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The South African government is delivering a big blow to Shein and Temu in this country.

Since the South African Revenue Service (SARS) and Customs are set to change how they handle small orders coming into South Africa, the prices Saffas pay for their products from these “marketing megalodons” will increase significantly.

Clothing items imported into the country valued at less than R500 will carry the same duties as bigger orders starting from 1 July 2024, while clothing imports above R500 in South Africa are subject to a 45% import duty plus value-added tax (VAT).

Up until now, anything shipped here with a value under R500 has been treated differently and carried far smaller customs duties – a rule that Shein and Temu seemed to be taking advantage of by breaking up larger orders into smaller quantities and packages.

They would then combine these smaller packages into a larger order before shipping it to their South African client once they’d paid the cut-down customs duties and taxes. Local companies complained that this eCommerce loophole gave Temu and Shein an unfair pricing advantage over their own retailers.

Per Daily Investor, National Clothing Retail Federation (NCRF) executive director Michael Lawrence had flagged these issues with SARS, noting that the Chinese fast fashion giants have not played the game fairly at all.

“Our concern with offshore online services is that they are not paying the correct duties and VAT. Our national revenue suffers, and our local producers are disadvantaged,” he said.

“There have not been any invoices that show the correct revenue collection from authorities concerning VAT and tariffs at this point.”

Business Times reported that TFG CEO Anthony Thunström said South African retailers approached SARS and customs authorities to put Temu and Shein on a level playing field.

Daily Investor analysed a few invoices from Temu and Shein, and the customs and VAT charges of orders above R500 were between 14% and 19%. Meanwhile, a company like TFG, which also imports clothing through its Bash platform, pays 45% import duty plus value-added tax (VAT).

Stakeholders argued that this should also be applied to smaller orders, and so, from 1 July, the new rate of 45% plus VAT might make Temu and Shein’s pricing far less attractive.

Thunström told Business Times that this was a big move that would help the South African clothing industry, including local manufacturers, and create jobs, allowing everyone to fairly compete with the Chinese eCommerce powerhouses.

However, customers and fans of Temu and Shein are upset and have launched an online petition in protest against the higher taxes set to be imposed on orders as of next month.

The petition on change.org.za, which at the time of writing has 6,575 signatures, says :

South Africans cannot afford this, we buy from Shein and Temu because we cannot afford clothes from local businesses, the point of Shein and Temu is affordability. SARS can increase the tax so quickly, yet they don’t do anything regarding serious issues in South Africa. Shein and Temu don’t only benefit consumers but local couriers as well. This is not fair on consumers, the government does not care about us citizens, they just want to eat up all of our money.

To that, perhaps all the signatories need to consider the following satirical ad from SNL:

Also, once okes are done with the latest fashion pieces, they throw them out and buy hauls of the next – but all that excess clothing lands up polluting our Earth. Take that enormous and ever-growing pile of discarded clothing that is sitting in Chile’s Atacama Desert.

 

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It is a pity that, in this day and age, we have to pit affordability for fashion goods against the well-being of workers and nature.

[source:dailyinvestor]