Moves by authorities in the EU and elsewhere to end tax breaks for low-value parcels threaten Shein's profitability and risk denting the fast fashion retailer's long-term attractiveness ahead of its planned stock market debut, said investors who focus on the sector.
Shein, which sells $5 (R91) tops and $10 (R182) dresses online, confidentially filed early in June for a potential blockbuster initial public offering (IPO) in London, Reuters revealed last month.
The fast-growing, China-founded group's ability to convince investors of the soundness of its business case will determine whether it is able to match the $66bn (R1.2-trillion) valuation it achieved in a fundraising round last year.
Critics of Shein, including some lawmakers in the US and Britain, argue it uses customs duty exemptions on low-value packages to undercut rivals on price and avoid customs inspections.
The EU is discussing abolishing the duty-free limit, set at 150 (R2,970), as part of a customs reform proposed in May 2023. Above that threshold, an import duty of 17% is applied to sports trainers, for example, and of 12% to T-shirts.
