Naspers-owned e-commerce group Takealot has accused Chinese firms Shein and Temu of hurting SA’s apparel sector, warning that investment could be deterred in the sector should the playing field not be levelled.
Naspers in its annual report published on Monday said the growing popularity of Shein and Temu was a threat to the country’s re-industrialisation and localisation efforts.
“These platforms contribute to a market imbalance by flooding the market with inexpensive imports. This influx is particularly noticeable in the local apparel sector due to Shein, and in the wider general merchandise market, affected by both Shein and Temu. Such trends pose significant challenges to the development and sustainability of domestic industries,” the company said.
“These e-commerce platforms exploit outdated regulations and loopholes by using shipping methods that allow them to offer products at exceptionally low prices while avoiding duties, taxes and other government fees imposed on conventional retailers. Collectively, this hinders government initiatives focused on revenue generation and collection, and undermines SA’s sense of sovereignty.”
Former trade, industry & competition minister Ebrahim Patel recently called for the playing field in the e-commerce sector to be levelled to ensure platforms such as Temu and Shein paid equitable import tariffs and VAT to balance the clothing retail sector’s performance.
We believe it is crucial to quantify the significant current impact of offshore e-commerce on the SA economy, particularly in the manufacturing sector
As such, articles of clothing and apparel purchased from e-commerce retailers outside SA, packaged in small quantities and valued at R2,500 and below, will from July 1 be taxed the same as large quantities.
Takealot said SA’s current regulations fall short of addressing the need for fair competition and that this led to revenue losses and missed local job creation.
The company called on MPs to put in place a set of regulations to level the playing field, warning that if the current regime was not fixed, domestic players would be disadvantaged further.
“In addition, without reform, potential new international investment could be deterred by the risk of an unstable and unbalanced market. Importantly, beyond the regulatory environment, these businesses selling into our country do not invest in physical infrastructure locally, nor do they employ locally — a net loss to SA,” it said.
“We believe it is crucial to quantify the significant current impact of offshore e-commerce on the SA economy, particularly in the manufacturing sector. This form of commerce extracts value from SA consumers without contributing to local communities, ultimately harming small businesses, local manufacturers and the limited job opportunities available.”
With Mudiwa Gavaza
Correction: June 25 2024
A previous version of this article said packages in small quantities, and valued at R500 and below, will from July 1 be taxed the same as large quantities. This should be R2,500.
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