Business & Finance

Takealot Warns About Temu and Shein: The Battle for Fair Competition in South African E-commerce

Takealot Group has raised concerns over the impact of Chinese e-commerce giants Temu and Shein on South Africa’s local industries. The company calls for regulatory reforms to ensure fair competition and support for domestic businesses.

The Takealot Group, a prominent player in South Africa’s e-commerce landscape, has sounded the alarm over the growing presence of Chinese e-commerce giants Temu and Shein. In its 2024 financial results, Takealot highlighted the need for reforms within the e-commerce sector to support South Africa’s localisation efforts and ensure fair competition.

The Rise of Temu and Shein

Temu and Shein have rapidly gained popularity in South Africa, directly competing with Takealot’s online clothing retailer, Superbalist.com. The influx of inexpensive products from these platforms poses a significant threat to the sustainability and development of local industries.

“The rise of e-commerce platforms such as Shein and Temu in South Africa underscores a growing concern that threatens the nation’s reindustrialisation and localisation efforts,” Takealot stated. The company argued that the business models employed by these international retailers, which flood the market with cheap products, create an imbalance detrimental to local businesses.

Regulatory Loopholes and Fair Competition

Takealot pointed out that Temu and Shein exploit outdated regulations and loopholes to offer products at exceptionally low prices, circumventing duties, taxes, and other fees imposed on conventional retailers. This practice primarily involves the de minimis rule, which allows packages under R500 to be imported with a 20% duty and no VAT.

However, the South African Revenue Service (SARS) has announced that from 1 July, these small parcels will be taxed at the appropriate rate, with clothing imports facing a 45% duty before VAT is added. Takealot emphasized that regulatory gaps in the e-commerce sector hinder fair competition, placing domestic retailers at a disadvantage.

The Call for Policy Reforms

“It is imperative that policymakers craft regulations to level the playing field, ensuring all participants adhere to the same standards and practices and contribute fairly to the national economy,” Takealot urged. The company warned that if left unaddressed, the disparities would continue to widen, further disadvantaging local businesses.

Despite Takealot’s local roots, many South Africans support Shein and Temu due to their affordability. A petition titled “Petition for SARS not to increase tax on Temu and Shein orders” has garnered over 15,000 signatures, reflecting consumers’ concerns over price increases.

Consumer Perspective vs. Local Industry

Consumers argue that local retailers, despite being marketed as affordable, are often priced beyond the reach of most South Africans. “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,” the petition states.

Michael Lawrence, executive director of the National Clothing Retail Federation, countered this argument, suggesting that the consumers using these platforms are primarily middle-class. He emphasized the need to protect local jobs and industries, which are adversely affected by the pricing models of Temu and Shein.

Protecting the Local Clothing Industry

Lawrence acknowledged the financial strain on households but stressed the importance of supporting the local clothing industry. “What is true, of course, is that the household purse for all population segments has been under substantive stress for the last decade,” Lawrence said, adding that prioritizing local jobs and welfare is crucial.

Conclusion

The debate over the impact of Temu and Shein on South Africa’s e-commerce sector highlights the broader issue of balancing consumer affordability with the sustainability of local industries. As Takealot calls for regulatory reforms, the challenge lies in crafting policies that support fair competition while addressing the financial needs of South African consumers.

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