The need to create a level playing field in the country's e-commerce sector was also stated by Doris Tsepe, head of the South African Competition Commission.
Shein and Temu, which launched locally in 2020 and 2024, respectively, have taken the South African clothing market by storm due to their competitive prices and trendy catalogues.
This caused consternation for local clothing retailers such as Mr Price, Pep, Cotton On, and Woolworths.
As beneficial as this may sound for the South African public, especially during a time of tremendous pressure on the average consumer’s purse, the local industry warned that it would cost local jobs in the long term.
They also highlighted that Temu and Shein were exploiting a 2007 tax concession that the South African Revenue Service (Sars) issued to minimise the administrative burden for high-volume, low-value imports.
The concession allowed low-value packages under R500 to be imported into South Africa with a 20% duty and no VAT.
For reference, Sars’ trade statistics for June 2024 show that China is South Africa’s primary source of textile imports, with an average monthly import value of around R4.2 million.
To protect the local industries and level the playing field, Sars began applying VAT in addition to the 20% duty to all low-value packages from 1 September.
The decision was met with resistance from South African consumers who felt that their new affordable source of trendy clothing and electronics was threatened.
Judging from customer feedback, the value of the clothing items in the parcel indicates that SARS is already imposing a 45% clothing duty with 15% VAT on top of Temu orders.
South Africa’s Competition Commissioner Doris Tshepe has alluded to the need for policy intervention to create a level playing field in the country’s e-commerce sector, saying the government will need to employ all of its tools.
This comes after three local online stores have been shut down or sold in the past two months. The development was Takealot’s sale of its clothing retailer Superbalist on 1 September. The closures were then announced by Snatcher, an importer of non-branded cheap appliances, and clothing retailer Zando, a 12-year-old South African online clothing store. The company previously acknowledged that Temu and Shein were a major challenge to its business in South Africa.
Source: Mybroadband