Call for ministerial accountability over 8,000 jobs lost to customs 'loophole'
The LSF report found that Shein and Temu generated R7.3 billion in sales over the period, capturing 3.6% of South Africa’s R-CTFL retail market and a staggering 37% of its online sales.
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Actions SA says it has formally requested the urgent appearance of the Minister of Trade, Industry and Competition, Parks Tau, the Minister of Finance, Enoch Godongwana, and the SARS Commissioner, Edward Kieswetter, before Parliament.
This comes after a new report by the Localisation Support Fund (LSF), which looked at the effect of offshore e-commerce retailers on South Africa's clothing, textile, footwear, and leather (R-CTFL) industry, found that fast-growing Chinese online retailers Shein and Temu may have cost the country more than 8,000 potential jobs over the past four years.
"Between 2020 and 2024, Shein and Temu made use of the “de minimis” rule, which allowed parcels valued under R500 to enter the country with a flat 20% customs duty and no VAT," the party said.
"These companies deliberately broke up large orders into multiple low-value parcels to benefit from this rule, while local retailers and importers were paying up to 45% duty and 15% VAT on similar goods. For four years, the government allowed this practice to continue while local manufacturers and retailers bore the consequences".
The LSF report found that Shein and Temu generated R7.3 billion in sales over the period, capturing 3.6% of South Africa’s R-CTFL retail market and a staggering 37% of its online sales.
"In contrast, local producers lost an estimated R960 million in manufacturing sales. The loophole contributed to an estimated 2,818 manufacturing and 5,282 retail jobs that never materialised – over 8,000 potential local jobs in total".
Despite the SARS and the DTIC closing the "loophole" in late 2024, the party argues that damage had already been done.
"The responsible officials must now account for their inaction and explain what steps will be taken to prevent a recurrence. ActionSA will write to the Parliamentary Portfolio Committees on Finance and Trade & Industry to request urgent hearings on this matter".
In response to the report, Shein acknowledged its growing presence in the country and outlined its business approach.
The company also summarised its business model as “customer-driven” and “on-demand,” leveraging digital supply chain technology to adapt procurement decisions according to customer preferences and purchases.
"We operate a customer-driven, on-demand business model. Instead of trying to forecast trends and customer demand, SHEIN leverages digital supply chain technology to adapt our procurement decisions according to our customers’ preferences and purchases".
Meanwhile, Temu has said it has expanded the range of quality products available to South African consumers.
"Temu has expanded the range of quality products available to South African consumers, giving them greater choice and access to items that meet their needs."
mthobisi.nozulela@iol.co.za
IOL Business