South African Retailers Call for Action Against Temu’s Tax Exploitation

Amid the dynamic transformations shaking the South African retail landscape, local businesses have sounded the alarm on practices that could undermine the competitiveness of domestic market players. A particular point of focus is the exploitation of what is perceived as tax loopholes by burgeoning Chinese e-commerce platforms, with Temu at the center of the latest controversy.

According to a report by News24, South African retailers have raised their concerns to the government, calling for an urgent reassessment of tax regulations that currently seem to favor international online behemoths like Temu and Shein. These global giants have found fertile ground for growth, yet their business models have prompted fear among local retailers regarding tax advantages that could possibly tip the scales.

Etienne Vlok, an influential figure at the Southern African Clothing and Textile Workers Union, voiced out the pressing need for tax rule alterations on small-imported items, which could protect local businesses from unfair competitive pressures. The crux of the issue lies in the so-called de minimis rule – a regulation that allows the import of items under a certain value to bypass standard customs declarations and duties.

In response to the criticisms, Temu – supported by its parent company, PDD Holdings Inc. – has not only denied reliance on such tax policies but also emphasized its core business strengths. According to Temu spokesperson Kieran Powell, the secret to their rapid success and market acceptance in South Africa since their January launch is the result of supply chain efficiencies and operational proficiencies that have been honed over the years.

Powell further added that Temu is not just open to policy modifications by legislators but also supportive, provided these policies are in line with consumer interests and create a fair competitive environment.

The Chinese retailer's stance appears to highlight a willingness to engage with policymakers and asserts confidence that policy changes will not impact the company's competitive prowess. Temu, which currently operates in 49 countries, has further demonstrated its ambition for international growth by placing ads at high-profile events like the Super Bowl.

As South Africa wrestles with the complex issues of global e-commerce integration, growth, and domestic industry protection, the case with Temu opens a broader debate that carries significant implications for tax policy, international trade, fairness in competition, and the future of South African retail.