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End of drop-shipping in Europe in 2021?

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Diogo Santos

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Hello guys, I just came across the information that from 2021 on, the existing VAT exemption for goods up to 22 € in Europe will disappear.
So now we will have to pay the VAT ( % according to your country ) AND the service and handling fees, which on small items will often be more than the cost of the item and the VAT combined.

So is this the end of drop-shipping in Europe?

This will force the consumers that usually bought from Aliexpress and such to buy locally. This could also be good for an already existing business that orders from china in BULK since they already paid these taxes.

I Think drop-shipping was never a good business model, but now in Europe, I think it's going to be completely dead unless they can somehow bypass this situation.

And for the people that used to buy Aliexpress, well most likely it's not going to be worth it anymore.

Source: New form of customs declaration for low value consignments

PS: This information was posted a few months ago already, I did not find anything while searching for it in the forum, but in case this was already posted before please remove this post, Thank you!
 

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mon_fi

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This is great!!! It will protect local manufacturers and hopefully will bring back the jobs that went to China (low chance but you never know).

I personally believe in local entrepreneurship more than ever.

It is so sad that Europe has literally NO tech companies - phone, laptop, social media, e-commerce....

That makes me really sad because Europeans are still the smartest people in the world, and they all go to the US because they'll make more money there, and there are more opportunities.

More than the jobs, it is the brains we need to bring home.

It is creativity and intellectual capital that are the real assets of a nation, nothing else. Such a shame we don't invest more into education.

Ok, my rant stops here.
 

Kasimir

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Great news! I like the fact that dropshipping will disappear in Europe. And I don't think it'll disappear completely I think only the best will survive. Because there are many ways to get around these rules.

I totally agree with you @mon_fi I think it's so sad that Europe hasn't many big tech companies. I find it strange that so many people believe that they have to go to the US to be successful. Which isn't true at all. It's just a mindset which sadly is quite widespread. Maybe the chances are higher if you have nothing to lose because you spend all your money on moving to the US. And yeah maybe you can surround yourself with like-minded people but these people also live in Europe.

I really hope that chances in the future.
 

Ing

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The question is, wheather these 22€ Will really make that difference.

and in EU there really is a regulation madness, which destroys many actions.
I m in that Situation at present, too.
sure its a higher entry by that, but if one really invests much, than USA is a wanted destination.
even my son now Dreams of going there.
 
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Kasimir

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The question is, wheather these 22€ Will really make that difference.

and in EU there really is a regulation madness, which destroys many actions.
I m in that Situation at present, too.
sure its a higher entry by that, but if one really invests much, than USA is a wanted destination.
even my son now Dreams of going there.
Yeah, because everyone thinks that there is a magic place where you just have success, money, and freedom. And that's less and less true. Yeah, there is a bigger chance of success compared to a small town but it doesn't have to be the US. There are plenty of big cities in Europe. Berlin, London, Paris, and Zürich are just a few of them.

Any yeah the regulation madness really destroys many things but it also protects others.
 

Kasimir

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How they are living in such high standards life if they are only consumers ?
The problem is that we don't have many well-known tech companies. We have many tech companies just not Apple and Samsung. Additionally, we have a lot of banks and other companies in the health and trading commodity field. Like Glencore, Néstle, UBS, CS, Roche, ABB, etc. (just some swiss based). Compared to Apple and Samsung they sometimes prefer if they aren't in the public spotlight.
 

mon_fi

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How they are living in such high standards life if they are only consumers ?
Balance deficit + unrealistic currency price. One of the reason why EU and US are so rich is thank to their currencies.

Tbh, I have always found it very unfair. Making bread in Switzerland is worth more than making bread in Ukraine.

As such works the economy.
 

mon_fi

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The problem is that we don't have many well-known tech companies. We have many tech companies just not Apple and Samsung. Additionally, we have a lot of banks and other companies in the health and trading commodity field. Like Glencore, Néstle, UBS, CS, Roche, ABB, etc. (just some swiss based). Compared to Apple and Samsung they sometimes prefer if they aren't in the public spotlight.
We have logitech ; )
 

mon_fi

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Sometimes I dream about starting a European Xiaomi.
 

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Saavedra

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How they are living in such high standards life if they are only consumers ?

Airbus, Mercedes, Volkswagen, Rolls-Royce (airplane engines), Airbus (military), Autodesk, Nestle, Unilever, all the other European car makers (1-2 per nation), airlines (one per nation), Maerks, BP (oil), Total, DFDs, Vestas, Ariannespace ( up until ten tears ago market leader), insurance companies (several per country), Spotify, game studios.... out of the top of my head.

Plus Nokia died 10 years ago, and assembling phones is not exactly black magic, there are plenty of companies on that market from several countries.
 

Saavedra

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Balance deficit + unrealistic currency price. One of the reason why EU and US are so rich is thank to their currencies.

Tbh, I have always found it very unfair. Making bread in Switzerland is worth more than making bread in Ukraine.

As such works the economy.

Best thing is we don't even have to fight many wars on foreign countries to export inflation like the US, people just trust the Euro for no specific reason at all, since it might disappear any year.
 

mon_fi

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Great question, to answer it, we need to understand what makes a currency desirable and that has a lot to do with what the economy is as well as the political system.

