on immigrants from other southern African countries. After the February raids, retailers including Pepkor, Pick ‘n Pay, and Mr Price have already withdrawn orders from Newcastle factories.
Alex Liu, an unofficial representative of the Newcastle factory community and PR advisor, noted that “since February, most factories, if not all, have been operating on reduced hours.” He also confirmed that “it is true, if you take foreigners out of the factories, almost every CMT business will have to close.” According to Liu, the main problem is the lack of skilled seamstresses, as local workers rarely know how to sew zippers, a specialized task mostly performed by foreigners.
Struggle for Survival and Challenges for Owners
In neighboring Madadeni, Ronhua Yang, known as David Old, is fighting to keep his business afloat. “This is the darkest time in my life,” said Yang, adding that the combination of rising costs, low CMT prices, and a bad reputation “is killing the CMT business.” He described his experience in South Africa with the Chinese term 轮回 (lun hui) — a cycle of death and rebirth. Factory owners in Newcastle face a tough choice: “Either we leave while we still can, or we do something else, like selling our own brands. We cannot continue like this.”
In addition to low prices from suppliers, factory owners identified penalties for late delivery of orders as the biggest risk to their business sustainability. One owner noted: “If I am one day late, the supplier deducts 10% from my payment, but when my business is disrupted due to a problem on their side, I cannot charge them a fee because they hold the money.”
Workers, many of whom live directly on the factory premises to work longer hours and avoid spending R40–R55 daily on transportation, are paid piece rates. For sewing a small part of a garment, they earn about 20 cents, and for a larger part, 30 cents. A seamstress from Lesotho named Gift said that only the most productive workers can earn the minimum hourly wage — R32, which amounts to R1,443.50 for a 45-hour workweek. Less productive workers sometimes earn only about R20 a day, while the fastest earn up to R80.
According to Gift, in Lesotho, skilled seamstresses can earn over R3,000, but due to factory closures, there are few jobs available. Some of these closures are related to the introduction of 50% tariffs announced by US President Donald Trump in April 2025.
Impact on the Local Economy and Search for Solutions
The contribution from Newcastle’s 34th district, where most garment factories are located, in June 2025 was R761,424,823, approximately 47% of the municipality’s total revenue. Alex Liu believes that the factories employ between 15,000 and 20,000 workers, producing about ten million garments per month. This generates approximately 50 million rand in revenue per month, of which at least 25 million rand goes to workers’ wages.
Joe Tau, managing director of Allwear, the largest garment enterprise in Newcastle, rejects the argument that compliance is impossible at retailers’ prices. He stated that his company, which pays according to the bargaining council rates, needs investment in new equipment. “I am willing to open all my secrets because I am a real businessman, but when I do, I expect no less from you,” said Tau, who employs over 1,000 workers, all of whom are South African citizens, with 98% being women.
A procurement officer from a large South African retailer reported that after the raids, many retailers redirected orders to factories in Lesotho, Eswatini, Madagascar, and China. However, he noted that the government of Eswatini is also conducting its own compliance campaign, threatening legal action against unscrupulous owners. He added that retailers “have become victims of their own price wars that began in the early 2000s,” leading to widespread rule-breaking and the search for cheap solutions, such as subcontracting in Newcastle.
