{"id":784242,"date":"2024-07-25T09:59:00","date_gmt":"2024-07-25T07:59:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=784242"},"modified":"2024-07-25T10:10:24","modified_gmt":"2024-07-25T08:10:24","slug":"shein-opening-physical-store-in-south-africa-with-a-big-catch","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/lifestyle\/784242\/shein-opening-physical-store-in-south-africa-with-a-big-catch\/","title":{"rendered":"Shein opening physical store in South Africa – with a big catch"},"content":{"rendered":"\n

Shein will open a pop-up store in South Africa, but products cannot be purchased in-store. <\/p>\n\n\n\n

The Chinese-founded and Singapore-headquartered e-commerce giant will open its first South African pop-up store at the Mall of Africa in Johannesburg, the country’s busiest mall. <\/p>\n\n\n\n

The store will be open from 14h00 to 20h00 on Friday, 2 August and from 09h00 to 21h00 from Saturday, 3 August, to Sunday, 11 August.<\/p>\n\n\n\n

However, the pop-up store is only an exhibition space<\/strong> that showcases the latest fashion and lifestyle products, the group said.<\/p>\n\n\n\n

This means that products cannot be purchased at the pop-up. Customers will be able to try on products and order them online with a discount at the store.<\/p>\n\n\n\n

A blend of physical and online retail is a similar strategy to what Yuppiechef adopted when it launched its first brick-and-mortar outlets in 2018<\/a>. <\/p>\n\n\n\n

Tax fight <\/strong><\/p>\n\n\n\n

Shein, along with fellow online retailer Temu, has caused chaos in the South African retail space, with local retailers struggling to compete with their lower prices.<\/p>\n\n\n\n

In the Bureau for Economic Research\u2019s (BER’s) latest Retail Survey for 2024Q2, confidence amongst semi-durable goods retailers, which includes textiles, clothing, footwear and leather goods, declined massively from 68% in the prior quarter to 38%. <\/p>\n\n\n\n

The drop in confidence followed weak sales in 2024Q1, which came off a high base period due to, in part, the 2023 Rugby World Cup.<\/p>\n\n\n\n

The BER said that online competitors like Temu and Shein were also straining the sales\u00a0of domestic clothing retailers.<\/p>\n\n\n\n

Many retailers have also criticized the online sellers for allegedly violating tax laws to drive down prices and undercut South African competitors.<\/p>\n\n\n\n

They are accused of abusing the de minimis<\/em> rule to get clothing parcels of under R500 through customs with a 20% import duty and 0% VAT.<\/p>\n\n\n\n

Local retailers claim that Temu and Shein break up larger orders into smaller quantities and packages to ensure they are under R500.<\/p>\n\n\n\n

After benefitting from the lower 20% tax, they then must combine the orders before shipping them to clients. <\/p>\n\n\n\n

Local retailers said that Shein and Temu must pay the 45% plus value-added tax (VAT) for imported clothes.<\/p>\n\n\n\n

\u201cThese companies are not paying duties on their imports and are avoiding paying VAT where it should be applied,\u201d the National Clothing Retail Federation’s Michael Lawrence said.<\/p>\n\n\n\n

Lawrence said these eCommerce giants\u2019 local couriers and service providers are also not reporting their duties and taxes correctly to the South African Revenue Service (SARS).<\/p>\n\n\n\n

\u201cThere have not been any invoices that show the correct revenue collection from authorities about VAT and tariffs at this point,\u201d he said.<\/p>\n\n\n\n

SARS Commissioner Edward Kieswetter said that the taxman would continue to target Temu, Shein, and other online retailers. <\/p>\n\n\n\n

The service committed to levying the same duties and taxes on clothing items under R500 as on bigger orders.<\/p>\n\n\n\n

Kieswetter said that the state lost out on over R3 billion in unpaid taxes and is actively looking to address the problem. <\/p>\n\n\n\n

However, Temu and Shein deny any wrongdoing. <\/p>\n\n\n\n

Temu said that it complies with local tax legislation, and the products on its website do not include import duties and taxes. <\/p>\n\n\n\n

Shein said it keeps prices affordable through its technology-based on-demand business model and flexible supply chain, not by dodging local taxes.<\/p>\n\n\n\n

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Temu and Shein clampdown in South Africa<\/a><\/blockquote>