South Africa could be losing tax revenue and jobs when e-commerce platforms target the local market but operate offshore, such as Temu and Shein.
This is according to Takealot Group CEO Fred Zietsman, who made the comments during an interview with 702 on Tuesday (30 April).
Chinese retailer Temu is aggressively advertising its platform since launching in South Africa in January. It joins another Chinese marketplace Shein, whose app became the most popular on Google Play store locally last year after launching in 2020.
The two platforms are known for selling products at low prices that many retailers in South Africa, including Takealot, are unable to match. Part of their advantage is that they do not have physical infrastructure locally.
Takealot on Temu and Shein
Zietsman revealed that Takealot is having discussions with governmental and non-governmental entities about offshore e-commerce regulation in South Africa.
“Competition needs to be fair, and it’s not just for Takealot, [but also] for small businesses that transact on our platform,” he explained.
“For example, if I’m a third-party selling on Takealot’s marketplace, I import my goods from abroad and I pay my import duties, VATs and tariffs, which puts an inflationary part into my pricing.
“I think it’s clear, if you read the media, that some of the new players don’t actually follow that. We’ve made it very clear and we’re actively speaking to governmental and non-governmental institutions to make clear that revenue leakage to this country’s fiscus is not in anybody’s benefit in the short term.”
Zietsman added that in the long term, issues such as import substitution, jobs, industrialisation and economic growth have to be considered.
“What we believe is that there has to be an acknowledgement of what offshore online means,” he explained.
“If you’re a business and you’re selling into our country, but you don’t put up any physical infrastructure and you don’t employ anyone, that’s maybe a net loss to the country as opposed to a gain if you can enable online, onshore.”
Temu has previously denied allegations that it may be taking advantage of import tax loopholes. It explained that while it doesn’t include import taxes on the prices displayed on its platform, they are imposed by local tax authorities when products are delivered to customers.