FASHION SYSTEM

SHEIN FACES STRICTER EU RULES TO COMBAT COUNTERFEITS

FASHION SYSTEM
EU regulations target Shein for online content control. The European Union (EU) has included fast-fashion giant Shein under its new Digital Services Act (DSA). This act aims to tackle illegal and harmful content online, with a focus on curbing counterfeit goods on Shein's platform.

Large EU user base brings Shein under the DSA. Shein's massive user base in the EU, exceeding 45 million monthly users, triggers the DSA's regulations. Non-compliance could result in hefty fines for the company.

Shein to tighten content monitoring. The DSA requires Shein to significantly increase its monitoring of platform content, especially regarding the sale of counterfeit products. This translates to stricter measures to prevent counterfeit items from being sold.

Strict compliance deadline for Shein. Shein has just four months from notification to comply with the most demanding aspects of the DSA. This includes protecting users, particularly minors, and mitigating any potential risks associated with its services.

Shein joins other online giants under the DSA. Shein joins other major platforms already regulated by the DSA, including YouTube (Alphabet Inc.), Facebook (Meta Platforms Inc.), and Elon Musk's X. Additionally, marketplaces like AliExpress (Alibaba Group Holding Ltd.) and Amazon.com Inc.'s platform have also been designated due to exceeding the 45 million monthly active user threshold in the EU.

Shein committed to cooperating. Shein's global head of public affairs, Leonard Lin, expressed the company's alignment with the EU's goal of ensuring consumer safety while online shopping. Shein remains committed to fulfilling its role in achieving this objective.

The DSA's broader requirements. The DSA also mandates online marketplaces to track sellers, implement methods for users to report illegal content, and conduct random checks for illegal products.

EU's focus on regulating companies with Chinese links. This move highlights the EU's recent efforts to tighten regulations on companies with connections to China. Earlier this week, the EU compelled ByteDance Ltd.'s TikTok to suspend a controversial rewards program on its Lite app. This action aimed to prevent a potential temporary ban by EU watchdogs concerned about the program's addictive nature for children.

EU widens its net on Chinese companies. The EU's actions extend beyond the DSA. Competition watchdogs raided the premises of Chinese security firm Nuctech under a separate legal instrument, the Foreign Subsidies Regulation (FSR). The suspicion is that Nuctech may have received subsidies that could distort competition within the EU's single market. Recent FSR probes have similarly targeted other Chinese firms in the clean energy and rail sectors. This surge in investigations reflects the EU's increasingly assertive approach towards China, potentially leading to restrictive trade measures, tariffs, and a trade war.