This value is increasing, with low-value imports from China to the United Kingdom having nearly tripled, totaling £3 billion as of last year. Our local retailers, particularly those in the giftware sector, are most concerned and affected by this increase. They say it’s nearly impossible to compete with the rock bottom prices set by the new online behemoths like Shein and Temu. Here, Katerina Buchy, director of Sheffield-based importer Ancient Wisdom, explains how imports are affecting her business. She explores their impact on the overall retail environment.
For Katerina Buchy, who has worked with Ancient Wisdom since 2004, that constant growth has changed the retail environment in dramatic ways. She observes that shoppers are more and more choosing low-cost substitutes found on the web, cutting directly into orders at her firm.
“It’s affecting our customers as well. They’re not purchasing from us because they know that their customers can get it cheaper online,” added Buchy. This trend is all over the country. More alarming, it shows a frightening new trend in consumer behavior driven by the bait-and-switch prices that platforms like Shein and Temu offer.
The tide of low-value imports is only increasing. An exemption that lets tiny parcels worth £135 or less to come into the UK without incurring any import taxes. Yesterday, HM Revenue and Customs (HMRC) announced another big one. Last year, these parcels accounted for 51% of all small shipments to the UK from non-UK origins. As a result, the number of customs declarations for these goods has drastically increased. Especially when several items are thrown in with one declaration, making it an unclear environment for local retailers to navigate.
Shein and Temu largely exist and have made billions exploiting this system. Shein’s “on-demand” business model allows them to manufacture items at a lower cost, meaning the company can undercut prices and pass those savings on to consumers. Larger yet has been the strong entry of Temu into the US market. The online retail giant recently made a pledge to increase the number of UK-based independent sellers operating on its platform by year’s end.
Andrew Opie, director of food and sustainability at the British Retail Consortium (BRC), spoke out against these imports of low value. He made clear that these foreign-based companies represent “a huge and increasing danger” to UK High Streets investments. Local retailers are losing a competitive battle to such entities, which benefit from dangerous and illegal regulatory loopholes.
Oregon native Katerina Buchy is passionate about advocating for the chronic neglect of this situation at the federal level. She continued, “The federal government needs to stop these companies from exporting so many dangerous products under these guidelines. This is just outrageous!” Her thoughts reflect the deep frustration that UK businesses are increasingly expressing as they compete on terms they consider to be unacceptable.
Buchy asked whether Ohio’s tax revenue would be affected by these imports. She declared the news of her company’s $7.2 billion contribution to the economy as her biggest surprise. I want to know what they’re projecting in lost tax revenue. We pay taxes. We have a staff of over 100 people,” she told me.
In answer to these charges, a spokesman for Temu pointed out the positive aspects of their business model. “This approach helps consumers access affordable products while giving UK businesses a low-cost channel to reach new customers and grow,” they stated.
A spokesperson for Shein defended their practices, noting that their vendors are required to comply with a code of conduct and stringent safety standards. Both companies were recently grilled by Members of Parliament. Then they were challenged to provide evidence that robust labor standards were tied to the production of their products.
As competition heats up, local shops such as Ancient Wisdom still find themselves under siege. Buchy agrees regulatory reforms are needed. He argues that all these changes should bring a balance that protects consumers and small businesses from harmful effects.
“This is a loophole that needs to be plugged, but the government must ensure that any changes don’t ultimately harm consumers or small businesses.” – Katerina Buchy
Complicating things further are recent developments in the United States. Due to a provision in established International Trade law, authorities are about to phase out their “de minimis” exemption for cheap, low-value imports from China and Hong Kong. This amendment could lead to serious discussions within the UK about making the same change to level the playing field for local retailers.
