Fast-Fashion Giant Shein Is Under Investigation in South Africa for Import Procedures

Textile workers and industry groups allege Shein sends its goods in small packets to avoid paying import taxes.
The South African government follows allegations from regional textile unions and industry groups that fast-fashion retailer Shane may be abusing tax cuts to gain an unfair advantage in Africa’s most advanced economy. announced Monday it was investigating the issue.

A Ministry of Trade, Industry and Competition official declined to provide information about the investigation, but said the investigation was launched in response to concerns from labor and business groups.

The allegations by South African organizations are similar to those by American unions and manufacturers who allege that Shein and other Chinese merchants are abusing provisions of the US customs law that exempt them from paying tariffs on imported goods. .
An investigation into Shein’s import tactics was not officially confirmed by the government until after the South African investigation.
Founded in China and now headquartered in Singapore, Shein has grown into one of the world’s largest online fashion retailers by sending ultra-low prices directly from China to customers in over 150 countries. You can buy gowns for her under $5 and women’s tops for just $2 on her website at Shein.

South Africa’s National Clothing Retail Federation and the South African Clothing and Textile Workers’ Union allege that Shein deliberately distributes its goods in low-priced, small packages to avoid paying import duties.
These taxes are in place to help local businesses compete with low-cost imports.
According to Etienne Broc, the union’s national industrial policy officer, import records show that the union is actually using gaps designed for individual consumers. If it’s below the value threshold, you don’t have to pay the same tax as someone importing tens of thousands of garments.

According to Vlok, the tax Shein is paying could be as little as 10% to 20%, which the South African government typically charges on imported apparel.

In that case, he said, we need to look at solutions to fill that gap. “Shayne doesn’t seem to play by the rules others play,” says the author.

A Shein representative said the business is dedicated to complying with the local rules and regulations of the markets in which it operates.

Similar concerns about the regulation known as the de minimis rule have been expressed by US organizations such as the Alliance for a Prosperous America, made up of US manufacturers and labor groups. We use this rule to allow American travelers to bring back duty-free items from abroad to avoid paying customs duties.

As long as the product is packaged, targeted to a specific buyer, and priced at less than $800, the rule applies to US stores selling Chinese imports and Chinese stores selling directly to US consumers. Allow companies to exempt from tariffs.

According to Michael Lawrence, executive director of South Africa’s National Apparel Retail Federation, the fact that Shane has a very aggressive lower price range is somewhat of a global phenomenon.
“My membership is not the only one trying to understand how aggressively low pricing is possible.”

Content provided: wall street journal & NFH

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