Minister for Trade, Industry and Competition (the dtic), Ebrahim Patel, has called for an urgent need to balance the playing field in the e-trading sector to ensure platforms like Temu and Shein paid equitable import tariffs and value-added tax (VAT) to balance the clothing retail sector's performance.
This comes as local operators complain of the competitive edge these Chinese retail giants have over locally-based industry.
Patel yesterday said there were challenges brought by the booming e-trade sector that could undermine the progress made in the last five years, including the creation of more than 251 jobs in manufacturing and 280 000 jobs in the retail sector.
Speaking alongside Retail Clothing, Textile, Footwear and Leather (R-CTFL) Master Plan Executive Oversight Committee (EOC) and other stakeholders, Patel said the key principle was that no player in the clothing and footwear space should be at a disadvantage against others.
“South African retailers should not be at a disadvantage. South African online retail should not be disadvantaged, and manufacturing should not be disadvantaged,” he said.
“That equally applies with a foreign on-line trader selling into the South African market. We must recognise that there is an urgent need to address the issue.”
The R-CTFL Masterplan was developed to produce a competitive, sustainable and dynamic R-CTFL value chain that provides its customers with compelling products invested in growing employment and advancing inclusion and transformation.
Seven commitments form the core of Phase 1 of the R-CTFL Master Plan.
These include growing the local market for local CTFL products, increasing local CTFL procurement, stemming the flow of illegal imports and transforming the value chain from stakeholders.
The South African clothing retail market has expressed concern over the phenomenal explosion of Temu in the local market as the online app is reported to have attained more than 350 million app users across the globe.
Its principle is based on minimising additional costs often incurred by traditional retailers by directly linking customers with leading manufacturers, removing unnecessary intermediaries and associated costs.
Meanwhile, Patel said South Africa was looking forward to a considerable extension of the Africa Growth And Opportunity Act (Agoa) which expires in 2025.
“The US Congress has said it seeks to extend the next phase of Agoa considerably. And for us, that means intensifying our capacity in manufacturing clothing and footwear to supply not only the US, but other markets including the African continent,” he said.
Patel said there were also initiatives to broaden the clothing and footwear by developing closer collaboration with downstream suppliers including cotton, hemp and mohair local production.
Part of gains made since the Master Plan was initiated in 2019 include turning the scale of high-level of imports, which were under-declared.
With the South African Revenue Service's intervention, imports have decreased by some 34% while the value of local products has increased.
On transformation, there have been 33 black industrialists over the last two years that have been established in the sector with the aid of R2.5 billion grant funding from the dtic and funding access of about R44bn from the Industrial Development Corporation (IDC).
BUSINESS REPORT