Surging Small Parcel Exports from China: A £3bn Challenge for UK Retailers

In an astonishing increase, small parcels shipped from China to the UK—exempt from import taxes—have more than doubled in value from £1.3 billion in 2023-24 to approximately £3 billion in 2024-25. This surge, primarily driven by Chinese e-commerce giants like Shein and Temu, has raised alarm among UK businesses, which argue they face unfair competition from these low-cost imports. Currently, any package valued at £135 or less can enter the UK without customs duties, enabling companies like Shein and Temu to dominate the market with affordable goods ranging from clothing to electronics.

The UK government is examining this system of low-value imports amidst growing pressure from domestic retailers, who have witnessed a decline in business as consumers flock to cheaper options online. Katerina Buchy, a wholesaler, expressed frustration over the inability to compete with the prices offered by Shein and Temu, highlighting the detrimental impact on local employment and tax obligations.

Despite Shein’s triumphs and attempts to secure stock market listings, concerns regarding labor standards and product safety continue to loom, particularly due to the lack of rigorous customs checks on small shipments. Natalie Berg, a retail analyst, pinpointed the recent rise in the value of these imports as aligning closely with the rapid success of these e-commerce firms, while also cautioning against potential negative implications for consumers in the event of changes to tax regulations.

While the US has already put an end to its own tax exemptions on low-value imports, the UK Treasury has launched its own review, influenced by major retailers urging reforms for a level playing field. The British Retail Consortium warns of a significant threat that low-value imports pose to UK high streets, potentially exposing consumers to unsafe products.

Although the number of shipments can be tricky to quantify, HM Revenue & Customs records around 281,000 customs declarations for these low-value imports, suggesting a growing trend. As the government continues to assess its policies, it stresses a commitment to support local businesses and sustain economic growth, indicating that future regulations might reshape the dynamics of international trade for small parcels.