We all love a bargain, but there is a downside to everything, over the last few years Ali-Express and then Temu and Shein have expanded massively in the online space, and explosion of people buying from these Chinese online retailers, with hard to resist bargains coming direct from China, and landing on your doorsteps for a fraction of the cost of equivalent items bought in the UK, but what is the real cost to our country as a whole.
I have spoken before about the dangers of untested, unregulated products, and the evidence for this is all too prevalent with e-bikes and scooters going up in flames left right and centre, but there is another hidden cost and that is to the country, when you buy from Temu or Shein etc generally your purchase Is less than the £135 single item import duty threshold, meaning that when it enters the UK you / Temu etc do not pay any import duty or VAT on the item. This is known as the “de minimis” rule. Of course this import tax is paid by all UK retailers, which gives Temu & Shein etc an automatic 20% minimum price advantage. But it also means of course that the goods they sell in the UK which would normally be taxed on import and sale are no longer taxed and this in turn is starving the UK government on revenue, revenue which could be going into paying doctors and nurses, filling potholes or even renovating schools.
It’s not just the UK where this problem exists either, Temu, Shein and Ali-Express are a world wide phenomenon, with both the EU and the USA currently drawing up plans to end the de minimis rule and start charging import duty and VAT on everything in order to combat the huge losses of revenue and of course the unfair competition afforded to these Chinese invaders.
In the USA in the 2021, Gap and H&M paid $700 million and $205 million dollars in customs duties alone, with Temu & Shein paying a collective total of absolutely nothing, a potential billion dollar loss to the USA’s government coffers. and by 2022 the two companies are estimated to have reached 600,000 daily shipments passing through US customs and paying nothing in duties or taxes on their way into the USA. and to top all of this, EMarketer expects Temu’s US marketplace sales to grow 136.5% this year, reaching $19.39 billion, on which no duty or sales tax is collected.
A recent article in Retail Week has suggested that ASOS will be knocked out of the top 30 list of biggest UK retailers and overtaken by Shein by 2027. and of course it not just the exchequer that will suffer, companies like ASOS are major UK employers and with their loss of revenue will come the loss of much needed UK jobs.
There is also an even darker side to the likes of Shein and their business practices, from data violations and unethical sourcing, copyright infringement and the use of “slave” labour with a recent report by the U.S. – China, Economic and Security Review Commission citing Numerous controversial practices then have supported Shein and other Chinese e-commerce firms in their dominance of the worlds retail markets.
