European and American retailers are anxiously looking over their shoulders. Ultra low-price clothing and homeware from online Chinese marketplaces have recently eaten into their market share. Shein, which specialises in “fast fashion” is rapidly closing in on traditional clothing outlets Zara and H&M. Temu, which sells everything from discount decor to electronics, boosted its profile after running ads during this year’s Super Bowl. Smart TikTok campaigns and slick supply chains have raised both companies’ appeal too. But western vendors see something else in this success.
Temu and Shein are able to charge low prices partly by shipping items in small packages direct to consumers, thereby avoiding customs duties. The EU, US, and UK apply “de minimis” rules which set a monetary threshold below which imported items are able to avoid duties. The allowances are designed to avoid placing onerous costs on small businesses and households for low-value consignments. Customs procedures for such items are often uneconomical.
The European Commission is now exploring scrapping its €150 threshold. America politicians have been considering lowering or removing its generous $800 ceiling too. There are two main motives. The first is to avoid what is deemed to be unfair competition for domestic retailers. The second is to block Chinese suppliers, which could potentially flout product safety, human rights and environmental rules since their packages can receive less scrutiny at the border. That the west is engaged in a broader trade tussle with Beijing is perhaps an additional reason.