For the past few years, Shein and Temu have charmed American shoppers thanks to their astronomically low prices…
All while raking in billions of dollars in revenue.
But now their glory days seem to be coming to an end because the U.S. government has set its sights on these two foreign companies.
So what lies ahead for Shein and Temu?
All Eyes On Shein And Temu
Shein and Temu have effectively taken over the American shopping landscape.
Thanks to their ultra-low prices and ability to keep up with trendy styles in their catalogs…
These companies have gained millions of devotees across the globe.
And the numbers for Shein and Temu prove it.
ANNUALLY, SHEIN BRINGS IN ABOUT $30 BILLION IN REVENUE, AND TEMU’S PARENT COMPANY SAW $34.9 BILLION LAST YEAR (A 90% INCREASE FROM THE YEAR BEFORE).
Given their growing popularity in the U.S., Shein and Temu have been seen as dangerous competition, gaining market share from rivals such as:
- Zara
- H&M
- Walmart
- Amazon
The rapid growth of these two Chinese brands has had giant companies pivot their strategy to compete better. For example, Amazon is launching a discount goods section to drop prices for customers even lower.
But it might not be fun and games for Shein and Temu anymore. The U.S. government is going after a trade law that makes their signature low prices possible.
A 1930s tariff law loophole, the de minimis exemption allows packages under $800 in value to enter the United States without import duties and less scrutiny than other shipments.
But American regulators say that Shein and Temu, as foreign businesses…
Have been abusing this loophole and hurting competition in the U.S. because of it.
The House Select Committee on the Chinese Communist Party has investigated that…
“THE MAJORITY OF PRODUCTS FROM SHEIN AND TEMU FALL UNDER THE DE MINIMIS EXCEPTION. THIS ALLOWS THEM TO DODGE U.S. CUSTOMS AND EVADE THE SCRUTINY OTHER RETAILERS FACE. THE U.S. MUST URGENTLY CURB THESE SHIPMENTS…”
More and more regulators are advocating that Shein and Temu be barred from the de minimis exemption…
But what does that mean for these brands?
Aggressive Competiton
If Shein and Temu are barred from the de minimis exemption…
PRICES FOR THESE BRAND’S GOODS COULD GO UP AS MUCH AS 20%
And if prices go up, it could put these brands into closer competition with American brands.
For example, the average price for a dress on Shein is $28.51, but with the 20% increase, that number would be $34.21…
Inching them closer to the average price of a dress at H&M, which is $40.97.
Unlike other Chinese companies like TikTok that are at risk of being banned from the country completely…
It doesn’t seem likely that regulators will ban these sites altogether.
Ultimately, while barring Shein and Temu from the exemption might be good for American businesses…
Like any other tariff, it will make things more expensive for American consumers.
Be Great,
GCTV Staff
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