Marcelo Claure, president of the company for Latin America, says that the price of clothes should increase with the rate
The Chinese fashion giant Shein stated that it will adhere to an eventual federal tax for imports below US$ 50 (R$ 244, at the current exchange rate) regardless of the rate. “Obviously we will follow the government rules”he said Marcelo Claurepresident of the company for Latin America, on Thursday (24.Aug.2023) in an interview with Power360.
However, the executive said that the increase in the tax burden should raise the price of the products that the company sells. The enhancement, in his words, “it will depend on how much tax the government decides to charge”.
Watch the interview with Marcelo Claure (21min52s):
Asked how Shein’s sales could be affected by the increased tax burden, Claure replied that “the tax is not just for Shein, but for all other e-commerce platforms”.
The businessman says that competitiveness will remain the same when all international retailers are under the tax.
E-commerces foreigners who joined the government program Compliant Shipment pay 17% ICMS (Tax on Circulation of Goods and Provision of Services). They do not contribute to federal revenue.
Until August, online retailers from other countries had to pay 60% II (Import Tax). But it was common for foreign companies, especially Chinese ones, to commit fraud and ship products as individuals. Thus, they were exempt from any taxation.
The government considered ending the exemption, but dropped out after pressure on social media and the First Lady, Janja. Measure will impact public accounts by BRL 35 billion by 2027, according to the Federal Revenue Service.
Marcelo Claure said that Shein maintains constant relations with the federal government. He claimed to have contacts with the president Luiz Inacio Lula da Silva (EN) to talk about the company’s expansion plans. Also with the minister Fernando Haddad (Farm).
“We presented our growth plan to both President Lula and Minister Haddad and other representatives of the Brazilian government”he stated.
NATIONALIZATION
Shein committed to having 85% of its clothing production in Brazil by 2026. In August, it announced that it would invest in a partnership with Coteminas (Companhia de Fabrics Norte de Minas), owned by the president of FiespJoshua Gomes, and the Santana to establish a network of manufacturers in the textile sector in Brazil.
To the Power360, Claure said the goal is to open 2,000 factories in Brazil. In addition to producing for domestic consumption, they are also considering exporting products abroad.
The tax burden in Brazil is higher than abroad. Brazilian women have to deal with a series of taxes (IPI, PIS, Cofins, ICMS). Nationalizing the productions should increase the price for the consumer.
Claure declared that Shein’s success is not a result of the price of fashion items, but rather the company’s efficiency.
Shein promised to create around 100,000 jobs, including direct and indirect, with the nationalization. According to the president for Latin America, the vacancies would be the result of work created for the manufacture, logistics and transport of clothing items.
A CNI (Confederação Nacional da Indústria), however, estimates that 500,000 Brazilians may become unemployed with the advent of international retailers and tax exemptions.
Asked whether job creation by Shein and others e-commerces internationals would be able to make up for the losses, Claure replied that “maybe there will be unemployment in certain stores. The positive side is that small merchants will be hired to meet new marketplace demands”. didn’t give more details on how jobs will be created.
Claure stated that Shein’s Chinese executives see Brazil with great eyes. He said it was the first country the company considered investing in industries after China.
“It is an innovation market for us. Shein, before Brazil, manufactured 100% of all its products outside China. Brazil is the 1st market outside China where Shein went to manufacture.”
COMPETITION, STORES AND MARKETING
Brazilian fashion retailers say that competition with foreign retailers, especially Chinese ones, is unfair. They pay less taxes. Claure defended her company. She said the criticism stems from Shein’s unbridled growth.
The executive says that Shein is still very different from companies like HERE It is creekfor example: “Shein’s great competitive advantage is its agile model, a differentiated model. It has no stock. don’t have inventory […] We only manufacture what consumers want.”.
The brand already had physical stores in Brazil, but temporary ones. There were two in 2022, in the cities of São Paulo and Rio de Janeiro. Another two the following year, in Belo Horizonte and Salvador. The establishments are crowded when they open.
Claure says that the impact of physical stores on sales is negligible. It is a marketing strategy to make consumers aware of the products. “For us, they are pop-up stores. Shein will never have a permanent store. A permanent store means you have to have inventory, you have to have staff, and the product is going to be a little more expensive.”
Asked when and where the next temporary stores would be installed, Claure replied that the company works with “surprises”.
PROFILE
Marcelo Claure, 52 years old, is the founder of the Claure Group, a global investment company. He was formerly executive director of the SoftBank Group International and COO of SoftBank Group Corporation. At Shein, he has been working since January 2023.
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