Shein to Encounter Stricter EU Rules as Large Online Entity

The European Union has designated the Chinese-founded fast-fashion company Shein as a "very large online platform" (VLOP) under the Digital Services Act (DSA). This classification applies to companies with more than 45 million users and comes with a set of stricter rules that Shein must comply with by the end of August. As a VLOP, Shein is now required to implement measures to protect consumers from unsafe or illegal goods and to prevent the sale and distribution of products that could be harmful, especially to minors.

Shein joins a list that includes more than 20 other large online platforms such as AliExpress, TikTok, and Amazon. These platforms are now subject to the DSA's regulations, which have been effective since February 17. The DSA mandates that the largest platforms must also provide an external audit once a year to verify compliance. Failure to adhere to these rules could result in substantial fines, with penalties reaching up to 6 percent of the company's global annual revenue.

Shein has come under scrutiny for various issues, including allegations of forced labor in China's Xinjiang region, which the company denies. Additionally, French lawmakers are focusing on fast-fashion companies like Shein as they seek to enforce a new environmental law. The EU has also launched investigations into other tech firms, including TikTok and AliExpress, for potential violations of the DSA.