Former Dragon’s Den dragon and Ryman’s chairman Theo Paphitis has hit out at Chinese etail marketplace Temu for “destroying small UK retail businesses.”
Speaking at Spring Fair, Paphitis said that although Temu is “operating absolutely legally”, its business model exploited legislative loopholes which enabled it to “suck up a big swathes of the UK consumer market and give nothing back” in terms of import tax or VAT.
He added that the online marketplace operates “within the law as far as taxation” but “not in terms of safety, quality and intellectual property rights” and that it was “up to government to legislate and create a level playing field.”
“When you can be so cavalier and sell [products] that don’t comply to safety checks, alongside no corporate governance, ESG commitments, VAT or import duties – not only does it pose a danger to customers, but the biggest danger is the demise of our own high streets and businesses,” Paphitis thundered.
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Paphitis’ comments follow reports of incoming EU legislation which will tighten quality checks on cheap products from online marketplaces such as Temu, Shein and Amazon.
He said that the lack of tax legislation for retailer operators like Temu could lead to further job cuts across small and medium-sized retailers across the UK, many of which would reduce headcount to deal with increased National Insurance contributions rather than risk of losing further trade to Temu by putting up prices.
Paphitis added that the Labour government had increased National Insurance contributions for employers in a bid to “stabilise the economy” – but that driving growth and confidence in the market had to be next priority.
“It was over-optimistic to expect them to hit the ground running and get every call right on day one, but what we desperately need now is green shoots,” he said.
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