Hunt’s hopes for $90bn London Shein float risks being derailed

Jeremy Hunt’s attempt to convince Shein , a Chinese fast fashion company, to list in London faces opposition from some British retailers’ biggest stores.

High street leaders have been lobbying ministers about Shein’s alleged abuse of tax loopholes. This comes at a time when the retailer is considering choosing the UK instead of New York to float its $90bn plan.

Shein is responsible for the complaints, because it ships directly from China to its customers. It imports smaller parcels that help them avoid paying taxes.

Rivals claim that Shein exploited unfairly the tax system by doing this, allowing them to pay lower customs duties than UK competitors.

Retail bosses launched a recent campaign to convince Ministers to crackdown on this practice. They say that it benefits online retailers who import hundreds of millions individual packages.

The Retail Sector Council is at the forefront of criticism, with Boots, Amazon, and Sainsbury’s as members.

The co-chairs are Kevin Hollinrake (parliamentary undersecretary at the Department for Business and Trade) and Richard Pennycook, former Co-op boss.

In a discussion paper published recently, the group urged for restrictions to be placed on how some online retailers can avoid paying import duties by packaging small quantities of products in other countries.

The group stated that it was detrimental to the economy as well as the retailers’ outlook if they paid the full taxation including VAT.

Without a level playing field, we will see more business failures and less taxation, as well as more unemployment.

A senior retail executive publicly criticized the low tax rates paid by companies like Shein at an industry event last week.

Shein has been accused by some of evading tax thresholds and normal controls. One FTSE 100 CEO is among those who have publicly attacked .

Recent UK figures indicate that the UK’s revenue reached £1.1bn during the 16-month period ending December 2022. Taxes paid were just £2.3m.

Shein spokesperson said: “Our ability to create fashionable products for customers is the reason for Shein’s success.”

Our flexible supply chain and on-demand model allows us to keep our prices low. This eliminates waste, reduces our inventory, and decreases inefficiency. This advantage is passed on to our customers, and has led to our growth.”

Sources say that the Treasury has been approached to close the loophole before the Budget. However, they also state that there are no immediate plans to make any changes.

Richard Allen from Retailers Against Market Abuse Alliance said: “It is almost as if Government has forgotten what the purpose of customs duties is.

They’re there to safeguard our economy. We have to reach a point when we start to think about our country and economy. All the money that comes from these sales is going straight to China.

There are concerns that Shein’s London Stock Exchange entry is being prioritised by the Government.

Last week, it was revealed that Jeremy Hunt had met Donald Tang, Shein’s Executive Chairman earlier this year. During the meeting the Chancellor encouraged the company to list on the UK stock exchange.

It was reported that the US Securities and Exchange Commission might block Shein’s New York float because of its close links to China.

Anda Rowland is the director of the tailor Anderson & Sheppard. “Bending backwards to people who bring no skills or jobs to the country… It is very confusing.”

Shein’s spokesperson said that the company is “proud” to have supported many fashion designers from the UK and other parts of the world.

Shein is based out of Singapore and has offices in London, Manchester, and is expanding its workforce in the UK after last year purchasing the British brand Missguided

Adam Mansell is the chief executive of UK Fashion & Textile Association, whose president, the Princess Royal, believes that allowing imports of low-value products has value, but this shouldn’t apply to large-scale retail stores.