The US is closing a tax loophole for low-value shipments, impacting e-commerce.
- Shein claims this change won’t hinder its competitive edge significantly.
- The proposed rules target the ‘de minimis’ threshold for duty-free imports.
- Shein’s on-demand model is a key factor in its market advantage.
- Political scrutiny is increasing in the UK over Shein’s operations.
In response to upcoming changes in US tax regulations, fast-fashion retailer Shein’s executive chairman, Donald Tang, has announced confidence in the company’s sustained competitive advantage. The proposed alterations aim to address the ‘de minimis’ threshold that permits the duty-free import of low-value shipments. This initiative is part of broader efforts to regulate the influx of packages from major online shopping platforms, including Shein.
Donald Tang emphasises that Shein’s competitive strength lies predominantly in its on-demand business model, rather than the existing tax provisions. “Shein has a competitive advantage because of its on-demand model and not the de minimis rules,” he articulated. Tang asserts that the company’s efficiency and extensive product diversity are the crucial elements of its market position, providing more than a marginal edge over competitors.
The executive chairman also indicated a preference for any tax changes to be based on the wholesale price of goods entering the US, instead of the retail price. Such a shift, according to Tang, would align more closely with the company’s operational strategies and financial planning.
As the US closes in on these regulatory changes, scrutiny over Shein’s practices intensifies in the UK. The fashion retailer is preparing for a significant public offering on the London Stock Exchange, projected to be valued at approximately £50 billion. Concerns have been raised by UK political figures, such as Labour’s Liam Byrne, especially regarding allegations of forced labour in the supply chain from the Xinjiang region in China.
Byrne has called for a more stringent review process to ensure that Shein complies with top-tier forced labour protection standards. This highlights an increasing pressure on e-commerce entities to adhere to ethical labour practices, intersecting global trade regulations with human rights considerations.
Shein remains optimistic about its competitive positioning despite regulatory challenges in the US and increasing scrutiny in the UK.
