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The War on Local Entrepreneurs: How Global E-Commerce Giants are Strangling South Africa’s Economy

The Institute of Chartered Entrepreneurs has joined the chorus of critics calling for reforms in South Africa’s e-commerce sector, warning that the rise of low-cost Chinese fashion and general merchandise online retailers is threatening the country’s economic growth and local industries.

The non-profit organization, which represents entrepreneurs, start-ups, and small and medium-sized enterprises (SMEs), has accused global e-commerce giants like Shein and Temu of exploiting tax loopholes and unfair competition, which is devastating local businesses and putting thousands of jobs at risk.

According to Tebogo Khaas, global chief entrepreneur of the Institute of Chartered Entrepreneurs, the situation is dire. "The offshore global e-commerce sites that cater to South African consumers threaten the nation’s reindustrialisation and localisation efforts, with thousands of jobs on the line. We call upon all stakeholders to support measures that ensure fair competition in the e-commerce sector."

Khaas points out that while consumers may enjoy affordable prices, the long-term consequences of supporting these global e-commerce giants are catastrophic. "The affordability of products from these platforms should not come at the cost of undermining local industries and the jobs they provide."

The South African Revenue Service (SARS) has recently implemented new import duties on clothing items manufactured internationally and bought from international e-tailers, which will apply to purchases under R500. An import duty of 45% plus VAT will apply to such purchases.

However, almost 20,000 South Africans have signed an online petition opposing the new duties, claiming that they will only hurt consumers and local businesses. "As citizens and consumers, we recognise the importance of taxation in funding government services and programmes," the petition reads. "However, South Africans cannot afford this. We buy from Shein and Temu because we cannot afford clothes from local businesses. The point of Shein and Temu is affordability. SARS can increase the tax so quickly, yet they don’t do anything regarding serious issues in South Africa. Shein and Temu don’t only benefit consumers but local couriers as well. This is not fair on consumers; government does not care about us citizens; they just want to eat up all of our money."

The Institute of Chartered Entrepreneurs is urging policymakers to take immediate action to address the issue. "The South African Revenue Service’s decision to impose a 45% duty on clothing imports before VAT from 1 July is a step in the right direction. The duties on low-value imports, although still very low, are essential for supporting vulnerable consumers employed within the manufacturing sector."

The battle for the soul of South Africa’s e-commerce sector has begun. Will local entrepreneurs be able to survive the onslaught of global e-commerce giants, or will they be crushed by the weight of unfair competition and exploitation? Only time will tell.



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