site.btaBulgarian Businesses Call for Urgent Measures to Tighten Control on Chinese Online Retail Platforms

Bulgarian businesses are calling for urgent measures to tighten control on Chinese online retail platforms and one measure they want to see implemented is lowering or scrapping the EUR 150 threshold for duty-free shipments from third countries. During a discussion on how the Chinese platforms are affecting local businesses held in Sofia September 11, it transpired that Bulgarian retailors suffer sizeable losses and shops are closing down as a result of the aggressive entry and growing popularity of Chinese online retail platforms

The discussion was titled “Chinese Platforms for Fast Fashions: Health and Business Hazards”. It was organized by the Bulgarian Industrial Association (BIA) and the Bulgarian Association for Circular Textile, and brought together representatives of industry-wide organizations, the President’s Office, the Health Ministry, the Environment Ministry, the National Revenue Agency, the Customs Agency, the Consumer Protection Commission, the European Recycling Industries' Confederation, NGOs, retailers.

According to the Chairman of the Bulgarian Association for Circular Textile, Sevdalin Spassov, the industry he represents reports a 15% drop in turnover and shops have had to close down. It is estimated that orders from China to Europe with a per-order value of less than EUR 150, totaled over USD 2 billion. Proportionally, this means that shipments delivered in Bulgaria alone are around 20 million, or 10 shipments per month per active consumer in the country. 65% of shipments have a false declared value to avoid duty. 92% of random samples in Germany in 2023 did not meet some of the import criteria. 40% of each shipment was subsidized of the Chinese state, and the most serious problem is the safety of these goods. “This is not a matter of trade but of national security at home and in Europe,” he said.

His organization proposes stricter controls to ensure compliance with the health requirements, and also removal or lowering of the EUR 150 duty-free threshold, as well as the introduction of eco fees for ultra-fast fashion retailers, because they offer disposable clothes that cannot be recycled.  

BIA President Dobri Mitrev pointed out that as an employer organization BIA is concerned about the extraordinary expansion of the large Chinese online platforms. "They are operating all over the world, offer extremely low values of their products, free shipping and fast delivery by air. They book Asia-Europe cargo flights more than a year ahead, which disrupts the supply chains for retail trade,” said Mitrev. He added that BIA insists on clear and applicable rules for products from third countries, on a par with the rules for Bulgarian and European companies. 

The Customs Agency and the Health Ministry said they are not in a position to control all shipments, especially when they enter the EU in another Member State. Victoria Hristova, Chief Expert at the Directorate for Public Health Protection, Health Control and Patients' Rights, explained that the Ministry is aware of the magnitude of the problem, but there is no requirement in the current legislation for border checks for the safety of goods to be permanent, and, respectively, the state health control authorities do not have the resources to carry out year-round checks. The Ministry is considering initiating more frequent checks at the border to monitor third-country imports.

Tsetska Docheva, director of the Customs Intelligence and Investigation Directorate, explained that the cargo shipments first reach France, Belgium and Germany, where the goods are customs-cleared. The Bulgarian Customs Agency has absolutely nothing to do with these online platforms. Controls over third-country shipments take place at the first point of entry into the EU. From there on, the goods leave as intra-community goods and the individual control bodies have no authority to exercise other controls, Docheva explained.  

Chinese goods mainly arrive in Bulgaria via the ports of Varna and Burgas, where there are enhanced controls based on risk analysis. There more than 200,000 items coming from China have been seized since the start of the year, and these items included clothes, toys and equipment that does not meet the safety standards, said Tsetska Docheva. She pointed out that a meeting is to be held at EC level to discuss the possibilities of removing the customs threshold for low-value shipments.

Totyu Karapeev, Director of Department at the National Revenue Agency (NRA), admitted that the Chinese online traders are fully compliant with the law. "From the point of view of the NRA, they pay VAT, they pay their tax. If they were not paying the tax, we would have leverage. But here we are talking about a transaction between an individual and a platform - these shipments arrive in sealed envelopes, they bear the name of the recipient. According to international conventions, until the recipient accepts it, there is no way for the control authorities to intervene," Karapeev said.

Businesses, however, are suffering from the pressure of the Chinese platforms, said Venka Kraicheva of the Bulgarian Retail Association, which represents the largest retail chains. She urged building a legislative mechanism to ensure fair pricing. She pointed out that Chinese retailers often violate copyrights and literally duplicate products of the big brands. "Businesses also take an image hit - many customers tell themselves that these [of the Chinese goods] are the real prices and all other traders are profiteers. Why buy at higher prices when the same thing is 5 times cheaper there [on the Chinese paltforms]," Kraycheva explained.  

Hristo Trendafilov of the Consumer Protection Commission (CPC) noted that there is an increase in complaints that reach the Commission, but when a country is outside the EU, the options for reaction and sanctions are nil. "The CPC has no powers to sanction traders outside the EU. The most frequent complaints are related to the fact that most often when someone wants to make a claim, they cannot return the goods or there is no contact with the trader," Trendafilov explained.

The President’s advisor for environment, Rossitsa Karamfilova-Blagova, called for measures to address the situation. She pointed out that the environmental damage of this type of production “affects the water, climate, soil, health and pocket of every European citizen”. "The fast-moving goods that flood us lead to the rapid generation of waste, which in turn leads to additional costs for managing waste at national level. I believe that the problem is most significant in environmental, health, social and even moral terms, and should be widely discussed," she said. She also said, “We will be shocked by the absolute cost that we have to pay to manage the rubbish that enters Europe, in particular Bulgaria, disguised as various products. The truth is that these companies are making billions selling rubbish,” Karamfilova said.

Philippe Doliger, a Policy Advisor at the European Recycling Industries' Confederation, which monitors the issue at European level, said that the EC is currently considering removing the EUR 150 customs threshold. He believes, though, that this will not be enough to solve the problem. According to Doliger, there should be a thorough change in the concept of textiles and the business model of the textile industry in Europe, aimed at ending single-use and supporting traders in the reusable sector.