(Bloomberg) -- Shein has enlisted a former top European Union official to bolster its lobbying efforts across the region, taking a more active stance toward potential regulatory scrutiny as it plans a stock market debut in London.
The online fashion retailer hired former EU budget commissioner Günther Oettinger as a consultant to help it navigate the bloc’s policy environment, a company representative told Bloomberg News. Shein faces a raft of issues including a debate whether to impose customs duties on cheap parcels — a potential game-changer for Shein and other low-cost online retailers like PDD Holdings Inc.’s Temu.
The European Commission has kept the ultra-fast-fashion industry in its sights since about 2021, when President Ursula von der Leyen denounced it as “poison” due to the environmental impact of cheap, disposable clothes. That hasn’t prevented Shein from a major European expansion, and it’s preparing an initial public offering that could value the company at about £50 billion ($64 billion).
The EU is moving forward with plans to scrap a loophole that excludes items valued at below €150 ($164) from import duties as local retailers face growing competition from cheap Chinese goods shipped to the bloc.
Oettinger, who is a senior member of Germany’s conservative CDU party and sits on the advisory board of consultancy Kekst CNC, has faced criticism in the past for disparaging remarks about Chinese people. In 2016, he apologized for using comments that created “bad feelings” in a speech to business leaders.
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Prior to joining the private sector, he held several senior roles in the EU between 2010 to 2019, including European Commissioner for energy, for digital economy and society, and finally for budget and human resources.
Kekst CNC declined to make him available for comment. Spokespeople for German business school EBS Universität, where Oettinger is president, and the CDU in his home region did not respond to a request for comment.
Shein paid consultancy group Kekst CNC as much as €199,999 last year, according to the European Union Transparency Register.
Founded in China and now headquartered in Singapore, Shein has become one of the world’s most valuable startups thanks to its model of high-volume, ultra-cheap fashion. Its phenomenal success has drawn competition from the likes of ByteDance Ltd.’s TikTok and Temu, but also spurred criticism from multiple corners.
Shein is now grappling with EU rules designed to clamp down on illegal and harmful content online, aimed at stopping the spread of counterfeit items on the platform, Bloomberg News reported in April.
In 2022 Bloomberg reported some Shein garments were made with cotton from China’s Xinjiang region that the US has banned due to its links to forced labor. The company has pledged to improve its record.
After Shein joined the British Retail Consortium, the BRC’s head Helen Dickinson told Reuters the company committed to engage on issues including sustainability and ethical labor policies.
Shein spent about $2.5 million on lobbying in the US and the EU last year, and has pledged $70 million over the next five years to improve its supply chain. There is no record of rival Temu spending in the EU transparency register, and European Commission regulators have told Bloomberg News they liaise with Temu’s representatives directly.
--With assistance from Mark Bergen, Samuel Stolton and Liau Y-Sing.
(Updates with BRC membership in the 12th pargraph.)
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