Growing disquiet from European retailers has forced the European Union to consider closing the competitive threat from (principally) Chinese online retailers who currently benefit from the avoidance of import duties for low cost shipments to consumers. The duty free ceiling is currently set at €150 per shipment and this has always been routinely abused by the merchants breaking higher value customer orders down into separate shipments to brazenly avoid import duties. The same happens to DTC order shipments coming into the UK where the tax free limit is set at £135.
This rising concern about the unfairness of competitive advantage is seen as a direct attack on the likes of Shein and Temu which have flooded Europe and the UK with low priced offers which their UK and European counterparts, which are paying all regulatory taxes and duties on their bulk import shipments, cannot hope to compete with. The additional benefit enjoyed by Chinese merchants is the subsidy on postal rates from China into Europe which ordinarily means that it can cost less to post a package from China to Brussels, for example, than it does to post the same package from Brussels to Antwerp.
The European Commission is proposing to completely remove the import duty exemption and the discussion on this, in the European Parliament, is scheduled for later this month, according to Bloomberg.
Meanwhile, the UK government is also under pressure from UK retailers to take equivalent action.
These moves would naturally impact all Chinese marketplaces offering direct-to-consumer services and, in Shein’s case, could well impact its planned listing on the London Stock Exchange. The profits derived from all of the Chinese DTC businesses in significant international markets would be slashed at a stroke.
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