South Africa’s National Consumer Commission has opened a formal investigation into e-commerce giants Shein and Temu, signaling a major regulatory reckoning for the Chinese ultra-fast fashion platforms as they rapidly expand across the African continent.
The investigation, launched in November 2024, focuses on alleged violations of “various provisions” of South Africa’s Consumer Protection Act, according to Prudence Moilwa, head of complaints and investigations at the National Consumer Commission.
“Both companies have been alerted, and both have undertaken to cooperate,” Moilwa confirmed in a statement on Wednesday.
The Financial Stakes Are Massive
The potential penalties are staggering. Under South African law, companies found guilty of consumer protection violations face administrative fines of up to R1 million ($55,000) or 10% of their annual turnover in the country, whichever is greater.
For context, Shein generated approximately $24 billion in global revenue in 2023, with projections targeting nearly $60 billion by 2025, while Temu reached roughly $18 billion in 2023 and aimed for $60 billion in 2024. In South Africa specifically, research estimates the two platforms collectively achieved R7.3 billion ($400 million) in sales in 2024, accounting for nearly 4% of the country’s total clothing retail market and a staggering 37% of the sector’s e-commerce sales.
A 10% penalty on their South African revenue alone could amount to R730 million ($40 million) combined. The legislation goes further for serious offenses, allowing for criminal prosecution that could result in director imprisonment of up to 10 years.
A War Between Giants
While both platforms face regulatory scrutiny, they’ve also been locked in an increasingly bitter rivalry that has spilled into courtrooms worldwide. The two have accused each other of an array of violations ranging from copyright infringement to fraudulent business practices.
In August 2024, Shein filed an 80-page lawsuit against Temu in Washington, D.C. federal court, accusing its rival of systematically stealing its designs, operating a fraudulent marketplace, and encouraging sellers to infringe on Shein’s intellectual property. The suit alleged that Temu “strategically ripped off” the Shein brand and used fake social media accounts to impersonate Shein and redirect customers.
Temu hit back hard. In its counter-lawsuit filed in December 2023, Temu accused Shein of using “mafia-style intimidation” tactics to bully suppliers into exclusivity agreements, preventing them from working with Temu. The platform claims Shein has filed over 33,000 Digital Millennium Copyright Act takedown notices—averaging 170 per day—to disrupt Temu’s operations through what it calls a “bad-faith campaign.”
A federal judge recently ruled that Shein must face Temu’s copyright and trademark infringement claims, though some antitrust claims were dismissed.
Different Business Models, Similar Controversies
Despite their heated rivalry, the two platforms operate quite differently. Shein works directly with a network of Chinese suppliers to produce clothing in small batches, releasing 500 to 2,000 new pieces daily at rock-bottom prices. The company maintains tighter control over its supply chain and focuses primarily on fast fashion.
Temu, by contrast, operates as a pure marketplace platform spanning 29 product categories, from home goods to electronics. Launched in September 2022 by PDD Holdings (which owns Chinese e-commerce giant Pinduoduo), Temu has rapidly emerged as a formidable competitor, even overtaking Shein in U.S. market share through aggressive advertising and “shopatainment”—a gamified shopping experience that blends entertainment with commerce.
Both platforms have faced mounting criticism globally over labor practices, product safety standards, environmental impact, and their connections to Chinese manufacturing. Shein alone faced over 40 lawsuits in 2022, primarily from independent designers and established brands like H&M and Uniqlo alleging copyright infringement.
Impact on South African Retailers
The disruption from these Chinese e-commerce players has been profound. South African fashion retailers have seen their share prices plummet in 2025: Mr Price down 25%, The Foschini Group down 31%, Truworths down 46%, and Pepkor down 10%.
Research commissioned by the Localisation Support Fund estimates that Shein and Temu’s R7.3 billion in South African sales translates to R960 million in lost local manufacturing sales and approximately 8,000 jobs either lost or not created. The platforms now account for 15.3% of the online retail market used by South Africans, placing them second only to Takealot’s 32%.
More recent data from Reveal Insights suggests these figures may be conservative, with Shein holding 12.3% market share and Temu at 16.6% among economically active South Africans in the 2024/25 period.
What Happens Next
While the specific violations under investigation remain undisclosed, the Consumer Protection Act covers a broad range of potential issues, from misleading advertising and unfair business practices to product safety and return policies. The NCC’s willingness to pursue companies of this scale suggests the allegations are substantial.
Both Shein and Temu have committed to cooperating with the investigation, though neither company has issued public statements addressing the specific allegations. The investigation’s timeline remains unclear, but consumer protection cases of this magnitude typically take months to resolve.
The outcome could set a crucial precedent for how African nations regulate the new generation of cross-border e-commerce platforms, potentially influencing regulatory approaches across the continent. Similar scrutiny is mounting globally—France recently fined Shein €150 million for data privacy breaches, €40 million for misleading discounts, and €1 million for greenwashing, while the European Union is probing whether products sold on these platforms meet EU safety standards.
For now, both platforms continue operating in South Africa while the investigation proceeds, though the specter of massive penalties and potential criminal charges hangs over the proceedings.
