The French government has fined Chinese e-commerce retailer Shein 40 million euros (£34.5m) for deceptive marketing practices and failing to provide sufficient information about the environmental impact of its products, amidst a broader focus on the company and competitor Temu by EU regulators.

France’s Ministry of Economy said in a statement that it took the measure based on an investigation from 1 October, 2022 to 31 August, 2023 that found Shein’s French subsidiary, Infinite Style E-commerce, had “misled consumers” about discounts.

Shein’s discounts were not based on an item’s lowest price over the previous 30 days, as required by French regulations, and in some cases the company raised prices before applying a reduction, the ministry said.

Regulatory pressure

As a result, 57 percent of advertised promotions actually offered no reduction in price, while 11 percent represented price increases, according to the ministry’s findings.

Shein also failed to provide information on the environmental quality of the waste-generating products it markets in France, resulting in a fine of just under 1.1m euros, the ministry said in a separate statement.

It said a 2023 investigation found that more than 700 products sold by Shein in the country did not disclose that they release plastic microfibres into the environment during washing, as requested by the government.

The success of Shein and Temu’s business model of selling inexpensive items around the world that are often shipped directly from China has led to increasing regulatory scrutiny of the firms in many countries.

In May several EU countries, including France, Belgium, Ireland and the Netherlands admonished Shein to modify multiple practices that could break EU consumer laws, including fake discounts.

https://www.elysee.fr/So far France is the only one of those countries to take further action.

Last week EU consumer protection commissioner Michael McGrath said unspecified actions were underway against Shein and Temu amidst an “explosion” in the volume of small parcels entering the bloc, 90 percent of which were from China.

IPO plans

The cheap products being shipped were often bad for consumers, local businesses and the environment, McGrath said at the time, adding he planned to visit China this year to discuss the matter directly with authorities.

In May the European Commission proposed a 2 euro fee for small packages valued at 150 euros or less sent directly to consumers from abroad, following a US move to end the “de minimis” customs exemption for parcels valued at under $800 (£586).

China’s Ministry of Foreign Affairs said at the time that it expected the EU to provide a “fair, transparent and non-discriminatory business environment for Chinese companies”.

Shein last year reportedly scrapped plans to hold an initial public offering in the US or the UK amidst increasing regulatory pressure.

The company was instead working to file a confidential draft prospectus for a listing in Hong Kong, Reuters reported in late June.