News24 | Temu’s move to SA warehouses will be ‘monitored’, Tau says

Minister of Trade, Industry and Competition Parks Tau has said his department is looking to update regulations governing e-commerce sites.

• Minister of Trade, Industry and Competition Parks Tau said the National Consumer Commission will probe the e-commerce industry in SA, including investigations around popular site Temu.
• Tau said the probe will also investigate concerns about the “deceptive practices, quality, and safety of products” on the site.
• The minister also said that the department will work towards tightening e-commerce site regulations, including protecting small businesses.
• For more financial news, go to the News24 Business front page.

The popular Chinese shopping platform Temu may face increased local scrutiny in the coming months, Minister of Trade, Industry and Competition Parks Tau says.

“The department has noted media reports that Temu has launched its ‘local warehouse’ and the National Consumer Commission (NCC) shall be monitoring these developments and their impact on the domestic retail sector,” Tau said in response to a parliamentary question from the EFF.

In July, Temu announced that it was now stocking some of its products, which were previously dispatched from China, in local warehouses (owned by other logistic companies) to ensure faster deliveries. This also enables the group to sell larger items, like furniture.

Since launching in SA at the start of 2024, Temu has emerged as a big local seller thanks to its low prices. Last year, Temu and another Chinese retailer, Shein, together sold an estimated R7.3 billion in local sales, according to a report by the Localisation Support Fund, a non-profit organisation funded by the private sector. The report found that this represented 40% of the online market for clothing, textiles and footwear.

South African manufacturers, retailers and labour groups have been critical about the impact of the cheap Chinese imports. In contrast, South African Revenue Services last year estimated that SA suffered tax losses of R3.5 billion due to previous import loopholes that allowed packages of below R500 to imported with a flat-rate duty of 20% and no VAT.

READ | Shein and Temu disrupted, but not conquered, SA fashion market — report

The NCC will in the next year conduct a detailed scoping of the e-commerce market in South Africa to identify if there are areas that require investigation in terms of consumer protection laws, Tau said.

Tau said the NCC has not received formal complaints against Temu, although it has noted concerns of “deceptive practices, quality and safety of products” elsewhere.

“These are some of the practices that the scoping of the e-commerce market seeks to understand, particularly to assess if South African consumers are affected. The NCC, after gathering data, will determine if there is a reasonable suspicion to proactively initiate an investigation.”

The minister also said that the department will work to introduce and amend consumer laws, including the Consumer Protection Act (CPA), to maintain “fair business practices” and protect local businesses, including SMMEs. “From a regulatory perspective, there is scope to modernise and harmonise all e-commerce-related laws. More specifically, the department is considering measures to strengthen and align the CPA with the e-commerce ecosystem through regulations or amendments to the CPA.”