(June 12): More cheap parcels exported from China are flowing into the UK than rival European economies, undermining British retailers that want the government to accelerate a promised crackdown.
Chinese export data shows US$1.8 billion ($2.3 billion) of cheap parcels entered the UK between December and April, the sixth-most globally and more than France and Germany combined. Though the total was 11% lower than a year earlier amid a global slowdown, the drop was far smaller than in France where the government implemented a tax on the parcels in March.
Large British retailers including Primark and Marks & Spencer Group plc are pushing for the UK government to take steps this year to close a tax loophole they say is helping online giants such as Shein and Temu gain market share.
In her budget statement in November, Chancellor of the Exchequer Rachel Reeves issued her promise to do so by 2029, but retailers say that is not soon enough. Meanwhile the government has yet to publish responses to a public consultation on the plan that closed on March 6.
The delay “only supports those operating overseas with no UK footprint and disadvantages UK retailers who employ thousands”, said George Weston, the chief executive officer of Primark owner Associated British Foods plc. “Other countries are acting decisively to support their domestic sectors and the government must do the same.”
Scrapping the exemption is “a significant reform which backs our businesses to compete and grow”, a UK Treasury spokesperson said. “We are removing the customs duty relief for low-value imports and reforming the way these goods are declared into the UK to ensure all goods are appropriately controlled.”
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Shein is engaging with the government on the UK’s proposed reforms, the company said in a statement. “Advocating for measures that risk increasing costs for British shoppers in the name of competitiveness will not ultimately benefit British consumers or retailers,” it said.
Temu didn’t respond to multiple requests for comments.
See also: Reeves to lower UK tax burden to attract wealthy US expats — Bloomberg
Crackdown
French President Emmanuel Macron’s government imposed a €2 (US$2.30) tax on low-value imports in March, after introducing advertising restrictions on fast-fashion brands earlier in the year. The European Union is set to introduce a €3 fixed customs duty on parcels valued under €150 from next month, ahead of more extensive measures in 2028. US President Donald Trump scrapped so-called de minimis exemptions in the US last year.
“I would really ask the government to go faster on the de minimis exemption abolishment,” said Tjeerd Jegen, the CEO of discount retailer B&M European Value Retail plc. The 2029 deadline is “way too late”.
Globally, Chinese low-value parcel exports fell 11% in the period from a year earlier, matching the drop in the UK. That’s happening as Chinese firms shift strategy in response to changes to de minimis rules around the world, according to Jun Du, a professor of economics at Aston Business School. Larger platforms are increasingly consolidating goods into bulk shipments, she said.
Even so, eighteen British retailers and associations including M&S and Next plc wrote to the government last month, urging ministers to bring forward the crackdown. The companies noted that a flat fee of £2.60 (US$3.47) per parcel would raise £1.7 billion a year for the UK treasury.
Low-value imports to the UK tripled between 2021 and 2024, while more marketing is being targeted at UK customers, the retailers wrote.
Tax revenue
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“This isn’t just important for British retail,” said Alex Baldock, the outgoing CEO of electronics retailer Currys plc. “Closing the loophole would generate significant tax receipts for the Treasury at a time when the government is looking for every pound of revenue it can find.” He added that Currys isn’t directly affected by the import of low-value parcels.
“Waiting until 2029 risks allowing billions more pounds of imports to enter under a regime that creates a structural disadvantage for UK retailers and reduces potential tax revenues,” said Dan Finley, the CEO of clothing retailer Debenhams Group.
In France, anti-fraud authorities have fined Shein, including for not providing consumers with mandatory information. Junior Minister for Small Business Serge Papin said on social media he is fighting against “unfair competition”.
Shein, founded in China and now based in Singapore, also locked horns with the French government last year when ministers attempted to suspend its online platform in the country over sales of childlike sex dolls and weapons.
The company said it is contesting the fines in full. “We take our legal and regulatory obligations in France very seriously and remain fully committed to transparency and compliance with French regulations,” Shein said.
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