Shein eases tax loophole concerns by eyeing British warehouses

Fast fashion giant Shein is eyeing opening its first UK-based warehouse ahead of its £50 billion listing on the London Stock Exchange.

The Singapore-based retailer is scouting sites in Midlands' 'golden logistics triangle' (an area known for its logistics and warehousing facilities), according to This is Money. Representatives have been hunting for sites between 300,000 and 600,000 sq ft across Derby, Daventry, Coventry and Castle Donington.

A Shein spokesperson told TheIndustry.fashion: "To support the growth of the business, Shein is actively exploring warehousing locations worldwide. However, Shein has no immediate plans to acquire warehouse space in the UK."

This comes ahead of a potential listing on the London Stock Exchange. In June, the company confidentially filed the paperwork with the Financial Conduct Authority. However, the new Business Secretary, Johnathan Reynolds, has expressed concerns about a tax "loophole" being used by Shein.

This latest development could come as a response to UK politicians turning up the pressures on overseas retailers, such as Shein and Temu, who ship directly to Western countries from China in small parcels rather than creating fulfilment centres on UK soil. This means they do not have to pay import duties as packages worth less than £135 avoid tax. This is known as the "de minimis" rule. Shipments greater than £135 can incur customs duties of up to 25%.

In July, Shein publically committed to an investment of £211 million ($271 million) over five years in the UK and Europe after it faced criticism for its tax loophole by shipping cheap packages from factories in China globally.

Commenting on the tax 'loophole', a spokesperson for Shein said: "Shein's success comes from our ability to produce fashionable products for our customers. We keep prices affordable through our on-demand business model and flexible supply chain. This reduces inefficiency, takes out wastage of material, and lowers our unsold inventory. We pass this advantage to our customers, and this has driven our success around the world, not the exemptions that retailers receive under current tax regimes."

Along with politicians, potential investors have shown concern over reports of Shein manufacturers exploiting workers in China. One report from the advocacy group Public Eye in May revealed some workers endure 75-hour weeks.