Studying Zahn's Irritation Over Temu and Shein: A Cry for Fairness
Executive Chef of Kik, Patrick Zahn, voiced his discontent towards the gentle handling of political regulations towards retail giants like Shein and Temu. "It's downright astounding that these platforms can run amok without adhering to the law and order," he stated during a seminar to the Economic Journalistic Association members in Düsseldorf, denouncing it as a "shocking injustice."
Through Zahn's point of view, these Asian e-commerce platforms have an unfair edge, with benefits such as low customs charges. Typically, Asian retailers predominantly use air freight, which implies zero customs charges on packages worth less than 150 euros from non-EU countries upon import. The Kik chief finds this circumstance unacceptable. "We pay our dues too," Zahn insisted, proposing that foreign retailers in Europe should face the same regulations.
Zahn expressed his concerns over dubious double standards being implemented. "It's peculiar how things are done," he stated. Mostly, more than 400,000 to 500,000 Temu and Shein packages are delivered daily through Liège, Belgium, where only six customs officers are present, resulting in bypassing inspections for packages, which is strangely inappropriate, as Zahn found.
Zahn criticized the Supply Chain Act for imposing stringent regulations on European companies while failing to address such matters with online retailers like Shein and Temu. Politicians have acknowledged the situation yet have taken no action.
Shein and Temu have gained notable recognition in Germany. Their success has placed traditional retailers under profound pressure. According to a Textiles, Shoes, and Leather Goods Trade Association estimate, German consumers purchased approximately one billion fashion items and shoes from such platforms last year. However, these portals have been under controversy. Consumer advocates, politicians, and retail industry representatives have criticized issues related to product quality, misleading complaint procedures, and manipulative practices, urging stricter regulations.
Zahn contends that K K Textiles and other traditional retailers are handicapped by the lenient customs regulations for Asian e-commerce platforms like Shein and Temu, as they are required to pay customs duties while the latter do not due to the low customs charges on packages worth less than 150 euros from non-EU countries upon import.
Additionally, Zahn highlights that not just K K Textiles but all foreign retailers operating in Europe should be inclined to the same regulatory standards as local retailers, as unfair competition persists due to the lax handling of political regulations towards Asian retail platforms.
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Additional Insights:
The proposed regulations and current customs duties policies for Asian e-commerce platforms like Shein and Temu have significant consequences for traditional retailers. Some essential aspects are:
Existing Regulations:
- De Minimis Exemption: Initially, the de minimis exemption allowed shipments valued at less than $800 to enter the U.S. duty-free. However, this exemption has been underwhelming scrutiny.
- Tariffs on Chinese Imports: The Trump administration levied a 10% tariff on almost all imports from China, including those from Hong Kong, which went into effect on February 4, 2025. This tariff extends to all goods entered for consumption or withdrawn from warehouse for consumption after 12:01 a.m. ET on February 4, 2025[3][5].
Proposed Changes
- CBP Proposals: The U.S. Customs and Border Protection (CBP) has put forth two notices to modify the de minimis exemption, as follows:
- Jan. 14 NPRM: Introduced a new "enhanced entry process" for low-value shipments, requiring a 10-digit Harmonized Tariff Schedule of the United States (HTSUS) classification for expedited clearance[1].
- Jan. 21 NPRM: Proposes excluding shipments valued at less than $800 and covered by Section 201, Section 232, or Section 301 tariffs from the de minimis exemption. These shipments would be subject to all applicable duties and fees. Additionally, all de minimis merchandise would be required to provide a 10-digit HTSUS classification regardless of the entry process chosen[1].
Consequences for Traditional Retailers
- ** financial Burden**: Eliminating or altering the de minimis exemption and imposing tariffs on Chinese imports will significantly increase operational expenditures for e-commerce platforms like Shein and Temu. Consumers could drop shoppers due to potentially higher costs and shipping delays as businesses adjust their logistics strategies[2][4].
- Supply Chain Modifications: Retailers adhere by establishing warehouses in the U.S., diversifying sourcing locations, and altering product pricing. Some enterprises evaluate suppliers outside of China to reduce tariffs on Chinese goods[2].
- Impact on European Retailers: While the specific influence on European retailers like Kik may vary based on supply chain and sourcing strategies, the increased costs and complexities associated with importing from Asia could present opportunities for European retailers to compete more effectively. However, this also relies on how well European retailers can manage their supply chains and pricing strategies while responding to these shifts.
In conclusion, the proposed changes and current regulations aim to address trade imbalances and guarantee compliance with U.S. trade laws, but they will likely contribute to increased costs and complexities for Asian e-commerce platforms like Shein and Temu, potentially boosting traditional retailers in Europe if they can effectively handle these changes.
