Sexdockskandal blev gnistan – nu granskas Shein av EU

Regulatory probes and the ending of customs loopholes pose big challenges, but its business model is highly resilient.

In November, several French ministers, a bevy of TV cameras and an army of customs officers set up camp at Charles de Gaulle airport outside Paris to conduct a very public inspection of the contents of thousands of packages sent to France by fast-fashion giant Shein.

“In order to put a stop to a system that is clearly non-compliant with our standards and our tax laws, we need to have proof,” budget minister Amélie de Montchalin said at the time. Some 300,000 packages containing half a million items were eventually searched, with a quarter found to violate French or EU standards.

The theatrical display took place at the height of the French government’s stand-off with the Chinese-founded platform. Shein had opened its first permanent physical shop in the country at the beloved central Paris department store BHV the day before, attracting both queues of shoppers and protesters bearing signs that read “Shame on Shein” and “Protect children, not Shein”.

Reports had emerged that third-party sellers on the platform’s online marketplace were selling “paedopornographic” sex dolls and weapons such as brass knuckles, leading France to temporarily suspend its marketplace platform and launch investigations into Shein and some of its peers.

This week, spurred by events in France, the European Commission opened its own probe into the sale of “illegal products”, including the child sex dolls, the “addictive” nature of its app and whether it was being transparent enough about its use of recommendation algorithms. If found guilty of non-compliance, the Commission could hit Shein with a fine of as much as 6 per cent of its global revenue, or more than $2bn, based on 2024 figures.

The investigation is a major challenge in a crucial growth market for the fast-fashion company that has rocked the world of ecommerce since the pandemic, notching nearly $40bn in annual sales and spawning a slew of copycats.

Shein told the FT in a statement: “We take our obligations under the Digital Services Act seriously and have always cooperated fully with the European Commission”.

It added that it had accelerated the rollout of new safeguards around age-restricted products. “Protecting minors and reducing the risk of harmful content and behaviours are central to how we develop and operate our platform.”

But the EU probe is just the latest of Singapore-headquartered Shein’s problems, which are stacking up in many of its major markets as it seeks to push through an initial public offering in Hong Kong or London. That process too has been impeded by regulatory scrutiny.

In Europe, the US and the UK, authorities are closing or have closed loopholes that allowed Shein’s low-value packages to avoid duties and onerous customs checks. There have also been questions about the company’s supply chains, employment practices and the potential sourcing of cotton from China’s Xinjiang province, where rights groups have alleged producers use forced labour.

Consumers globally, meanwhile, are becoming more conscious of issues such as sustainability and the environmental cost of so-called fast fashion.

Analysts say the EU investigation is a sign of growing difficulties for not only Shein but also for a broad cohort of both fast-fashion companies and Chinese ecommerce platforms operating in key western markets. For Shein, they add, it may be time for a change of strategy.

“The investigation is about more than just some narrow products sold by Shein, it also concerns the company’s business model and how it engages with consumers,” said Sheng Lu, a professor at the University of Delaware.

“This could pressure Shein to make significant changes to its platform, from how it promotes its products to what it could sell.”

As a young graduate from China’s eastern Shandong province during the early years of China’s ecommerce boom, Xu Yangtian, Shein’s low-key founder, cut his teeth matching western buyers of everything from gaskets to spark plugs to local components factories.

By 2008, he had founded what would later go on to become Shein, but it took over a decade, and the arrival of the Covid-19 pandemic, for it to achieve the meteoric success in the US that propelled it to global prominence.

Its business model, which in effect connects western customers directly to Chinese factories, cuts out an entire industry of middle men and keeps both costs and lead times low. It uses algorithms to help identify popular designs for women’s clothing and cosmetics, which it then places as small orders at its network of some 7,000 contract manufacturers. The small-batch system means it can maintain a vast range of products that more traditional fast-fashion retailers have struggled to keep up with.

While small orders can force losses on suppliers, manufacturers are willing to fulfil them because Shein pays them more promptly than traditional retailers — and because a design that takes off could bring huge sales. Shein also argues that its test-and-learn model helps to reduce waste.

Its stunning success — the company’s revenues were $38bn in 2024 — has triggered a wave of imitators, most notably Temu, launched in 2022 by Shanghai-based ecommerce group PDD.

According to a survey by the International Post Corporation, an association of 26 national postal services, Temu accounted for nearly a quarter of the global market for cross-border ecommerce last year, on a par with US giant Amazon. Shein accounted for 9 per cent.

But that ascent has triggered stiff resistance from western fashion retailers and officials, who argue that Shein unfairly exploits tax exemptions for small packages to undercut local competition.

In the EU, policymakers have railed against a “flood” of cheap online packages coming from China, with both Shein and Temu in their crosshairs. The vast majority of the 5.8bn small packages flown into the EU last year were from China, mostly low-value goods such as clothes, electronics and toys.

