Shein implements stricter controls amidst regulatory fines

Core Insights - Shein is tightening its compliance framework due to penalties related to data privacy, misleading discounts, and environmental claims [1] - The company is facing increased regulatory scrutiny as it expands globally, particularly in Europe and the US [1][4] Regulatory Penalties - In 2025, Shein was fined €150 million ($174.53 million) for unauthorized cookie data collection and €40 million for misleading discounts [2] - Italy imposed a €1 million fine on Shein for greenwashing [2] - Shein is appealing the €150 million fine, and a European consumer protection investigation may lead to further actions if safety requirements are breached [2] Compliance Measures - Shein has established a Business Integrity Group to enhance compliance, governance, and external affairs [3] - The company is expanding its internal audit capabilities to address potential legal issues, focusing on copyright violations and product safety compliance [3] - These measures are currently being trialed in the US, Canada, Brazil, and Mexico [3] Business Challenges - As Shein's global profile grows, so do its compliance risks, prompting management to allocate more resources to address these issues [4] - The company faced challenges in Q2 2025 due to US tariffs and increasing political and regulatory pressures in Europe [4] - The removal of duty-free status for low-value online purchases in the US has led to price adjustments [4] Revenue Projections - Coresight Research forecasts a 20.1% increase in US revenue for Shein in 2025, reaching $17.2 billion, down from an estimated 50% growth in 2024 [5] - European sales are projected to surpass US sales, with a 30.7% revenue increase to $17.9 billion [5] - Regulatory scrutiny in Europe has intensified following an OECD investigation that raised concerns about Shein's business practices [5][6] Business Conduct Concerns - An OECD inquiry concluded that Shein does not align with responsible business conduct guidelines, including labor rights and environmental standards [6] - The report highlighted a lack of transparency regarding Shein's business activities, finances, and governance, complicating analysis of its operations in the EU and globally [6]