South Africa: Tighter Customs Regime Impacts Shein, Temu E-commerce

International e-commerce giants Shein and Temu are pivoting towards local fulfilment and supply chains in South Africa due to the country's tightened customs regime on low-value imports. This regulatory shift has significantly curtailed the growth of cross-border e-commerce, forcing these platforms to abandon their previous strategy of "tax arbitrage" through direct imports. Instead, they are now focusing on establishing local fulfilment and supply chains within South Africa, as highlighted in the "Online Retail in South Africa 2026" report by World Wide Worx, in partnership with Mastercard, Peach Payments, and Ask Africa. The study reveals that the South African Revenue Service's (SARS) intervention has had a more pronounced impact than anticipated, with Shein's growth slowing to 11% in 2025 and Temu experiencing an average monthly decline of 42%.

This development underscores the South African government's commitment to protecting local industries and ensuring equitable tax collection from international e-commerce players. For legal practitioners, it signifies a fundamental shift in the regulatory landscape for cross-border trade, emphasizing the critical importance of compliance with customs duties, VAT, and import regulations. The move by Shein and Temu to local fulfilment will necessitate new legal considerations related to local business registration, employment law, supply chain contracts, consumer protection, and competition law within South Africa. It also sets a precedent for how other international e-commerce platforms might need to adapt their strategies to operate successfully and compliantly in the South African market, moving away from models that exploit perceived "tax loopholes."

The regulatory intervention primarily involves the South African Revenue Service (SARS) and its rigorous enforcement of customs duties, import regulations, and Value Added Tax (VAT) on imported goods. While specific statutes are not named in the excerpt, the "tighter customs regime" and "closure of tax loopholes" refer to the application and enforcement of existing customs and tax legislation, such as the Customs and Excise Act, 1964, and the Value Added Tax Act, 1991. The previous model likely leveraged de minimis thresholds or other import duty exemptions for low-value consignments, which SARS has now tightened or more rigorously enforced. The shift to local fulfilment will bring these companies squarely under South African corporate, labour, consumer protection (e.g., Consumer Protection Act, 2008), and competition laws.

The primary regulatory body is the South African Revenue Service (SARS). The international e-commerce platforms directly affected are Shein and Temu. The analytical framework for understanding this impact was provided by the "Online Retail in South Africa 2026" report, conducted by World Wide Worx, in partnership with Mastercard, Peach Payments, and Ask Africa. Local retailers are also key stakeholders, as the regulatory changes aim to level the playing field and foster fair competition.

Attorneys advising e-commerce businesses, particularly those with cross-border operations or considering market entry into South Africa, must thoroughly understand the implications of SARS's tightened customs regime. This includes advising on compliance with import duties, VAT, and other customs regulations, and assessing the viability of direct import models versus local fulfilment strategies. For clients establishing local operations, legal advice will be crucial on corporate structuring, employment law, supply chain agreements, intellectual property protection, and adherence to South African consumer protection and competition laws. Businesses should anticipate continued rigorous enforcement by SARS and plan their market strategies accordingly, prioritizing full compliance over any attempts at "tax arbitrage."