The Asian giants Shein and Shopee have been in the news recently due to a new rule by Brazil's Federal Revenue Service. The rule initially planned to end tax exemptions for products worth up to US$50 purchased by individuals. However, after negative reactions, the government decided not to impose taxes on international shipments.

Brazilian retailers accused the Asian companies of unfair competition because they suspect that those players have been taking advantage of the tax exemption to avoid paying taxes, allowing foreign companies to offer lower prices in the Brazilian market during an economic crisis that has forced local companies to close stores and reduce operational costs, resulting in higher unemployment rates.

Despite the government's later decision to maintain import tax exemptions, the Federal Revenue Service will increase its oversight of international shipments. Starting in July, the postal service will be required to send a form with details about the purchase and buyer before the shipment enters Brazil. This way, the government aims to track individuals that import large volumes of goods. The government is also expected to announce additional measures in May to combat illegal practices.

The increase in oversight could hinder the growth of the Asian companies, forcing them to rethink their strategies in Brazil. According to SiiLA Market Analytics, the e-commerce sector has been responsible for the largest number of leases in Brazilian industrial properties in recent years. E-commerce companies currently occupy nearly 14% of all leased space in industrial assets in Brazil, considering the overall market (Classes A+, A, and B). The Brazilian Association of E-Commerce (ABComm) expects e-commerce sales to reach R$185.7 billion in 2023.

Shein, the Chinese e-commerce company, had revenue of R$8 billion (around 1,6 billion dollars) in Brazil in 2022, representing a growth of 300% compared to 2021. These figures were reported in a BTG Pactual report in January 2023. It is worth noting that Shein started selling in Brazil in mid-2020. Last November, the company opened a pop-up store in Shopping Vila Olímpia, a mall in São Paulo's south zone, attracting long lines of customers. Shein has over 9,000 employees worldwide and sells products to over 150 countries.

Shopee, on the other hand, was founded in Singapore in 2015 and has joined the Brazilian market in 2019.  Last year, the company led app downloads in Brazil, surpassing Mercado Livre and Magazine Luiza.

According to an exclusive SiiLA analysis based on first-quarter 2023 data, Shein and Shopee occupy approximately 186,000 square meters in industrial properties in Brazil, considering Classes A+, A, and B. Shopee leads the way with over 112,000 square meters and a presence in several states, such as São Paulo, Rio de Janeiro, Paraná, and Rio Grande do Sul. The largest lease is in Prologis Castelo 41, a Class A asset located in Barueri, São Paulo, with over 74,000 square meters of leasable area.

Shein, on the other hand, has leased over 80,000 square meters in the Class A+ GLP Guarulhos II near São Paulo capital. This asset was delivered in 2021 and has over 250,000 square meters of gross leasable area (GLA).

The Asian companies have also leased corporate office space in Brazil for their operations. Shopee has over 20,000 square meters in high-end offices in São Paulo, distributed among impressive buildings such as B32 and Faria Lima Plaza, both located in the Faria Lima region, and Berrini One and Thera Corporate, located in Berrini. With a more modest occupation, Shein recently inaugurated administrative space on a floor in the Vera Cruz II, a Class A+ building located in Faria Lima.

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