South Africa’s National Consumer Commission (NCC) has launched a formal investigation into Chinese ultra-fast fashion behemoths Shein and Temu, marking the most significant regulatory pushback against the platforms since their explosive entry into the African market.
Responding to inquiries on Wednesday, Prudence Moilwa, head of complaints and investigations at the commission, confirmed the probe relates to alleged violations of “various provisions” of the Consumer Protection Act (CPA).
“The investigation was launched in November. The two companies have been alerted, and both have undertaken to cooperate,” Moilwa said.
The stakes are high. If found in violation, Shein and Temu could face administrative penalties of up to R1 million ($55,000) or 10% of their annual turnover in South Africa. Given their estimated revenue, the latter figure would be astronomical. For serious offenses, the legislation even allows for director imprisonment of up to 10 years.
The “Damning” Numbers
The regulatory crackdown coincides with the release of a startling report by the Ecommerce Forum South Africa (EFSA) in November. The data paints a picture of a market undergoing a rapid, structural shock.
According to the report, Shein and Temu have captured a combined 37% of South Africa’s online clothing sales in 2024.
- Revenue: The platforms generated an estimated R7.3bn ($400m) each in 2024.
- Forecast: Combined sales are projected to hit R22.2bn ($1.2bn) by 2030.
- Market Impact: They effectively control a significant slice of South Africa’s total R96bn ($5.3bn) ecommerce sector.
This growth has come at a cost. The report, prepared by the Mapungubwe Institute for Strategic Reflection, estimates that 34,000 local manufacturing and retail jobs are at risk as the platforms capture 20% of the total clothing, textile, footwear, and leather market by the end of the decade.
“This isn’t just about ecommerce growth,” says Dr. Alastair Tempest, CEO of EFSA. “We’re seeing a fundamental shift in how value flows through our economy. These platforms extract consumer spending without the reciprocal investment in infrastructure, employment, or tax base that domestic retailers provide.”
The Tax Loophole
This is not the first time the duo has faced scrutiny. Until mid-2024, Shein and Temu benefited from a customs duty concession — known as the de minimis rule — that allowed goods under R500 ($27) to enter with a flat 20% duty and zero VAT. Local retailers, by contrast, pay up to 45% duty plus 15% VAT on textile imports.
The Department of Trade, Industry and Competition (DTIC) closed this loophole in June 2024, mandating standard tax rates for smaller packages.
“We are fully supportive of free-market dynamics, especially when they benefit entrepreneurs,” said Rael Levitt, CEO of Inospace, a logistics firm, at the time. “But it is crucial that local businesses are given a fair chance to compete.”
Despite the tax changes, the platforms have remained dominant, buoyed by optimized logistics that bypass local warehousing costs. Unlike Amazon, which recently set up local operations in South Africa, Shein and Temu ship directly from Guangzhou to the consumer’s door.
Civil War: Shein vs. Temu
While they present a united front of disruption to local regulators, the two companies are engaged in a bitter feud behind the scenes.
In September 2023, Shein — the older incumbent — filed papers in a US federal court accusing Temu of “mafia-style” anticompetitive practices. The allegations include:
- IP Theft: Copying designs, slogans, and photography.
- Brand Impersonation: Lifting marketing materials and removing Shein watermarks to sell copycat products.
- Aggressive Marketing: Bidding on Shein’s keywords to divert traffic.
The “no love lost” dynamic complicates the regulatory picture, as the two giants fight for dominance not just in South Africa, but globally.
What’s Next?
The NCC has stated it aims to wrap up its investigation by 28 February 2026.
In the meantime, the EFSA has proposed a “CART” framework (Connect, Accelerate, Regulate, Trade) to salvage the local industry. Recommendations include:
- Local Registration: Forcing foreign platforms with over R10m in sales to register local entities.
- Digitized Customs: Real-time tracking to prevent under-declaration of value.
- Digital Free Trade Zones: Modelled on China’s own cross-border pilots to help local MSMEs export.
South Africa finds itself in a geopolitical bind: it is a member of BRICS and counts China as its largest trading partner, yet it must protect its shrinking industrial base.
“This is a ‘seize the moment’ situation,” warns Dr. Tempest. “Without coordinated action now, we risk locking in an extractive model where South Africa becomes merely a consumption market.”