South China Morning Post
·4-min read
Some consumers in South Africa are looking to abandon popular low-cost online retailers Shein and Temu, according to recent social media posts, after the country's revenue authority this month enforced higher tariffs on all imported clothing to close loopholes allegedly exploited by international e-commerce platforms.
The South African Revenue Service on July 1 started charging an import duty of 45 per cent plus value-added tax (VAT) on all clothing, up from a tariff of 20 per cent previously imposed on low-value parcels, as part of efforts to stop Chinese-backed shopping platforms like Shein and Temu from undercutting domestic retailers.
Several local retailers have accused those platforms of abusing a so-called de minimis rule, which charged an import duty of 20 per cent and zero VAT on clothing parcels valued at under 500 rand (US$27.44), according to a report on Wednesday by local media News24.
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They claimed Shein and Temu had been breaking up larger orders into smaller packages that cost below 500 rand. After getting the lower tax, the orders are combined again before these are shipped to buyers.
Neither Shein nor PDD Holdings-owned Temu immediately replied to a request for comment on Friday. PDD also operates Pinduoduo in China.
The South African Revenue Service has introduced higher import taxes on smaller clothing items bought from international e-commerce platforms. Photo: Shutterstock alt=The South African Revenue Service has introduced higher import taxes on smaller clothing items bought from international e-commerce platforms. Photo: Shutterstock>
Shein user Lisa, who goes by the handle ofunwa109 on short video site TikTok, on July 4 posted a photo of her tax bill of 2,038.14 rand for an order worth 2,700 rand, with the caption "Bye Shein".
Another TikTok user, with the handle _Kgadii, shared a similar experience. "Temu is also expensive," she wrote, pointing out that her 397-rand order for two pairs of pants and a smartphone case resulted in a tax bill of 178 rand.
Various South African users on TikTok have been sharing tips to save money under the higher import duty regime, such as ordering clothes combined with light items like cosmetic products.
The action taken by South Africa's revenue authority shows how low-cost goods from mainland China could potentially be subjected to higher tariffs and scrutiny in other countries, as more domestic retailers are put at a disadvantage by cheap items sold by the likes of Shein and Temu.
The European Union, which has 27 member states, is said to be drawing up plans to impose customs duties on cheap goods bought from Chinese online retailers including Temu, Shein and AliExpress, an international marketplace run by Alibaba Group Holding, according to report by The Financial Times earlier this month. Alibaba owns the South China Morning Post.
South Africa has lost more than US$165 billion from the loopholes exploited by international online shopping platforms, according to the country's revenue service. Photo: Shutterstock alt=South Africa has lost more than US$165 billion from the loopholes exploited by international online shopping platforms, according to the country's revenue service. Photo: Shutterstock>
In the United States, the Customs and Border Protection last month announced a crackdown on multiple customs brokers handling billions of dollars in inexpensive online shopping orders from the likes of Shein and Temu, according to a Reuters report. That initiative comes as more than 1 billion packages, each averaging around US$50 in value, are forecast to arrive in the US this year, driven by fast-fashion orders from Chinese platforms.
South Africa's revenue service commissioner Edward Kieswetter said that the country lost more than 3 billion rand owing to the loophole exploited by international online retailers, according to a report on Wednesday by News24. He said the government would continue to crack down on the "unfair advantages" created by these retailers.
The initiatives in South Africa and other jurisdictions could potentially complicate Singapore-headquartered Shein's planned initial public offering in London. That flotation may put the British government under reputational risks owing to Shein's controversies related to intellectual property and forced labour, according to a report by The Financial Times.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2024 South China Morning Post Publishers Ltd. All rights reserved.
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