Shein has begun trading in Hong Kong, but faces sanctions imposed in Europe that affect its business model. The company is seeking alternatives to grow in a stricter regulatory environment.
The shares of Shein started trading in Hong Kong after a process that has lasted for years. However, information reported by expansion.com reveals that the company is facing sanctions in France that could impact its business model in Europe.
French authorities have decided to impose restrictions on ultra-fast fashion products, casting doubt on Shein's low-price strategy in the region. This measure is part of a broader set of regulations affecting the company, including the removal of tax exemptions that have favoured its growth.
According to Lorraine Tan, director of equity research for Asia at Morningstar, “at this stage, they have to compete on much more equal terms.” Shein, which has around 273 million active customers in approximately 160 markets, is facing a more complicated landscape.
With a valuation in its IPO of over 26 billion dollars, the company is seeking new growth avenues after reporting losses of 99 million dollars in the first quarter of 2026. Shein's shares initially fell but approached their listing price by the close of Tuesday's session.
One strategy that Shein could adopt is to open its supply chain to external brands, as it does through its Shein Xcelerator program, which allows designers and brands to use its production infrastructure. Additionally, the company has acquired fast fashion brands such as Missguided and Everlane to diversify its offerings.
Amid a stricter regulatory environment, Shein's revenues in Europe are expected to be negative this year. However, some analysts believe this impact could be temporary.
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