Shein under siege in South Africa

Shein is under siege in South Africa. It is losing market share, and the South African Revenue Service (SARS) is set to withdraw all its concessions.

In March, SARS Commissioner Edward Kieswetter issued a notice that he intends to withdraw all forms of concessions currently in use which are ultra vires.

Kieswetter said many concessions are no longer applicable due to changes in law, policy, procedure or technological advancements.

He highlighted that some concessions date back 20 years and were granted for a specific purpose at the time, which are no longer applicable.

So, to ensure compliance with the Act, SARS intends to withdraw all these concessions that traders rely on.

This would mean that products from Chinese retailers Shein and Temu can no longer be cleared at customs using a simplified process with a 20% flat duty rate.

This specific concession was implemented in 2007 and was one of the primary mechanisms the e-commerce giants used to import their goods into South Africa.

The mechanism, which only applies to shipments valued under R500, was intended to help logistics companies cope with an influx of imports.

These imports flooded the system as international e-commerce activity accelerated and more South Africans bought products from overseas.

South African retailers said these concessions gave international players like Shein an unfair advantage as they pay far less import taxes than local players.

Retailers further claimed that the concessions were open to abuse, with importers using loopholes to ensure they paid only 20% import taxes on clothes instead of the usual 45%.

For example, they would split up large orders to ensure each package is under R500 and then combine these packages again after it passed through customs.

In 2024, SARS introduced a temporary measure to clamp down on these practices by adding 15% value-added tax (VAT) to the 20% flat rate customs duty.

However, after review, all special concessions are now on the chopping block. Importers must ensure they comply with the current Act without relying on outdated concessions.

“The withdrawal of concessions could lead to increased costs for businesses that previously benefited from special allowances or arrangements,” PwC said.

The process is open to feedback, with SARS giving stakeholders until 23 April 2025 to comment.

Stakeholders who believe a concession should stay must indicate why the concessions should not be withdrawn or suggest legislative amendments.

Shein losing market share in South Africa

The clampdown by the South African Revenue Service has already impacted Shein’s performance in the country.

New research by Slant Research revealed that Shein’s market share has declined significantly since 2024 due to the revised import duty regime.

“According to our data, import duty and VAT payments on Shein orders are facilitated by third parties like Buffalo International and Meili Logistics,” it said.

The charts below show a significant increase in the median value of payments to these companies from September 2024.

This data suggests that the government regulations have had a meaningful impact on Shein’s sales.

However, despite the increase in payment value, Slant Research also noted that enforcement appears to have declined.

“Our data shows fewer payments to logistics providers as a proportion of total purchases,” Slant Research said.

The charts below show Shein’s median transaction amount and how its market share has changed over the past three years.

“It’s clear that Shein did not achieve the same level of market share at the end of 2024 as it did at the end of 2023,” Slant Research said.

“Similarly, progress in the first 10 weeks of 2025 lags far behind where the brand was tracking at the same stage in 2024.”