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Shein tightens compliance controls after major fines over privacy, discounts, and greenwashing

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Shein, the fast-fashion giant, is overhauling its internal governance after a string of regulatory fines across Europe for data privacy breaches, misleading discounts, and greenwashing, according to company memos, investor letters, and sources familiar with the matter.

In a letter to investors reviewed by Reuters, Executive Chairman Donald Tang said Shein has launched a “Business Integrity Group” to unify compliance, governance, and external affairs functions, while expanding its internal audit capacity to strengthen corporate discipline.

Over the past three months, the company has been fined €150 million ($175 million) in France for data violations, €40 million for deceptive pricing practices, and €1 million in Italy for greenwashing claims. Shein is appealing the largest fine, but faces further scrutiny from an ongoing EU product safety investigation.

The Singapore-headquartered firm — which ships from factories in China to over 150 countries — is also rolling out stricter compliance frameworks in the U.S., Canada, Brazil, and Mexico as part of a global pilot program. Job postings show new audit and risk management roles in Los Angeles to reinforce oversight.

Tang admitted in the August 25 letter that Shein faces “heightened political and regulatory headwinds” in Europe and tariffs in the U.S., which have slowed growth. Coresight Research projects Shein’s U.S. revenue will rise 20.1% in 2025, down sharply from 50% growth this year, while Europe is expected to surpass the U.S. for the first time.

Shein’s compliance revamp follows mounting criticism of its opaque governance, copyright issues, and environmental standards — with a French OECD agency finding it noncompliant with global responsible business guidelines.

Shein’s First Permanent Stores in France Ignite Fierce Backlash from Retailers and Officials

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Fast-fashion giant Shein is taking its first major step into physical retail in France, announcing plans to open permanent stores this November in collaboration with Société des Grands Magasins (SGM). The rollout includes a flagship location on the sixth floor of Paris’s BHV department store and additional stores in Galeries Lafayette branches across Dijon, Grenoble, Reims, Limoges, and Angers.

Until now, Shein’s presence in physical retail was limited to short-term pop-up stores designed for marketing. The partnership with SGM, however, signals a significant strategic shift—one that has immediately triggered political and industry backlash.

Galeries Lafayette, which licenses its name to SGM through a franchise agreement, said it opposes the decision and intends to block the openings, citing Shein’s “ultra fast fashion practices” as incompatible with its brand’s values. “This decision contradicts our commitment to quality, sustainability, and responsible commerce,” the group stated.

The criticism has extended beyond retail circles. Paris Mayor Anne Hidalgo denounced the plan as incompatible with the city’s sustainability goals, warning that it undermines efforts to promote local and eco-friendly businesses. “We are extremely concerned by BHV’s decision to host the first permanent Shein store in France,” she wrote on LinkedIn, calling for support of ‘sustainable local commerce.’

Industry leaders also reacted sharply. Yann Rivoallan, president of the Fédération Française du Prêt-à-Porter Féminin, accused Shein of “destroying dozens of French brands” and warned that the new megastore would “flood the market with disposable products.” The backlash comes as French lawmakers advance a draft bill to regulate fast fashion, potentially banning Shein from advertising in France.

Shein’s model—offering €12 dresses and €20 jeans shipped directly from Chinese factories—has upended the retail landscape by exploiting customs exemptions for low-value parcels. The company claims its online-only model keeps waste minimal, but the shift to physical stores could challenge that efficiency by forcing it to maintain inventory and absorb higher operating costs.

The expansion also coincides with regulatory shifts in major markets. The U.S. is phasing out Shein’s “de minimis” duty exemption, and the European Union is preparing similar reforms. Despite these headwinds, Executive Chairman Donald Tang insists Shein remains a favorite among rural and provincial shoppers, who often have fewer options for affordable fashion.

Whether these stores succeed—or spark a broader European backlash—will test Shein’s ability to translate its digital dominance into physical retail while navigating growing political, environmental, and cultural resistance.