France targets Shein and Temu with fast fashion fines

France is taking action to tackle the surge in sales of cheap clothing from e-commerce giants like Shein and Temu. On Tuesday, the country began imposing fines on these fast fashion retailers as part of a new law aimed at addressing environmental concerns from overproduction. The penalties range from €0.25 for items like boxer shorts or socks to €12 for a coat, with the amount limited to 50% of the product's pre-tax sales price.

These fines come at a crucial time for Shein, as its valuation dropped ahead of its Hong Kong stock market debut due to the end of duty-free access for cheap e-commerce parcels in the EU and US.

Neither Shein nor Temu commented on the fees. The French spokesman for Shein, Quentin Ruffat, previously stated that the fast-fashion penalties would be detrimental to customers by causing prices to rise. China's commerce ministry described the French law as discriminatory and a trade barrier, potentially violating World Trade Organization (WTO) principles.

The fine calculation formula considers factors such as the number of products sold, their prices, and repairability. The new penalties are set to increase further from 2030. European retailers like Inditex's Zara and H&M, with smaller online ranges, are not expected to be affected. Under EU regulations on textile waste, member states must have an Extended Producer Responsibility body to collect fees from textile producers to fund the collection, sorting, and recycling of discarded clothes.

In France, the organization set up to manage this will collect the new fines from the importer or manufacturer of fast fashion responsible for the penalty.