In another example of the EU’s regulatory impact on ASEAN companies, Singapore-headquartered SHEIN has been classified as a Very Large Online Platform (VLOP) under the EU’s Digital Services Act (DSA). SHEIN, an online fashion and lifestyle retailer, produces most of its fast fashion products in China, targeting consumers in Southeast Asia, Europe and the US. The company was founded in China, but moved its headquarters to Singapore in 2022 and has customers in over 150 countries and employed around 10,000 employees worldwide.

In light of SHEIN’s published EU average monthly users in February this year, the online fashion retailer’s Irish subsidiary Infinite Styles Services Co, Ltd has now been added to the list [1] VLOPs since 26 April 2024, joining the likes of AliExpress, Amazon, TikTok, Meta, and Google. The company must now adhere to stricter regulations that accompany this designation as part of the EU’s Digital Services Act (DSA). 

VLOPs are required to do more to fight harmful content and counterfeit products on their platforms, as well as tackle the particular risks when it comes to illegal content, and their impact on fundamental rights, public security, and wellbeing of Europeans and society. This means that they must identify, analyse, and assess systemic risks that are linked to their services.  

VLOPs will need to establish a point of contact for authorities and users; report criminal offences; have user-friendly terms and conditions; be transparent as regards advertising, recommender systems or content moderation decisions; establish an internal compliance function that ensures that the risks identified are mitigated; be audited by an independent auditor at least once a year and adopt measures that respond to the auditor’s recommendations; share their data with the Commission and national authorities so that they can monitor and assess compliance with the DSA; allow vetted researchers to access platform data when the research contributes to the detection, identification and understanding of systemic risks in the EU; provide an option in their recommender systems that is not based on user profiling; have a publicly available repository of advertisements

Specifically for SHEIN, the Commission has required the company to put in place mitigation measures to address risks, such as the listing and sale of counterfeit goods, unsafe products, and items that infringe on intellectual property rights. 

SHEIN will have 4 months from its designation to comply with the DSA, and its compliance will be supervised by the Commission in cooperation with the Irish Digital Services Coordinator. Violations could lead to fines of up to 6% of their global annual turnover. SHEIN, which has already come under criticism by EU activists groups for allegedly using forced labour in China’s Xinjiang region, will now face further scrutiny by EU legislators on how it runs its operations. 

In a press release [3], SHEIN’s Global Head of Public Affairs, Leonard Lin said 

“We share the Commission’s ambition to ensure consumers in the EU can shop online with peace of mind, and we are committed to playing our part. We also share a commitment to the principles of transparency and accountability that are at the core of the DSA, as reflected in our supply chain governance standards and our engagements with our users. We will continue to work constructively with the European Commission to ensure that we deliver a safe and compliant environment for our online community.”

About the DSA

The DSA one several EU legislations recently created to regulate the digital economy. It was first proposed in December 2020, and entered into force in November 2022. The DSA in particular seeks to regulate online intermediaries and platforms such as marketplaces, social networks, content-sharing platforms, app stores, and online travel and accommodation platforms, with the aim of preventing illegal and harmful activities online and the spread of disinformation, ensure user safety, protecting fundamental rights, and creating a fair and open online platform environment.

[1] https://digital-strategy.ec.europa.eu/en/policies/list-designated-vlops-and-vloses 

[2] https://www.sheingroup.com/about-us/shein-at-a-glance/

[3] https://www.sheingroup.com/uncategorized/shein-affirms-commitment-to-comply-with-the-eus-dsa-following-vlop-designation/