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Shein’s pre-IPO charm offensive hits roadblocks in Europe

Shein’s pre-IPO charm offensive hits roadblocks in Europe

By Helen Reid and James Davey

LONDON (Reuters) -As online fast-fashion retailer Shein ramps up its pre-IPO charm offensive in Britain, pushback is growing too from Europe’s retail industry and lawmakers.

As citizens of 27 countries vote in European Union elections, European manufacturers of fabric, clothes, leather goods and shoes this week called on future EU policymakers to protect the 1.5 million jobs in the sector from low-cost products being “dumped” on the market.

With industrial policy a key issue in the election, apparel manufacturers, retailers and e-commerce companies are trying to put cheap clothes, accessories and gadgets from China on the agenda, invoking the same language used by EU officials about Chinese overcapacity in electric vehicles.

The textiles, footwear and leather industries in Europe – home to fast-fashion giants Zara and H&M, as well as the world’s biggest luxury brands – have a combined annual turnover of more than 200 billion euros ($220 billion).

Ninety-nine percent of companies in the sector are small or medium enterprises, making them vulnerable to “fierce” global competition, the industry groups said in a joint statement.

Poland’s e-commerce association argued in a report that Chinese state subsidies are giving online marketplaces like Shein, which sends $5 T-shirts, $15 jeans and $1 earrings from China directly to customers around the world, an unfair advantage over European rivals.

A Shein spokesperson said: “There is no truth to the allegation that Chinese state subsidies help support SHEIN’s business and its expansion worldwide.”

Most of the products Shein sells are made in southern China but the company has been building a supplier base in Brazil and in Turkey. “We expect our Turkish supply chain partners to increasingly support us in serving the European market,” the spokesperson said.

Shein is also working to improve its image in France, where lawmakers in the lower house of parliament in March approved a bill seeking penalties on fast fashion products to offset their environmental impact.

Raphael Glucksmann, an EU lawmaker leading France’s Socialists party list in the elections, is a proponent of the bill and prominent campaigner against Shein.

Shein has said the bill would only serve to worsen French consumers’ purchasing power. On Monday, Shein announced it would expand its second-hand clothing resale platform “Shein Exchange” to France first, followed by the UK and Germany, having first launched it in the U.S. in late 2022.

The e-commerce giant, which has declined to comment on IPO plans, is also courting officials in Germany.

Lionel Lim, associate director of global government relations at Shein, last month hosted an “ESG breakfast roundtable” in Berlin with attendees from government, trade associations, and business partners, according to his LinkedIn post.


Retailers in Europe have become increasingly critical of tax loopholes they say benefit Shein and other foreign e-commerce platforms. Under EU rules, individuals can order parcels worth less than 150 euros ($170) online from abroad, without paying import duties. In Britain, the equivalent threshold is a similar 135 pounds.

“We are calling on the MEPs to be elected to the European Parliament on Sunday to ensure equal conditions for competition in Europe,” the Finnish Commerce Federation’s managing director Kari Luoto said in a statement on Wednesday. “The removal of the duty-free limit should be urgent.”

Theo Paphitis, chairman and owner of UK retailers Ryman and Robert Dyas, told Reuters: “It’s beyond belief that the government hasn’t clamped down on a gaping tax loophole that allows giant companies from abroad to sell in the UK without paying customs, or contributing to the cost of the retail economy, at the expense of British companies that are paying their fair share.”

Germany has called for EU-wide changes. Its main retail association, Handelsverband Deutschland, said Finance Minister Christian Lindner “has signalled that Germany will support the abolition of the 150-euro duty-free limit at the European level”.

Shein says the duty-free treatment of low-value parcels is not critical to its success, and that it keeps prices low thanks to its on-demand business model and flexible supply chain.

Next chief executive Simon Wolfson has also called on the UK government to review the loophole despite the administrative complexity of trying to tax millions of small deliveries.

Britain’s Labour Party, widely expected to take power in a July 4 election, has met with Shein ahead of its possible London listing. But some British lawmakers have questioned Shein’s suitability for a London stock market listing and called for greater scrutiny of its supply chain and labour practices.

($1 = 0.9184 euros)

($1 = 0.7811 pounds)

(Reporting by Helen Reid and James DaveyEditing by Peter Graff)


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