Shein, an online fast fashion retailer, is being investigated by the SA government for alleged loopholes in their import tax.
Durban - Alleged loopholes in the import taxes of online fast fashion brand Shein are being investigated by a government department.
The allegations against the retailer pertain to the company’s alleged exploitation of low import taxes in order to sell its clothing at low prices. Concerns have also been raised related to the company’s employee conditions and environmental practices.
The local textile union and industry federtions have called on the Department of Trade, Industry and Competition (DTIC) to investigate whether there were any unfair advantages when it came to the import of Shein goods into the country.
Bongani Lukhele, the director of media relations at the DTIC, confirmed that there was an ongoing investigation by the department into the matter.
However, they would not comment further. Michael J Lawrence, executive director of the National Clothing Retail Federation of South Africa, said they needed an assurance from government that fair retail practices were being adhered to. “We’re identifying that there may be some peculiar practices, just because of the kind of price points and trading legality that we have.
We certainly don’t know at this point that there are price misdeclarations or tariff non-payments, and the like, that are taking place, but we have asked the government to meet with us,” said Lawrence. He said they needed assurances to a list of points they would be raising with government.
“There is a little bit of a conversation going on that’s part of a bigger conversation. Everyone’s trying to work out what is online offshore doing. It’s not just one service provider. There are a number of them that have been identified. This is just the most prominent one.
We just want to make sure that everything is in order and by the book,” Lawrence said. “Government needs to be clear and we want to be clear that the government knows what we are asking for, and why we are asking for it and what kind of accountability comes – both with the request, and the information that we are likely to get.”
Lawrence said that their concern was that there had allegedly been a number of reports worldwide of eastern-based online traders not having the same depth of accountability to manufacturing processes and product inputs that retailers do.
“For example, when you order something online the seller doesn’t have to declare what type of fabric it is, what the fabric is made of, what the washing conditions are, etc. Whereas we in retail are obligated when a product is imported or made locally to have labelling,” Lawrence said.
The national industrial policy officer of the South African Clothing and Textile Workers Union, Etienne Vlok, said they believed Shein’s entry into the country was bad news for the economy, jobs and the environment. “We think that the company uses a model of production that is one that takes us back in terms of employee conditions and environment practices.
That allows it to produce very cheap garments but it also uses very cheap materials and produces garments that won’t last.
The concern with that is you buy a garment and after a few weeks you can’t use it and it ends up in a landfill which is not good for the environment at all.
We have raised the issue of Shein and our concern that the company is not complying with the necessary tax practices and laws, thus we have asked for an investigation,” said Vlok.
He said the union wanted the tax regime and tax laws to be changed in order to close any loopholes that the company may be using to import its products into the country. “We should investigate the company to see if it is breaking any other tax laws, and if it is, it should be fined and we should make sure we collect the necessary tax for the fiscus to enable the government to deliver the services that it should,” said Vlok.
Attempts by the Sunday Tribune to obtain comment from Shein had been unsuccessful by the time of publication.
SUNDAY TRIBUNE