Chinese e-commerce boom in South Africa – as local retailers cry foul

 ·19 Feb 2024

South African retailers have called on the government to close tax loopholes that they believe are being exploited by the Chinese e-commerce platform Temu as it rapidly expands in the country.

Similar concerns have also been raised about Shein, another Chinese online platform, reported News24.

Etienne Vlok, a national industrial policy officer for the Southern African Clothing and Textile Workers Union, told the publication the government should consider urgent changes to tax rules on small items to ensure fair competition for local businesses.

The Chinese retailer Temu disagreed with the suggestion that it was relying on the so-called de minimis rule that lets goods of low-value enter South Africa while avoiding Customs declarations or duties.

“The primary drivers behind our rapid expansion and market acceptance are the supply-chain efficiencies and operational proficiencies we’ve cultivated over the years,” Kieran Powell, a Temu spokesperson, told Bloomberg News.

“We are open to and supportive of any policy adjustments made by legislators that align with consumer interests,” Powell said.

“We believe that as long as these policies are fair, they won’t influence the outcomes of competitive business dynamics.”

Temu is a fast-growing business in the country, having launched its South African site in January 2024. It is competing with established players by offering affordable products and free delivery.

The parent company that owns and operates Temu – PDD Holdings – also owns Pinduoduo, a popular e-commerce platform in China.

This app experienced rapid global expansion and found its way to the United States in September of 2022.

Its popularity soared, and it quickly became the most frequently downloaded app in the US in 2023.

In South Africa, most product prices range from R10 to R300, with some more expensive products, such as inverters and batteries, crossing the R1,000 mark.

According to a Chinese media outlet, Temu’s logistics partner in South Africa is Fastway, which takes 6 to 20 days for delivery, slightly longer than other regions’ logistics efficiency.

However, despite being in the market for a short time, Temu has experienced rapid growth in South Africa. Its mobile app has already achieved a rank in the top three for free apps on both the Apple App Store and Google Play Store.

Shein takes the fifth spot in the top ten e-commerce companies in South Africa.

With Temu’s recent launch in the country and Amazon’s planned entrance later this year, the e-commerce market in South Africa is primed for substantial growth in the upcoming years.

With reporting from Bloomberg

Read: Big surprise for retailers in South Africa – but consumers still feel the pain

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