In a recent presentation to industry stakeholders, the department cited trade statistics from the South African Revenue Service (SARS) showing that textile and apparel worth R15,3bn were exported from China to SA last year.
Invoices, however, reflected imports worth only R6,1bn, representing a 60% shortfall in invoicing.
Industrial policy chief director Nimrod Zalk said the problem was not isolated, but constituted a “systemic fraud right through the value chain”.
“There has been a surge in imports, but what has become apparent is a gigantic underinvoicing of the imports. The whole industry needs to clean up its act in this regard,” he said.
The department has yet to decide whether it will extend quotas on Chinese clothing and textile imports, which expire at the end of the year.
Zalk hinted the measure was being considered. “The (import) tariff is a price-based instrument. What underinvoicing does is to undermine that price-based mechanism. The quotas to a certain extent remedies that. Of course, we need to look at unintended consequences.”
But National Clothing Retailers’ Federation executive director Michael Lawrence was unhappy about the plan.
“The issue of illegal imports is one of value. You can’t fix that with a volume-based measure.”
Retailers had raised concern about illegal imports, and called for a task team to be formed, he said, urging a “systemic approach”. Retailers were committed to the trade and industry department’s intent to make the value chain work, Lawrence said.
“But can we please not do it with a stick that’s being waved at us, and this stick has nothing to do with the problem.”
The extension of quotas would present a major headache for retailers.
With the industry roughly following a six-month cycle, orders for goods as far ahead as April have been placed. Shipments for the first quarter of next year were probably already on the water, Lawrence said.