To tackle that, the bloc has adopted two strategies. One is to curb the sale of online illegal products via the Digital Services Act, which forces large online platforms to limit the spread of illegal content and products on their platforms and to increase transparency around how they work. Policymakers hope the act will ensure online marketplaces abide by the same safety rules as bricks-and-mortar stores.

“Illegal products often flood directly from China [via Shein] into the internal market and right to their doorsteps,” said Anna Cavazzini, a Green member of the European parliament and chair of its internal market committee, which last month grilled Shein’s EU bosses. “This has no place in the internal market, with its highest consumer protection and safety standards.”

The bloc is keen to show to US President Donald Trump and his administration that the EU’s Digital Services Act does not only target US groups, such as social media platforms X or Instagram, but also companies based in other jurisdictions, such as China.

The EU has also sought to crack down directly on billions of cheap Chinese products sent via ecommerce by introducing a fee of €3 per product line for all packages with a value under €150. Individually, some member states have levied a flat handling fee on small packages ordered from outside the EU via online platforms.

In the US, where Shein and Temu have historically accounted for millions of packages a day, Trump cancelled de minimis exemptions from customs duties for Chinese goods early in his second term. Trump has called the exemptions, which were intended to reduce costs for small businesses and exempted packages whose contents were worth less than $800 from import tariffs, “a big scam going on against our country”. 

“All of this actually is just another aspect of the broader concerns about a second ‘China shock’,” says Jayant Menon, senior fellow at the Iseas-Yusof Ishak Institute in Singapore, adding that local retailers and producers “simply cannot compete” with prices offered by Chinese ecommerce platforms. 

While those concerns are particularly acute in Europe, regulators worldwide are looking at ways to protect local businesses from cheap Chinese goods, especially as higher tariffs in the US have pushed platforms like Shein to seek new markets, Menon adds. “It’s your corner stores, to the extent that they still exist . . . their prices are sometimes a multiple of what ecommerce charges.”

But observers are divided on how the end of de minimis will impact Shein’s business in the US. Although the closure hit the company’s sales in the country last year, according to data from Euromonitor, some suppliers argue that their products are cheap enough to remain competitive even with an added tariff. The axing of de minimis for all producers globally has also eased competitive pressure Chinese platforms may have felt from rival manufacturing hubs, they say.

Brittain Ladd, a US supply chain consultant who previously worked at Amazon and Dell, said that Shein would probably intensify a push to open its supply chain and design capabilities to outside retailers, under an initiative known as Shein Xcelerator which it expanded in September after a trial period. “This is a big move,” he says, adding that it will herald a significant strategic change for retailers.

The programme involves allowing designers to access Shein’s fulfilment, sampling and production capabilities and earn a commission when their product sells. 

But while the initial launch focused largely on a couple of thousand independent designers, the company has its eyes on expanding the model to more traditional retailers that want to increase their scale, according to people familiar with the company’s plans. “There are many small brands in Europe with sales of around $150mn. Think about what [Shein] can offer,” one of the people says.

Fan Di, a professor at the Hong Kong Polytechnic University, says the programme could also help Shein reduce its reputational risks. “Expanding these collaborations can help Shein argue that its scaling generates tangible benefits for western . . . small businesses, not only low prices for consumers,” he says.

With unfettered access to its key markets threatened, Shein has also sought new global customers to sustain its growth in the run-up to listing its shares on a public market.

The company’s market share for apparel in the US slipped last year for the first time since at least 2021. Sales in the country, meanwhile, were eclipsed by the sum of those in the UK, France, Germany, Italy, Spain and Brazil, University of Delaware professor Lu points out, citing Euromonitor data.

Shein is pushing into South America, particularly Brazil, where it is seeking to grow its production network and has significantly increased marketing spend. It is also establishing warehouses and logistics capabilities in overseas markets to reduce tariff and customs friction.

Ultimately, the company’s impressive supply chain and ultra-competitive prices offered by Chinese suppliers should provide some protection from increased tariffs, analysts agree. Nonetheless, says Fan, the protests at Shein’s BHV store in Paris, the broad EU investigation and growing weariness among young consumers may signal a broader reckoning.

“This episode fits a wider western pushback against the ultrafast low-value parcel commerce model, which is currently dominated by Chinese platforms.”

Henry Gao, a law professor at Singapore Management University, says Shein will either have to pivot to selling domestically, which it has never done, or comply with regulatory standards in the overseas markets it has targeted.

“That will be difficult because much of their appeal comes from ultra-low costs,” he adds. “I am not confident they can adjust.”

Additional reporting by Andy Bounds in Brussels

©The Financial Times Limited 2026. All Rights Reserved. FT and Financial Times are trademarks of the Financial Times Ltd. Not to be redistributed, copied or modified in any way.