Tuesday, July 23, 2024

Shein sets up circularity fund amid regulatory turmoil in Europe

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The platform will need to comply with the Digital Services Act by the end of August.


Online fast-fashion platform Shein announced today (9 July) that it will set up a €200m circularity fund in the EU and UK in a bid to create a future-proofed fashion industry. 

The Singapore-based company said it will help businesses throughout Europe and the UK which are developing next-generation technologies and solutions by investing in start-ups working with recycled materials innovation and entering commercial partnerships with start-ups that work in recycled materials.

 “As a global leader in our sector, Shein has both a responsibility and an opportunity to accelerate innovations that can address the environmental footprint of the fashion industry,”  Shein Executive Chairman Donald Tang said in a statement.

The announcement comes as the platform has been at the centre of regulatory attention in recent weeks. 

EU governments last month (17 June) called for tough measures to clamp down on the wasteful trend for cheap and disposable garments, by enabling governments to levy charges on firms whose marketing strategy promote ‘fast fashion’ consumerism.

Shein was also designated under the EU’s online platform rules as a Very Large Online Platform (VLOP) due to a soaring number of European users in April. The company will face stricter requirements under the EU’s Digital Services Act (DSA) — and must adopt specific measures to protect users’ well-being, and monitor illegal activity such as counterfeit goods by the end of August.

Last week (28 June), the European Commission already sent a request for information to Shein and its Chinese counterpart Temu under the DSA, asking for more information on the measures they have taken to comply with the rules related to among others advertising, the protection of minors and online interfaces.

The questions followed complaints by consumer organisation BEUC filed in May. The two platforms have until Friday (12 July) to reply to the Commission.

Custom duties

In addition, media reported last week that the Commission is preparing to apply customs duties on cheap products coming from China.

Under current rules, goods under €150 can be imported into the bloc duty free from non-EU countries. For products over this threshold, the percentage or rate varies depending on the type of goods. 

The move would be intended to combat an influx of low-quality products imported from Chinese online marketplaces Shein, as well as Temu and AliExpress.

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