Shein to increase product testing in response to EU probe

(Sharecast News) - Chinese fast-fashion retailer Shein said it was increasing product testing and set a target of scrutinising 2.5 million products this year in response to pressure from the European Union.

The controversial company added that it would spend $15m on compliance initiatives this year after the EU said fake discounts, pressure selling, and other practices breach the bloc's law.

It gave Shein a month to respond to its findings or face fines based on its sales in the EU countries where it says it has breached the law.

Shein, which sells its own-branded clothes in 150 countries, also runs marketplace for sellers of toys, gadgets, and homeware sent directly from factories mostly in China to consumers globally.

Since it launched its marketplace, Shein has stopped working with more than 540 sellers over compliance breaches, the company said in a statement.

The EU's ongoing investigation by its consumer rights arm found "a broad range of practices with which consumers are confronted while shopping on Shein and that are in breach of EU law" including instances of pretending to offer better deals by showing price reductions that were not based on actual prior prices, and fake deadlines to put consumers under pressure to buy.

Shein, which is looking for a stock market flotation was reportedly said to be working towards a Hong Kong listing after its proposed London IPO fell short of getting the green light from the China Securities Regulatory Commission, according to a news agency Reuters which cited unnamed sources.

Reporting by Frank Prenesti for Sharecast.com