Exceeding the speed limit: How France is trying to stop the Shein and Temu offensive

In June, the French Senate voted in favor of a bill to restrict advertising and impose environmental fees on ultra-fast fashion companies. The main targets are Chinese giants Temu and Shein. What does this mean for the ultra-fast fashion market, investors, and what does it have to do with zoomers?

Fast fashion was not invented by the Chinese, it is a European invention. In the 1990s, Spain's Zara was one of the first fast fashion retailers to break the mold: the production cycle from design to the counter took 15 days. The company offered hundreds of new models a week;

But Chinese giants Shein and Temu have gone even further, turning on the super-speed: as of 2023, Shein, in particular, was consistently producing up to 10,000 new items per day, writes McKinsey.

Compared to its rivals, it is delivering entire collections in record time: in 2022, Zara launched 6,850 new items, H&M launched 4,400 and Shein launched 315,000. Бренд запускает за два дня то, что H&M предлагает в течение нескольких месяцев,

In addition, Shein products are on average two to three times cheaper than their competitors. The average price for a Shein product item is $14, compared to $26 for H&M and $34 for Zara.

The bill, which the French Senate voted in favor of in June, is aimed precisely against fast fashion manufacturers. It involves the introduction of an ecological points system. Goods of brands with the lowest scores could be taxed up to 5 euros per unit already from 2025, and by 2030 it could increase to 10 euros. The tax cannot exceed 50% of the retail price of the product;

To reduce the demand for ultra-fast fashion among buyers, the bill suggests a ban on its advertising, including on bloggers and social media influencers - brands often advertise their products on them. 

But French lawmakers are not even hiding the fact that the project is directed against Shein and Temu.

«Today we still have to protect what is left of European industry. We have to make a clear distinction between the production that these giants have in China,» said Euronews Senator Sylvie Valant Le Ire. - We are talking about a scale that is 100 times larger than ours. So we are preserving European and French industry for the time being, because if we don't, there will be nothing left.»

The Europeans have reason to fear for their market: in 2017, Shein had 2.8 million users; in 2024, it will have 88 million. In the U.S., it was the second most popular shopping site (after Amazon) among American Generation Z. 

Temu's annual sales growth in France in early May increased by 100%, and in the  European Union  as a whole by more than 60%. The jump comes less than a month after U.S. President Donald Trump, in the midst of a trade war with Beijing, canceled a de minimis exemption for goods from China and Hong Kong. It allowed parcels up to $800 to enter the United States duty-free. В США более 90% всех посылок ввозились беспошлинно, из них около 60% —  из Китая напрямую потребителям через такие платформы, как Temu и Shein,

The bill against fast fashion manufacturers has not yet been finally passed. Lawmakers still have to notify the European Commission, then it must be approved jointly by both chambers of the French parliament, after which it will be approved by the French president;

If passed, it will create a triple jeopardy zone for Shein and Temu: regulatory, reputational and operational, Alena Nikolaeva, portfolio manager at Astero Falcon, told Oninvest. 

In particular, according to her, sin-tax (tax for «ecological sins») of 5 euros per unit of goods with the prospect of increasing to 10 euros with an average check of 10-15 euros simply kills unit economy, in which to assess the profitability of the business is analyzed income and expenses per one unit of product. 

Financially, for companies, this will mean a drop in revenue in the French market, higher logistics and compliance costs, and  an increase in the «reputational discount» in the eyes of investors. In a worst-case scenario, all of this could lead to the loss of one of Europe's largest markets, Nikolaeva said. It will be difficult to compensate for these losses at the expense of other EU countries if such a policy is picked up by EU members;

But it is a good chance for European fast fashion players, she believes. 

«For H&M, Inditex and the like, this is a good opportunity. They essentially get carte blanche to continue working, the market trusts them for the time being. Customers remain, advertising is allowed, access to capital is open. But this is also an important warning. The next round of regulation may reach these companies if they do not accelerate their transition to a sustainable circular fashion model. There is no way to sit back,» adds Nikolaeva;

Already, reports from large public companies are showing worrying signs of slowing growth. Temu's owner, PDD Holding, reported a 47% drop in net profit for the first quarter of 2025 to 14.74 billion yuan (just over $2 billion) and the lowest growth in revenue in three years. On the day the report was published, May 27, the company's shares fell more than 13% on the U.S. stock exchange. 

Swedish retailer H&M reported net sales growth of 3% to SEK 55 billion in the first quarter of fiscal 2025 (through February 28). But in the second quarter, that figure dropped year-on-year by almost 5% to SEK56.7 billion. The report said one reason was the strengthening of the  Swedish krona. H&M chief Daniel Erver also said there was a «very volatile situation» due to US duties and competitors had raised prices in the States. His own company is trying to keep prices competitive as consumers are particularly sensitive due to uncertainty in the global economy, Reuters wrote.  

Inditex (Zara, Oysho, Bershka, etc.) reported revenues of €8.27 billion in its fiscal first quarter report (through April 30), which was below the €8.39 billion forecast by analysts at LSEG. Back in March, the company reported a slowdown in demand, which it attributed to uncertainty over U.S. duties, recallsCNBC.

Shein is still only coming to an IPO and has not disclosed its performance. 

The environmentalists were the instigators of the fight against fast fashion. But they were dissatisfied with the bill;

«We have a text (of the bill - Oninvest note) that would target two brands and therefore exclude the others, and they represent at least 90% of the production of clothing sold in France,» said to Euronews Pierre Condamine, spokesman for the Coalition Against Fast Fashion and activist with Friends of the Earth France.

Today, consumers are buying more clothing than ever before: by 2030, global consumption will grow 63% to 102 million tons, projected by McKinsey. 

People have started throwing away clothes after as few as seven wears. Total greenhouse gas emissions from textile production amount to 1.2 billion tons per year - more than emissions from all international flights and ships combined. 

The main consumers of ultra-fast fashion are the zoomers. At the same time, half of Generation Z in China, for example, according to a McKinsey survey on sustainable consumption, reported a desire to buy less fast fashion goods;

But according to the State of Fashion 2025 report by this consulting firm, there is a critical gap between intention and actual action. 

For example, while 46% of UK shoppers say they avoid buying fast fashion items, more than half have made a purchase at a fast fashion store in the past year, according to McKinsey. That company estimates that most fashion brands could reduce their emissions by more than 60% by spending 1-2% of their revenue. 

This article was AI-translated and verified by a human editor