South African Retailers Claimed Breaches of Temu and Shein

South African Retailers Claimed Breaches of Temu and Shein
Photo: Shutterstock 20.02.2024 1598

Local sellers believe that the authorities should ensure conditions for fair competition and stop Temu and Shein's attempts to avoid paying taxes.

South African retailers have called on the government to close tax loopholes that they believe are being exploited by the Chinese e-commerce platform Temu as it rapidly expands in the country. Similar concerns have also been raised about Shein, another Chinese online platform.

Etienne Vlok, a national industrial policy officer for the Southern African Clothing and Textile Workers Union, told News24 the government should consider urgent changes to tax rules on small items to ensure fair competition for local businesses.

The Chinese retailer Temu disagreed with the suggestion that it was relying on the so-called de minimis rule that lets goods of low-value enter South Africa while avoiding Customs declarations or duties.

“The primary drivers behind our rapid expansion and market acceptance are the supply-chain efficiencies and operational proficiencies we’ve cultivated over the years,” 

Temu spokesperson, told Bloomberg News.

He also added that the company is open and supportive of “any policy adjustments made by legislators that align with consumer interests.”

“We believe that as long as these policies are fair, they won’t influence the outcomes of competitive business dynamics,” Temu spokesperson said.

Temu is a fast-growing business in the country, having launched its South African site in January 2024. It is competing with established players by offering affordable products and free delivery.

The parent company that owns and operates Temu – PDD Holdings – also owns Pinduoduo, a popular e-commerce platform in China.

This app experienced rapid global expansion and found its way to the United States in September of 2022. Its popularity soared, and it quickly became the most frequently downloaded app in the US in 2023.

Despite being in the market for a short time, Temu has experienced rapid growth in South Africa. Its mobile app has already achieved a rank in the top three for free apps on both the Apple App Store and Google Play Store. Shein takes the fifth spot in the top ten e-commerce companies in South Africa.

Chinese online retailers of cheap goods have already faced discontent from local sellers around the world. In particular, Shein has drawn criticism from sellers in Brazil, where the company allegedly exploits legal loopholes to avoid taxes, and in the United States, where the company has been accused of anti-competitive practices. In addition, in July 2023, Temu itselffiled a lawsuit against Shein alleging violations of US antitrust laws.

Source:  Business Tech

digital markets  South Africa 

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