Chinese e-commerce retailer Shein has divided opinion with its first physical pop-up store in South Africa that lured bargain hunters and spurred a tax change after rivals said the competition was unfair.

The store that opened in Mall of Africa, north of Johannesburg, for just over a week in August attracted long queues of customers eager for clothes and accessories often selling for less than R200/item.

Some, like 30-year blogger and fashion influencer Mi’chal Naidoo, said she was won over. “First initial expectation from Shein was that it was not up to my standard of what good quality would be,” Naidoo said.

“So, when I started noticing that, hey, this is actually like every piece of clothing in my cupboard, I was like maybe I should rethink this and give it a try,” she added. “It’s actually really affordable.”

But the price for Shein products that can only be bought online is expected to rise as South Africa’s tax authority has increased levies to protect local retailers.

From 1 September, people importing low-value parcels have been required to pay VAT of 15%, which they previously avoided, and the tax authority has said it could also increase the 20% customs duty concession rate they pay. The standard level is 45%.

Critics

Shein’s critics, who have said its low prices resulted from the customs duty exemptions, say the changes will help achieve a level playing field, but they also need to sharpen their game.

“We have to get smarter in order to be more responsive,” said Michael Lawrence, the executive director of the National Clothing Retail Federation that represents fashion retailers in South Africa. — (c) 2024 Reuters