South Africa
Illegal imports and under-invoicing of clothing and textiles is often linked to organised crime, said a senior official from the SA Revenue Service (SARS). The official, who wished to remain anonymous, said criminal activity in textiles and clothing was not always as "mob-style" as the smuggling of illegal drugs and tobacco.
However, "big profiteers" were carrying out operations in an organised manner with unscrupulous connections throughout the supply chain. "The game of under-invoicing is definitely a king's game, as there is some measure of risk management through supply chains," said the official.
Concerns about organised criminal activity fuelling imports of illegal textiles and garments were also voiced by the National Clothing Retail Federation of SA (NCRFSA), the SA Clothing and Textile Union (Sactu), the Apparel Manufacturers of SA (Amsa) and the largest shoe manufacturer in the country, Eddels Shoes.
NCRFSA director Michael Lawrence highlighted an incident earlier in the year in which a specialist policeman, warrant officer Johan Nortje, was shot dead in his driveway after he had intercepted a consignment of replica branded clothing from China valued at of R100-million.
"This is not a small-change problem and it is affecting different players in many different ways," said Lawrence. Under-invoicing of goods is costing the South African economy billions of rands in tax revenue every year and is stifling local industry. Finance minister Pravin Gordhan has said the country will lose out on an estimated R13-billion of tax revenue in the current fiscal year, bringing the year's deficit to almost R165-billion.
During the past financial year, SARS referred 149 criminal cases to the National Prosecuting Authority, most of them related to smuggling. From these, 56 convictions were obtained. SARS commissioner Oupa Magashula said at a recent National Economic Development and Labour Council session that raids and seizures of illicit goods had been prioritised by SARS. Goods to the value of R180-million were seized in raids during 2010 and 2011.
SARS figures show that about 70% of all clothing and textiles in SA are imported goods, while Sactu research reveals that almost a third of the country's clothing market is made up of illicit goods. A recent study carried out by the department of trade and industry found a 60% difference between what China said it had sold in clothing to SA and what local authorities recorded as coming in.
Amsa director Johann Baard said imports from China recorded by SA customs were R6.7-billion in 2010, which suggests under-invoicing of clothing imports from China alone came to more than R10-billion a year. Baard said this was more than the total value of all declared clothing imports in 2010, which was R9-billion.
Sactu research director Etienne Vlok said that under-invoicing was negating SA's export duties. SARS numbers showed women's woven trousers were being imported at an average cost of R7.33 a unit, while men's knitted trousers were imported at an average price of just over R12 a unit. "This gives some indication of the level of under-invoicing that is taking place and the chances that people are taking.
"This has serious implications for not only the fiscus, but also for government's efforts to create additional jobs through its New Growth Path and the Industrial Policy Action Plan," said Vlok. SA imposes 45% duty on imported finished garments to protect local manufacturers. Yet the clothing and textile sector has been declining over the past three decades. Baard said that while illegal imports were not the only reason for the decline, it had added additional pressures to an already stressed industry.
Every year about R1.5-trillion worth of goods move through SA's borders, with an average of 600 trucks a day passing through the Beit Bridge and Lebombo border posts alone. This makes it difficult for SARS to strike a balance between moving legitimate goods swiftly through checkpoints and ensuring that vehicles carrying illicit goods are detected, said Magashula. SARS has mandated customs officials to focus on textiles and other imported products, targeting undervalued imports. However, the SARS official pointed out that the customs agency on its own could never solve the smuggling problem.
Reference: LONI PRINSLOO, Business Times, 5 November 2011
The ReDress Consultancy has spoken at lengeth and highlighted the urgent need to address the scourge of illegal imports.
Sunday, 11 July 2010
South Africa’s Fashion Industry must tackle illegal imports
South Africa’s fashion sector once again missed an opportunity to highlight specific “fashion-nomics” that are hindering this vital link within the apparel and textile value-chain. Africa Fashion International through the Africa Fashion Awards could have used this platform to create awareness about one issue that is impacting on the industry providing an educational platform for fashion consumers and that is the illegal imports flooding our country.
Thursday, 10 May 2007
Chinese Clothing still being imported in South Africa
Durban - Rumours are rife in the clothing and textile industry that retailers, buyers and importers are breaking the law by continuing to import goods from China but are rerouting them through India, where “Made in India” labels are attached to the garments. The rumors surfaced while Renato Palmi – a researcher and development specialist in the clothing, textile and fashion sector was undertaking research for the Durban Fashion Council.
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