Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Brussels has launched an investigation into Shein, the China-founded ecommerce platform, amid concerns that the company is violating European consumer protection rules by selling illegal products.
An EU official said on Wednesday that there is “reasonable suspicion” of widespread violations of EU consumer protection laws by the company. Brussels is examining whether Shein pushed unfair contract terms, misleading price reductions and unfair commercial practices. There is already a similar investigation ongoing against Temu, the Chinese online shopping business.
It is the latest problem for Shein, the Singapore-headquartered fast fashion group that is planning to publicly trade its shares in London in the first half of 2025, targeting a valuation of £50bn. Donald Trump’s crackdown on tariff-free access for small goods could also dent its business model.
The EU probe is part of a larger crackdown by the bloc on the flood of imports from China, amid concerns about the rise in dangerous and counterfeit goods shipped from Asia. Brussels on Wednesday announced plans to make ecommerce platforms such as Temu, Shein and Amazon Marketplace liable for dangerous or illegal products sold online. More than 90 per cent of the 4.6bn lower-value parcels imported into the EU in 2024 came from China.
Shein said it shares the “goal of ensuring European consumers can shop online with peace of mind” and that the company intends “to work closely” with the national protection authorities and the European Commission to address any concerns.
If Shein is found to have breached EU consumer protection rules, it risks being fined by national authorities across the European Union.
Shein is already being investigated by the Commission under separate rules policing the market behaviour of large online platforms. In that investigation, Shein risks fines of as much as 6 per cent of its worldwide annual turnover.
Shein, which sells garments from thousands of Chinese companies at ultra-low prices across the world, is still waiting for Chinese regulators to give their approval for it to list overseas.
Last summer, the group filed confidential paperwork with the UK’s financial regulator for a listing and it is still undergoing due diligence. It first targeted New York but shifted to London after it was rebuffed by US regulators.
Shein has also been in the crosshairs of UK MPs recently and was accused of disrespecting a parliamentary committee after it refused to answer multiple questions about the integrity of its supply chain as part of a wider inquiry.
The company subsequently provided written responses to some of the question but Liam Byrne, the committee’s chair, wrote back after he claimed it had failed to clarify whether it shipped to Britain products with cotton from Xinjiang, an area linked to accusations of the use of forced labour.
Shein has faced allegations of poor working practices in its supply chain but has repeatedly said it has a “zero-tolerance policy” regarding forced labour.
