Chinese retailer Shein caused a stir in British financial circles last week when news broke that it might launch a major IPO on the London Stock Exchange, but the fast-fashion brand is realizing it will face the same resistance in Europe that it faced in the US.
The Singapore-based company has faced intense pressure from regulators in recent days, with competitors and lawmakers on both sides of the Atlantic trying to block its arrival.
Just days after a group of US lawmakers moved to tighten a tax loophole that allows SHEIN to import its clothes at discounted prices, the clothing giant is now facing backlash from British competitors and environmentally conscious politicians in France.
France’s environmental tax
On Monday, lawmakers from France’s ruling party proposed a new bill that would impose fines of 10 euros ($10.85) or up to 50 percent of the product’s price on imported clothing to offset the environmental impact of producing and transporting the goods.
The bill specifically criticizes Shein, with lawmakers noting that the company produces 7,200 new clothing models a day and offers 470,000 items to shoppers.
“The apparel industry’s evolution towards short-lived fashions combining increasing volume with low prices, creating a purchasing impulse and the need for constant renewal, has influenced consumer buying habits, not without environmental, social and economic consequences,” Reuters wrote in the bill.
France’s move could also have implications for Shain’s competitors as governments focus their attention on the clothing industry in their bid to meet net-zero environmental targets.
But for the Chinese fashion giant, this is just the latest in a list of headaches as the group pursues a major IPO.
Representatives for Shine did not immediately respond to Fortune’s request for comment.
Popularity catches up with Shein
Shein has become a hit with Gen Z shoppers, skyrocketing in popularity thanks to its ultra-low prices, despite its allegedly negative impacts on the environment and labor.
The group is privately held and doesn’t release financial information, but Jamie Salter, founder and CEO of Authentic Brands Group, one of Shein’s major retail partners, said the company’s annual revenue is “well over $30 billion,” according to a CNBC report.
Those revenues would exceed fast-fashion rival H&M’s annual sales.
The brand has been successful in attracting younger shoppers and is eyeing an IPO in Europe or the US.
And after facing stiff opposition in the US, Shein is said to be planning a $90 billion initial public offering in London, with British Finance Minister Jeremy Hunt meeting with Shein executive Donald Tan last week.
But as a Chinese-founded retailer that built a reputation for environmentally and ethically questionable fast-fashion practices, Shein’s rise has not been without controversy, raising questions on a range of areas from security to labor rights, as well as the speed at which it went public.
Lawmakers and retailers crack down
Last week, 40 U.S. lawmakers called on Homeland Security Secretary Alejandro Mayorkas to address the tax loophole that Shain exploited under what’s known as the “de minimis” exception.
The loophole allows up to $800 worth of goods per person per day to enter the US duty-free, and politicians and manufacturers say it threatens the survival of American businesses amid the explosion of fast fashion in recent years.
These issues have led Shein to look elsewhere for an IPO, but the brand is now realizing it will likely face the same problems wherever it goes.
Like US lawmakers, UK retail groups are calling on the government to close a tax loophole that allows Shein to avoid tariffs by shipping packages directly from China to customers.
“This is detrimental to the economy and to the prospects of retailers who pay all taxes, including VAT,” the Retail Council wrote in a recent paper, reported The Telegraph.
“Without a level playing field, we will see more business failures, fewer taxes and more unemployment.”
