The news: France’s government is pushing for a three-month suspension of Shein’s entire site after authorities discovered illegal firearms and sex toys for sale on its marketplace, per Reuters.

• While Shein temporarily shut down its marketplace on November 5 “to ensure full compliance with French law and uphold the highest standards of consumer protection,” it has continued to sell its own clothing brands.
• A ruling is expected within weeks.

More bad news: Shein is also facing a class action suit from a consortium of French retailers and retail associations that collectively represent thousands of French companies, per The New York Times.

• The retailer is accused of using false promotions to attract shoppers, and of selling items that don’t comply with regulatory standards in France and the EU.
• The coalition is seeking up to €3 billion ($3.25 billion) in damages from a company they view as “a systematic threat” to French retail.

Our take: While political considerations are part of the crackdown on Shein as governments seek ways to protect local retailers from ultra low-cost rivals, the company hasn’t helped its case.

• Shein “has the technical, technological, and financial means” to keep illicit products from appearing on its marketplace, a finance ministry official pointed out in a press briefing.
• An inspection of 200,000 packages at Charles de Gaulle airport by French authorities found that 80% of them were noncompliant with French and European regulatory standards.

While looser marketplace requirements may aid sales for a while, they could lead to Shein’s downfall in France—and potentially across Europe—by providing government regulators with a clear justification to come down hard on the retailer.

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