South African retailers express concern as Chinese e-commerce platforms surge

South African retailers have requested government intervention to plug tax loopholes that are allegedly being exploited by the rapidly expanding Chinese e-commerce platform, Temu. Similar concerns have also been expressed about another Chinese e-commerce platform, Shein.

Etienne Vlok from the Southern African Clothing and Textile Workers Union, suggested urgent amendments to tax regulations surrounding small items, with the aim of guaranteeing fair competition for local businesses.

Temu, however, disputes the claim that it’s capitalizing on the low-value goods rule known as de minimis, which allows such goods to enter South Africa without requiring Customs declarations or duties. Kieran Powell, a spokesperson for Temu, attributed the platform’s success and growth to its supply-chain efficiencies and operational proficiency, developed over many years.

Powell added that Temu welcomes and supports any policy changes that favor consumer interests and foster competitive business dynamics.

Launched in South Africa in January 2024, Temu offers affordable products and free delivery, rapidly gaining popularity and competing with established local retailers. Its parent company, PDD Holdings, is also the owner of Pinduoduo, a leading e-commerce platform in China. Its product pricing in South Africa primarily ranges between R10 and R300, with some items exceeding R1,000.

Despite being relatively new to the South African market, both Temu and Shein are ranked highly on app stores and are contributing to the expected growth of the e-commerce sector in the country, particularly with Amazon’s impending entry later this year.