Trade tensions between Europe and China are not close to subsiding. 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 is primarily aimed at industrial companies subsidized by Beijing, other legislative and regulatory measures, already in place or still to come, are poised to threaten the giants of Chinese online commerce, first and foremost Shein, the popular fast-fashion retail platform.
Long described as a success story, Shein is said to have taken advantage of the winds of globalization to build a borderless empire through technological innovation. In reality, Shein is part of Beijing's strategy of exploiting the loopholes of globalization to gain a foothold on the world market, at the expense of its Western rivals.
Absurd results
The first loophole is offered by the UN's Universal Postal Union (UPU). Created in 1874, UPU has granted discounts since 1971 to senders from "developing" countries including China, with absurd results – sending a parcel weighing less than two kilograms by air from China to France costs less than sending a similar parcel from Lyon to Nice. While Washington won the right to freely set its tariffs in 2019 by threatening to leave the UPU, none of the EU's 27 members has dared to follow suit.
The second loophole is provided by the European customs code which, since 2010, has exempted packages of non-EU origin containing goods of "negligible value" – less than €150. With the help of Covid-19, Chinese platforms (Shein, Temu, AliExpress) have seen their sales soar.
With a profit of $2 billion (around €1.812 billion) in 2023, the year in which over two billion small parcels of "negligible value" entered the EU, Shein has become the king of "ultrafast fashion" at the expense of H&M and Zara. A committee of experts appointed by the European Commission has estimated the loss of customs revenue for the EU at €1.5 billion. On July 5, the European Parliament proposed the abolition of this exemption.
But Shein's business model is based above all on low production costs of Chinese textiles. While the platform sources from thousands of companies in China, the group's management remains evasive about its links with the regime. In 2021, the Swiss NGO Public Eye revealed the deplorable conditions in which workers were employed by the platform, and an investigation by Bloomberg in 2022, showed that some of the cotton used by Shein came from Xinjiang, a region where Beijing is accused of organizing forced labor among Muslim Uighurs.
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