27 February, 2026

Shein is under fire. The fashion provider known for selling low-value clothing and toys from China has historically had low standards when it comes to sustainability and human rights. For a while, this didn’t seem to get in the way of growth, which increased rapidly between 2020 and 2023 to reach 10% market share.  

But in recent weeks these issues have come under the spotlight. From a very public showdown with customs officials at a Parisian airport, to a large consumer protest at its new bricks and mortars store, to a probe by the European Commission into the selling of illegal products, the company is in the headlines.  

Regulation is also playing an important role in disrupting its business model. Historically Shein have managed to keep prices low by sending low value packages, so avoiding duties and customs checks. Now in Europe, the US and the UK loopholes are closing and the company will need to pay these duties. In the face of increasing regulatory pressure, Shein are opening production facilities and warehouses overseas to reduce tariffs, but this will have implications for its low-cost model.  

In the case of Shein, it looks like its decades of irresponsibility might be catching up with it, which makes sense in a world of heightened regulation and scrutiny. Perhaps more surprising is that the tide doesn’t seem to have turned (yet) on brands with similar business models, such as Temu, which only opened in 2022, and already has 24% of the cross-border e-commerce market share.  

Our view is that time will tell for them too, and they will face similar regulatory and reputational pressures. But the longer-term hope is that rather than every bad business model being replaced by a new version of the same, the lessons learned and the operating environment stop them from being successful in the first place. 

By Anna Heis