Chinese fast-fashion e-commerce company Shein. [Reuters]
Chinese fast-fashion e-commerce company Shein. [Reuters]

The US Federal Trade Commission said it is investigating Chinese fast-fashion e-commerce company Shein over consumer protection concerns.

An FTC spokesperson confirmed Tuesday that the agency is conducting a consumer protection probe into Shein, according to Reuters.

Shein had disclosed the investigation in a filing published by the Hong Kong Stock Exchange on July 26, ahead of its planned initial public offering in Hong Kong, saying it is cooperating with the FTC and that the probe relates to its US business operations. The FTC's statement confirmed that disclosure.

"Regardless of whether the investigation results in a settlement, we may be required to make significant monetary payments, which could have a material adverse effect on our financial condition and results of operations," Shein said.

Often called the "Chinese Uniqlo," Shein was founded in 2012 and grew into one of the world's largest fashion brands by offering ultra-low prices — including $10 jeans — as its core strategy.

The company relocated its headquarters from China to Singapore in 2021 and was valued at $100 billion when it raised investment funds in 2022.

Shein had pursued listings on the New York and London stock exchanges in succession, but pivoted to Hong Kong after supply chain risk disclosures emerged as a major obstacle. Sources familiar with the matter said Chinese regulators were unwilling to accept filings that referenced Uyghur forced labor as a supply chain risk factor.

Shein has long faced criticism from the United States and the broader international community over allegations that it maintains unethical labor practices and sells consumer products whose safety has not been verified.

In a preliminary prospectus published Tuesday, Shein said it recorded a net loss of $99 million in the first quarter of this year, swinging to a deficit from a net profit of $395 million in the same period last year.

The company said its US sales and overall growth were hurt after the United States eliminated its "de minimis" exemption — which had allowed imports valued under $800 to enter duty-free — in May last year, dealing a blow to Shein's largest market.


yckim6452@heraldcorp.com