Shein's cheap garments face challenges in U.K. and France



Chinese retailer Shein got Britain’s financial whizzes into a spin last week when news emerged that it might go public on the troubled London Stock Exchange through a bumper IPO. But the fast-fashion brand is beginning to realize it will find the same resistance in Europe as it has faced in the U.S.

The Singapore-based fashion brand has faced a flurry of regulatory pressure in recent days as competitors and lawmakers on both sides of the Atlantic attempt to stop the company from making its way onto their shores.

Just a few days after a group U.S. lawmakers moved to toughen a tax loophole that lets Shein import its clothes at a cut price, the clothing giant is now facing pushback from competitors in the U.K. and environmentally-minded politicians in France.

France’s environment tax

On Monday, members of parliament (MPs) from France’s ruling party proposed a new bill that would leave imported garments subject to penalties of €10 ($10.85) or up 50% of the product price in an attempt to offset the environmental impact of their production and shipping.

Shein in particular was called out in the bill, with lawmakers pointing out that the retailer is pumping out 7,200 new garment models a day, and has made 470,000 different items available to shoppers.

“This evolution of the apparel sector towards ephemeral fashion, combining increased volumes and low prices, is influencing consumer buying habits by creating buying impulses and a constant need for renewal, which is not without environmental, social and economic consequences,” the bill said, per Reuters.

Governments are turning their attention toward the clothing industry as they try to hit net zero environmental targets, with France’s move also likely to affect Shein’s competitors. 

But for the Chinese fashion giant, it’s just the latest in a list of headaches as the group angles for a blockbuster IPO.

A representative for Shein didn’t immediately respond to Fortune’s request for comment. 

Popularity catches up with Shein

Shein has catapulted in popularity thanks to its ultra-cheap products, which have become a hit with Gen Z shoppers despite their purported environmental and labor harms.

As a private company, the group does not disclose its financial information. However, Jamie Salter, the founder and CEO one of Shein’s key retail partners, Authentic Brands Group, said the company’s revenue was “a lot more than $30 billion” annually, CNBC reported.

Those revenue figures would put it above the annual sales of fast-fashion rival H&M. 

The brand’s successes in winning over younger shoppers have led it to set its sites on an IPO in the West. 

And after facing stiff opposition in the U.S., Shein is said to be planning to launch its reported $90 billion float in London, with U.K. Chancellor Jeremy Hunt meeting with Shein executive Donald Tang last week. 

But as a Chinese-founded retailer making its name off environmentally and ethically questionable fast-fashion practices, Shein’s rise hasn’t come without controversy, raising questions in areas ranging from security to labor rights and causing doubts over how quickly it can go public.

Lawmakers and retailers clamping down

Last week, 40 U.S. lawmakers urged Homeland Security Secretary Alexander Mayorkas to address a tax loophole exploited by Shein based on something called a “de minimis” exception. 

The loophole allows $800 worth of parcels to be imported into the U.S. duty-free per person per day. Politicians and manufacturers are arguing this has hurt the viability of U.S. companies as fast fashion has exploded in recent years. 

It was issues like this that have caused Shein to look elsewhere for a prospective IPO, but the brand is now realizing it will likely run into those same problems wherever it goes.

Similar to lawmakers in the U.S., a group of retailers in the U.K. are calling on the government to close a tax loophole that allows Shein to avoid tariffs by shipping smaller parcels direct to customers from China.

“It is to the detriment of the economy and to the outlook of those retailers that pay full taxation, including VAT,” the Retail Sector Council wrote in a recent paper, the Telegraph reported.

“Without the playing field being evened, there will be more business failures, less taxation and more unemployment.”

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