Temu, the Chinese e-commerce platform that has grown rapidly in South Africa this year, has issued a statement saying it is “committed to complying with local laws and regulations in the markets where it operates”.

This comes as it faces criticism for allegedly exploiting loopholes in import taxes to undercut local companies.

In its statement, sent to TechCentral on Friday, a spokeswoman for Temu said: “For South Africa, the displayed prices of goods on Temu do not include import duties and taxes. Applicable taxes will be imposed by local authorities on customers upon the arrival of the package.

“In our commitment to providing the best service to our customers and adhering to local customs laws, Temu collaborates with a reputable logistics company with extensive experience in e-commerce packaging. The logistics company acts as our customers’ agent with the local customs and tax authorities to clear the packages and process and remit applicable taxes.”

But South African retailers are complaining that Temu is using loopholes to undercut local companies and are unhappy that the firm has offered huge discounts in South Africa since its launch in January.

National Clothing Retail Federation executive director Michael Lawrence confirmed the concerns of the federation, trade unions and South African manufacturers in a recent interview with Bruce Whitfield on The Money Show.

Investigations

“All our investigations so far seem to suggest that the offshore online traders from the East are not paying the correct duty and/or VAT; and there are national revenue collection implications; Sars should be acting,” Lawrence said.

“There are lots of small packages coming in and they’re being delivered by courier companies who should be reporting it. We’ve done some tests because these are competitors, but so far we haven’t seen any invoices for products or purchases that we’ve made.”

Read: Temu, the Chinese upstart shopping app menacing Amazon

Textiles and clothing coming into the country are meant to attract 45% duty, plus VAT where necessary. “You’re talking about a serious chunk of cash,” Lawrence told Whitfield. “This morning, I was shown an invoice for R600 with a total revenue collection of 10%, or R60, which makes absolutely no sense. It means that items are either being mis-declared or incorrectly categorised on the invoice.”

The federation has asked Sars for a report into the matter.

“We’ve identified a bunch of courier companies and specific service providers, and we want a generic report into their services for e-commerce traders from the East to see if their business practices are equitable. We do know the volume of small parcels has gone up exponentially in the last three or four years and most of it comes through as air freight.

“Every parcel can’t be stopped by Sars officials at land, sea and air borders, but they have to develop some smart algorithms to identify which products are likely to be problematic,” Lawrence said.

“That in itself is interesting given South Africa’s current challenges with air travel and the logistics at our ports, where large container loads for big retailers are being held up because of the handling problems going on there.”

Read: South Africa takes a Shein to China

The rise of fast-fashion e-commerce retailers such as Temu and Shein is turning the global air cargo industry upside down, as they increasingly vie for limited air-cargo space to woo consumers with rapid transit times, according to a report by TimesLive. – © 2024 NewsCentral Media