LTrade tensions between Europe and China are not about to ease. After raising customs duties on Chinese electric vehicles on July 5, Brussels decided on August 14 to tax imports of biodiesel produced in China. While European anti-dumping primarily affects industrial companies subsidized by Beijing, other legislative and regulatory measures, already in place or to come, are about to threaten the giants of Chinese online commerce, first and foremost Shein, the popular platform for selling low-cost clothing.
Long described as a success storyShein would have known how to take advantage of the wind of globalization to build a borderless empire thanks to technological innovation. However, the reality rather links Shein to the strategy used by Beijing to push its pawns on the chessboard of the global market, at the expense of its Western rivals, by exploiting the flaws of globalization.
Ubuesque results
The first loophole is offered by the Universal Postal Union (UPU). Created in 1874, the UPU has been granting discounts to senders from countries since 1971 “under development”… including China, which today gives absurd results: sending a package weighing less than 2 kilos by air from China to France costs less than sending a similar package between Lyon and Nice. If Washington obtained, in 2019, by threatening to leave the UPU, the right to freely set its rates, none of the twenty-seven members of the European Union (EU) has dared to follow this path.
The second loophole is provided by the European customs code which, since 2010, exempts from taxes packages of non-Community origin containing goods of a “negligible value” – less than 150 euros. With the help of Covid-19, Chinese platforms (Shein, Temu, AliExpress) have seen their sales explode.
With a profit of 2 billion dollars (about 1.812 billion euros) in 2023, the year in which more than two billion small parcels of “negligible value” entered the EU, Shein became the king of“ultrafast fashion” at the expense of H&M and Zara. A committee of experts, appointed by the European Commission, has customs revenue shortfall for the Union estimated at 1.5 billion eurosOn July 5, however, the European Parliament proposed the removal of this exemption.
But Shein’s business model is based primarily on the low production cost of Chinese textiles. While the platform sources from thousands of companies in China, the group’s management remains evasive about its links to the regime. British NGO Public Eye revealed in 2021 the deplorable conditions in which workers work for the platform, and a Bloomberg investigation in 2022 shows that some of the cotton used by Shein comes from Xinjiang, a region where Beijing is accused of organizing the forced labor of Muslim Uighurs.
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