The chain of fast fashion online Shein is tightening its controls following a series of fines for data privacy violations, fake discounts and greenwashing, according to a letter to investors, internal memos and two sources with direct knowledge of the plan.
Shein, which ships cheap clothing and accessories directly from factories in China to more than 150 countries, became the largest chain in fast fashion in the world in terms of sales. However, its rapid expansion was accompanied by regulatory failures in multiple markets.
In a letter to investors reviewed by Reuters, Chief Executive Donald Tang said the company created a “Business Integrity Group” connecting compliance, governance and external affairs teams, and also expanded its internal audit capabilities to reinforce discipline.
Over the past three months, Shein has faced mounting sanctions: a €150 million ($174.53 million) fine from France for website cookies that collect consumer data without consent, a €40 million fine from the French antitrust agency for misleading discounts, and a €1 million fine from Italy for greenwashing. Shein challenges the fine of 150 million euros.
New fines could be imposed if a European consumer protection investigation finds that products sold on its website do not comply with European Union (EU) safety standards.
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Founded in China and headquartered in Singapore, Shein applied for its IPO in Hong Kong, after failed attempts to do so in New York and London.
According to the letter, Shein implemented enhanced internal controls in the United States, Canada, Brazil and Mexico.
It is currently hiring two governance, risk and compliance policy analysts and an internal audit manager in Los Angeles, its careers website and LinkedIn notes.
It is unclear whether the advertised vacancies are additional positions.
The internal restructuring is focused on areas where Shein faces legal risks, such as copyright infringements and product safety laws, another source with direct knowledge of the matter said.
As Shein’s global profile grew, so did its risks, prompting senior management to allocate more resources to address persistent compliance issues, the source added.
Increase in fines and decline in growth: the problems facing Shein
Tang acknowledged “increased challenges” in the second quarter, citing U.S. tariffs and “intensifying political and regulatory hurdles” in Europe. The letter, which had not been previously published, was sent on August 25, according to a second source.
“In the second quarter, we grew steadily, in line with our global expansion plan and financial projections,” Tang wrote.
The end of the duty-free regime for low-value online orders hit Shein’s sales in the United States, the company’s largest market, forcing it to raise prices to offset rising costs.
Coresight Research estimates Shein’s US revenue will grow 20.1% in 2025, to $17.2 billion, up from an estimated 50% growth in 2024. Shein shifted more of its marketing spend to Europe (including the UK), which is expected to overtake the US in revenue for the first time this year, growing 30.7% to $17,900. million dollars.
Criticism of business practices grows
Europe, especially France, became the epicenter of scrutiny of Shein’s business practices.
An investigation by a French agency of the Organization for Economic Cooperation and Development (OECD), prompted by a complaint from two French lawmakers, concluded last week that Shein does not comply with OECD guidelines on responsible business conduct, due diligence, labor rights, environmental standards and transparency.
“Information on the group’s activity, its finances and its governance remains extremely scarce, making a clear analysis of its business, its revenues and its structure in the European Union and globally difficult,” stated the final report, published on September 29.
A spokesperson for Shein said the investigation “at times did not reflect the neutral mediation provided for within the OECD framework” and rejected accusations that Shein violates various EU laws, “in particular those that are not yet applicable.”
With information from Reuters
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