South Africa: Chinese E-Commerce Companies Popular in South Africa

Johannesburg — Rotondwa Mbadaliga is a self-professed “shopping addict.” The 25-year-old South African fashion influencer says she is a huge fan of Chinese-linked e-commerce companies Shein and Temu because she can get the latest trends at the cheapest prices delivered straight to her door.

Mbadaliga has more than 200,000 followers on TikTok where she mostly talks about fashion, sometimes posting videos of herself excitedly opening her newly arrived purchases from China.

“The variety is the main thing I really like and enjoy with shopping on Temu or Shein,” she says, adding that South African brands and shops aren’t as trendy.

“I don’t think you can beat the prices,” she adds.

But the prices of clothing on these e-commerce sites are expected to soon get more expensive.

South Africa’s tax authority plans to start imposing a 45% tariff and a value-added tax, or VAT, an indirect tax on the consumption of goods and services on orders of imported clothing that cost under 500 rand, or $27. Some consumers are pushing back with an online petition protesting the higher import duties.

Chinese e-commerce in South Africa

Shein, which has been available in South Africa since 2020, and Temu, which entered the market in January, have had huge success in the country, which has a growing middle class, tech-savvy youth and widespread internet access.

For women’s clothing purchases online, Shein is the top retailer with a 35% market share, according to data from Marketing Research Foundation, a nonprofit South Africa-based marketing survey group.

For its part, Temu is the most-downloaded app among iOS and Android users in South Africa.

Mbadaliga acknowledges that quality can sometimes be an issue.

“With shopping from China, you need to be OK with making a loss in some way,” she says, adding that she has a box of clothes bought on the platforms that didn’t fit or work out.

Her aunts in their 30s, who earn more, prefer to buy from foreign brands with brick-and-mortar stores in South Africa such as Zara because they believe the quality of clothing is better, Mbadaliga notes.

But she says longevity and quality don’t matter so much to her because she will only wear a garment while it is in style.

Industry pushback

South African retailers and local e-commerce platforms have been left reeling by the success of Chinese e-commerce and fearing their inability to compete.

Some South African companies and industry groups have lobbied the government to close an import tax loophole, a so-called de minimis rule, for small parcels of clothing. The loophole was introduced decades ago for items such as gifts before the advent of online shopping.

Under that system, small parcels pay a low 20% import duty. However, local clothing retailers, who order in bulk, pay a 45% tariff plus a VAT rate.

“We don’t mind competition … but what we find unpalatable, quite frankly, is an opportunity which is being taken advantage of where we believe we actually have an unfair and non-level playing field,” Michael Lawrence, executive director the National Clothing Retail Federation of South Africa, told VOA.

“We’re seeing 100,000 parcels a day, I’m told by some players, coming in. So, we’re not talking about an occasional occurrence. We’re talking about a significant commercial activity,” he says.

When South Africa’s tax authorities implement the higher tax rate for imported clothing under 500 rand, those shippers will be paying the same rate of 45% plus a VAT as the bulk shipments incur.

Contacted for comment, a Temu spokesperson told VOA: “Temu operates a direct-from-factory online marketplace that connects consumers with cost-efficient manufacturers. By reducing the number of intermediaries between consumers and producers, we can eliminate extra costs and pass those savings on to consumers through lower prices.”

“We compete fairly and transparently, adhering to the rules and regulations of each market we serve. Our growth does not rely on the de minimis policy. We support policy changes that benefit consumers and believe that as long as rules are applied fairly, they will not affect the competitive landscape,” the spokesperson added.

Shein did not respond to a request for comment.

Local alternatives

South Africa is not without its own e-commerce sites.

E-commerce company Takealot has accused the Chinese online shopping giants of exploiting tax loopholes.

“These platforms contribute to a market imbalance by flooding the market with inexpensive imports,” the company said last month in a statement. “Such trends pose significant challenges to the development and sustainability of domestic industries.”

“This form of commerce extracts value from South African consumers without contributing to local communities, ultimately harming small businesses, local manufacturers and the limited job opportunities available,” it continued.

To boost local industry, Takealot recently signed a multimillion-dollar deal with the government in South Africa’s Gauteng province, which includes the capital, Pretoria, and economic powerhouse Johannesburg. Called the Takealot Township Economy Initiative, it is focused on creating jobs and supporting small, Black-owned businesses.

Local online fashion retailer Zando launched its international e-commerce platform Zando Global earlier this year.

“With the rise of Shein and Temu, South African consumers have often found themselves hesitant to order internationally due to concerns about product quality, delivery reliability, and returns processes. Zando Global steps in as the local hero, offering a trustworthy alternative for those seeking international products without the uncertainties of ordering from abroad,” the company said in an April press statement.

When asked whether the market is already saturated by Shein and Temu, Zando Global’s CEO Morgane Imbert told VOA she believed the company could compete.

“We genuinely believe there is room for a player like Zando, because we think that we can offer a different experience, focusing on the quality of the product, the customer service and curated local and global fashion trends,” she says.

“We’re definitely supporting local brands and companies through the marketplace,” Imbert added.

US behemoth

Zando and Takealot must also compete with U.S. e-commerce company Amazon, which entered the South African market in May, its first foray into sub-Saharan Africa. Reports suggest Amazon had a slow start, but that could change.

On its website, Amazon says it is providing South African consumers with a “new online shopping experience.” It added, the site will include products from independent South African sellers and small and medium-size enterprises “to connect customers with businesses throughout the country.”

Still, like “shopping addict” Mbadaliga, many South Africans will not be easily weaned off Shein and Temu.

The on-line petition to the South African government aimed at stopping the import duty has garnered more than 21,000 signatures since June, hoping to change the minds of government authorities who have yet to implement the new tax rules originally set for July 1.