Shein has publically committed to an investment of £211 million ($271 million) over five years in the UK and Europe after it faced criticism for its tax loophole by shipping cheap packages from factories in China globally.
Shein, which is rumoured to have filed for a blockbuster £50 billion listing on the London Stock Market, sources the majority of its products from 5,400 suppliers in Guangzhou, China.
Earlier this week, the new Business Secretary Johnathan Reynolds expressed concerns about a tax “loophole” being used by Shein.
The UK is turning up the pressures on overseas retailers, such as Shein and Temu, who ship directly to Western countries from China in small parcels rather than creating fulfilment centres on UK soil. This means that they do not have to pay import duties as packages worth less than £135 avoid tax. This is known as the “de minimis” rule. Shipments greater than £135 can incur customs duties of up to 25%.
In response, Shein said yesterday that it has designated £42 million (50 million euros) for “potential investments in R&D or pilot Shein production facilities in Europe or the UK,” as well as bringing more UK and European artists and designers into its incubator programme.
The company was “keeping options open”,Shein Executive Chairman Donald Tang told Reuters, but he said the facilities would most likely be suppliers rather than being owned by Shein.
The fast fashion retailer also said it was launching a “circularity fund” with an initial investment of £169 million (200 million euros) to support businesses in the UK and Europe that are developing textile recycling technologies.
