Boohoo, Asos and Primark to see shares recover as governments take aim at Shein

Ecommerce

Boohoo, Asos and Primark are all set to benefit from the emerging international crackdown on Chinese fast-fashion giant Shein.

Shein, now the world’s most popular online retail app, is understood to have seen its web traffic triple in the past two years, raking in nearly double the numbers of its fast-fashion rivals and overtaking Amazon in some regions of the US.

According to Swiss banking giant Credit Suisse, Shein’s meteoric rise has not gone unnoticed by western governments who are now looking to level the playing field.

“Pressure on China from western governments looks likely to increase in the second half, with the UK potentially focused on data use and the US potentially deploying the Uyghur Forced Labor Prevention Act,” it said.

READ MORE: Shein is now being downloaded twice as much as Amazon

“There are practical difficulties in monitoring or halting thousands of small-value packages, but we would not exclude govts eventually following the example of India, which banned the Shein app in 2020.”

While Shein is a Chinese company, it only sells to countries outside of China allowing it to benefit from lower export, export, sales and VAT taxes than its rivals.

Combined with its low prices, rapid manufacturing times and captive young audience, Shein’s rise has been a major factor in the falling stock price of its rivals, with Asos, Boohoo and Primark seeing stocks drop 27 per cent, 21 per cent and 13 per cent this year respectively.

However, according to Credit Suisse, the upcoming policy intervention could reverse this trend.

“We believe Boohoo shares should rally on any signs of Shein’s growth or pricing being constrained by policy intervention, and we upgrade Boohoo to ‘outperform’ (price target 350p versus 340p) following underperformance.”

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