The economic importance:
Let's imagine that country A is the only country where you have oil and all the other countries need it. Country A's currency is highly unlikely to crash because everyone needs country A's currency to buy oil → the importance of a currency has a lot to do with (1) what the economy makes, (2) the size of the economy.

Brazil, for example, mainly exports raw materials. If Brazilian currency gets more expensive, I'll go get raw material where it's cheaper → Brazilian currency is not worth much because there is nothing in Brazil that I can't get elsewhere. The US, however, is not like that, there are many services or products I can only get there, which makes the dollar an important currency.
Indeed, it is simply almost impossible for anyone in the world to avoid the US economy because it is so big and produces so much. It is that big in fact, that the US dollar makes about 70% of world currency, and it is not rare to see two companies from two different countries that have nothing to do with the US selling and buying goods in USD. Why? Because (1) they know they will need USD at some point and (2) they probably sell in the US, get paid in USD and therefore have USD to buy stuff with.

"But Monfi, what about China then?"
Are you familiar with the impossible trinity? The impossible trinity is a macro-economic theory that says that a country can choose between three artifacts for its economy:
1. free capitals entering and leaving the country
2. fixed foreign exchange rate (deciding that your currency is worth x USD, for example, and maintaining it that way through currency volume control)
3. free monetary policy (printing money, or burning it at will).

While most of developed economies chose to have free capital flows and free monetary policy, it means they won't be able to control the price of their currency against other currencies. China is different, they want to control the price of their currency, they want to keep it cheap so the economy can export and the CCP can buy social peace. Since they want a fixed exchange rate and free monetary policy, they have no choice but to control capital: you can't randomly come to China with money, nor can you leave China with money. Since China is artificially lowering their currency (China IS indeed a currency manipulator, and has been so since Mao), no one wants to trade in renminbi because, well, its worth depends on the mood of Xi. There is though, with China, another element: the renminbi you have doesn't belong to you, but to good ol' uncle Xi, and that is because the inextistence of rule of law.

The political importance:
You won't have passed off the fact that China is not a democracy, that the judiciary, the executive and the legislative are all in the hands of the CCP and that if China wants to seize any house/company in China tomorrow, they can. That's because in China, there is no rule of law. It means that what Chinese have in China does not actually belong to them it belongs to everyone because we are a communist country, and private property doesn't exist. Ha, you wish. The part where I say that Chinese's assets don't belong to Chinese is correct, but it's not because it belong to everyone: it belongs to the government. As such, the Chinese government can seize any Chinese' assets at any time. That explains Chinese's propensity to invest oversea (Aussie, Kiwi and Canada's real estate greatly suffered from it). If a Chinese buys an appartment in Sidney, that appartment belongs to him/her. Chinese's assets oversea are a guarantee against a potential seize of assets in China, provided, of course, that you manage to escape the country before uncle Xi catches you.

In the US, there is rule of law, and the government can't just come seize your house because you uploaded a Winnie the Pooh meme on Weibo, and even if they do, you can go to a judge and the judge will look at the law and say "the US government can't do that". Rule of law is a beautiful thing, it protects you against your own government.

So what it means is that when I own renminbi, they don't belong to me because that's what China prints, and that belongs to China because there is no rule of law. When I own US dollars, I own them, no one can take them away from me, not even Xi.

What happened when the stock market crashed
When the stock market crashed, JPow rolled up his sleeves and got to work by pushing on the "on" button of the money printer. His unlimited money printing (fancily called "Quantitative Easing") bailed out the financial market (which is illegal, but well, we'll talk about it another time) and US companies at the same time. Now, you might think that with unlimited printing, the volume of USD increases and it must therefore lose value...well, yes, the volume of USD increases, but no, it doesn't lose value.
As we said, the value of a currency depends on the extent to which how many people want it, and how much they want it. When worldwide markets crashed, there was a shortage of USD, everyone was looking for them because the economy had virtually stopped. The fact that the world uses dollars and that the world was looking for dollars allowed JPow to order an unlimited amount of ink and paper on Amazon, which is why the Amazon stock shoot to the stars like that (i'm kidding). I mean that it allowed JPow to print a lot of money without fearing devaluation because the entire world was looking for dollars anyway, even more than usual because financial markets had crashed, and when everything is crashing, people have more faith in the US economy than in their own economy → while most currencies lost value, the USD gained value (and has since slightly decreased) during the months of March and May.

What now?
The USD is unlikely to lose value, unless the world loses faith in the US economy which it won't because in times of crisis, 'merica looks safer than all the others (well, unless JPow prints really too much money).

In terms of other currencies, the Pound will crash because of Brexit, Scottish independence, negative balance account, mismanagement and very soon, social unrest. The Japanese economy is not growing as the country battles with a tragic lack of demography renewal. As for the Euro, there is always the problem that it is a currency adopted by a bunch of sovereign countries that could tomorrow decide to leave it or worse, expel a country from it. As such, the Euro is only as strong as EU countries (*cough* Germany *cough*) keep it. In fact, things are about to get ugly as a very big f*cking meteorite called "Italy's debt" is approaching the Old Continent at light speed, but well, that story will be for another time.

Edit: If I forgot something, please tell me, I only know as much as I read

I wrote this big thread some months ago now, about currencies, if you guys are interested.
 

traction2

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Unfortunately Europe punishes success and hard work in the way of high taxes and fines, it will never change as their need for more and more funding to pay for society is forever increasing.
 

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