The chief executive of Danish homeware and lifestyle brand Sostrene Grene, Mikkel Grene, has voiced strong concerns over what he describes as a 'loophole' benefiting Chinese online retailers, warning it is 'killing' UK businesses. His comments add to a growing chorus of criticism from prominent British retail figures, including the bosses of Primark and Marks & Spencer, who are advocating for a crackdown on companies like Shein and Temu.
The central issue revolves around a specific customs exemption that allows goods imported from outside the European Union, valued at under £135, to enter the UK without incurring import VAT or customs duties. This exemption, designed to streamline customs processes for low-value parcels, is reportedly being exploited by ultra-fast fashion and lifestyle retailers based in China, enabling them to offer significantly lower prices than their UK counterparts who must comply with domestic tax and regulatory frameworks.
Mikkel Grene highlighted the disparity, explaining that while Sostrene Grene, which operates 16 stores across the UK, pays VAT on all its products, many items sold by these overseas online giants effectively bypass it. This creates a substantial competitive disadvantage, as UK-based retailers bear the full cost of VAT, business rates, and other operational expenses that their online-only, non-EU competitors can circumvent for a significant portion of their sales.
The debate intensified last year when Primark's owner, Associated British Foods, and Marks & Spencer publicly called for a review of these customs rules. They argued that the current system creates an uneven playing field, making it difficult for UK retailers to compete on price, particularly in the fast-moving fashion and homeware sectors. The cumulative effect, they warn, could lead to job losses and further decline on the British high street.
Retail industry bodies have also expressed concerns, urging the government to consider reforms that would level the playing field. They argue that while consumer choice is important, the long-term health of the UK retail sector and the jobs it provides are at stake if the current situation persists without intervention. The government has yet to signal any immediate plans for a comprehensive review of these specific customs exemptions.
Source: Sostrene Grene, Primark, Marks & Spencer