Shein, the online fast-fashion retailer founded in China, increased sales in the UK by about a third to more than £2bn last year, overtaking the British rival Boohoo and closing in on Asos.
The company, which had been considering a £50bn float on the London Stock Exchange but is expected to list in Hong Kong, said profits rose 56% to £38.2m last year on which it paid £9.6m corporation tax, according to accounts filed at Companies House this week.
Shein, which sells mainly fashion but has also moved into other products including toys and beauty, said it had benefited from the opening of two new offices in King’s Cross and Manchester, the launch of a pop-up shop in Liverpool and a Christmas bus tour across 12 cities in the UK.
The strong trading figures are likely to increase pressure on the chancellor, Rachel Reeves, to tackle the “de minimis” rule that has underpinned the rise of the fast-growing online specialists Shein and Temu.
Reeves pledged to review the rule, which allows overseas sellers to send goods valued at £135 or less direct to British shoppers without paying any customs duty, after criticism by major retail bosses including Simon Wolfson at Next and Simon Roberts at Sainsbury’s.
Earlier this month, Graham Bell, the chief executive of B&Q, said the rule was “killing the high street more than anything”.
The rapid rise of Shein, which bought the Missguided online brand from Mike Ashley’s Frasers Group in 2023, has piled pressure on UK online fashion retailers including Asos and Boohoo as well as low-price high street specialists such as Primark.
Fears of China’s retailers and manufacturers dumping goods in the UK have grown since the US in May revoked its own de minimis exception for Chinese-made goods, under which parcels with a value of less than $800 (£600) shipped to individuals had been exempt from import tax. It recently announced plans to scrap the tax break for items from all countries later this month.
The EU said in February it would phase out its exemption on customs duties for low-value parcels.
Founded by the entrepreneur Chris Xu, Shein is headquartered in Singapore and runs most of its operations from China but sells all its goods outside the country and has recently begun manufacturing in other countries including Turkey and Brazil.
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The retailer, which has almost trebled the number of its UK employees to 91 in the past year, reached a valuation of $100bn in an April 2022 fundraising round, making it the third-most-valuable startup in the world.
However, expectations of the valuation have been slashed in the past year amid changes to US import rules and concerns about conditions in its supply chain.
The failure of Shein representatives to reassure a committee of UK MPs at a hearing earlier this year that its products did not include cotton produced in the Xinjiang region of China, which has been linked to forced Uyghur labour, prompted an MP to accuse one of “wilful ignorance”.
