On Monday, March 13, South Africa’s Department of Trade, Industry and Competition announced an investigation into Chinese online fast-fashion retailer Shein following concerns over its import practices.
The investigation was in response to calls from local labor groups and competitors alleging that Shein’s business practices allowed it to undercut the market. Two trade unions — the National Clothing Retail Federation of South Africa and the Southern African Clothing and Textile Workers Union — had filed formal complaints, in which both alleged that the company failed to pay import duties on orders made by its customers in the country. But thanks to its low prices, Shein remains popular with many South African customers.
Shein has taken off in South Africa over the past two years, and is the top shopping app on the country’s Google Play store, with almost 380,000 downloads. South African customers and sellers told Rest of World the brand has become an attractive option because of its low pricing. Shein ships items such as women’s clothes that cost as little as 65 rand ($3.50); local merchants sell similar products at 150 rand ($8) and above.
An official with one of the trade unions claimed Shein pays as little as 10%–20% on import tariffs compared to standard tariff charges of 40%–45%. In the complaint, the unions allege that the company deliberately sends goods to its customers in small packages to accrue less import duty.
Bongani Lukhele, director of media relations for the Department of Trade, Industry and Competition, confirmed to Rest of World that an investigation against Shein was underway, adding that he could not share more information at this stage.
According to Michael Lawrence, executive director of the National Clothing Retail Federation, an organization representing the interests of retailers in South Africa, several sellers in the local textile industry had questioned systems that they claim enabled Shein to sidestep import taxes.
“The impact of Shein on the clothing and textile space is recorded worldwide,” Lawrence told Rest of World. “While Shein does not have a physical presence [in South Africa], it has an impactful commercial presence. What we are trying to understand as retailers is their pricing, which seems to have a competitive advantage. We want to understand if this pricing does not reflect on evasion of import tariffs.”
Sungwa Mwelwa, a Shein customer based in Randburg, a suburb of Johannesburg, told Rest of World that while she is aware of the investigation into Shein, she believes the company’s import process is fair and convenient.
“Their customs fees are very fair, and their delivery process is quite good because, as individuals, we order in smaller quantities,” she said. “Despite making us pay for shipping, I find that the amount paid for orders is still less compared to the ridiculously high prices charged for clothes by some local stores.”
Clara Musa, a resident of Mpumalanga province in eastern South Africa, acts as an intermediary for Shein customers. She collects orders from friends and neighbors and buys in bulk to lower shipping costs. Musa told Rest of World the platform has become so popular in her neighborhood that users form groups to bulk-order and take advantage of discounts.
“Sometimes we team up as groups of up to five individuals to place orders of anything between 900 to 2,000 rand,” Musa said. “All we have to do is check what we want on the Shein app, take screenshots, and combine our orders to get 10%–15% discounts.”
Ali Baba, a Shein clothing distributor in Cape Town, told Rest of World he doesn’t believe the investigation will impact Shein’s presence in South Africa. “The brand has already sold itself such that whatever the outcome of investigations by the [South African] government, Shein can still survive because it has made a name for itself,” Baba said.