EU Hits Fast-Fashion Giant Shein With New Digital Rules

Fast-fashion firm Shein has been drawn under the scope of flagship European Union rules designed to clamp down on illegal and harmful content online, aimed at stopping the spread of counterfeit items on the platform.

Shein, which was founded in China but is now headquartered in Singapore, has an average of more than 45 million monthly users in the EU, meeting the threshold to be swept up by the bloc’s Digital Services Act, the European Commission said on Friday.

The move means Shein could be liable for fines of as much as 6 percent of global revenue for violating the law, designed to curtail the spread of illegal content online. In practice, it means that the company will have to more carefully monitor the spread of content on its websites, including the sale of counterfeit products.

“Shein will have to comply with the most stringent rules under the DSA within four months of its notification,” the commission said. This includes “the obligation to adopt specific measures to empower and protect users online, including minors, and duly assess and mitigate any systemic risks stemming from their services.”

Platforms already drawn under the DSA include Alphabet Inc.’s YouTube, Meta Platforms Inc.’s Facebook, and Elon Musk’s X. Other marketplaces like Alibaba Group Holding Ltd.’s AliExpress and Amazon.com Inc.’s platform have also been designated, having met the criteria of having at least 45 million monthly active users in the bloc.

Leonard Lin, Shein’s global head of public affairs, said the company shares “the commission’s ambition to ensure consumers in the EU can shop online with peace of mind, and we are committed to playing our part.”

The DSA also requires online marketplaces to trace the sellers on their platform, add methods for customers to flag illegal content and randomly test for illegal products.

The EU’s move is the latest attempt from regulators to clamp down on companies with links to China. Under the same rules earlier this week, ByteDance Ltd.’s TikTok was forced to halt a controversial rewards programme on its Lite app before EU watchdogs carried out their threat to temporarily ban the feature over fears it could be addictive for children.

As part of a separate legal instrument - the Foreign Subsidies Regulation — EU competition watchdogs raided the premises of Chinese security firm, Nuctech, under suspicions that it may have received subsidies that could distort competition on the EU’s prized single market.

Other recent EU probes under the FSR have similarly targeted Chinese firms, involved in clean energy and rail. The deluge of investigations is a reflection of the EU’s increasingly assertive approach to China, threatening restrictive trade measures that could result in tariffs, cutting China off from European markets, and potentially leading to a trade war.

By Samuel Stolton

Learn more:

Fast Fashion Retailer Shein Doubles Profits as It Awaits IPO Approval

The online fast fashion retailer has more than doubled its profits to more than $2 billion as it awaits approval for a stock market listing in New York or London.