Many items such as Shein's $5 shirts, $20 dresses, and $15 shoes may face stricter trademark scrutiny under new EU regulations, which have strengthened intellectual property oversight.
Shein, the e-commerce giant founded in China, is preparing for an IPO in London. Under the new digital rules coming into effect by the end of August, Shein will be required to prevent intellectual property-infringing products from being listed on its platform and to stop the sale of counterfeit goods to its 108 million monthly active users in the region.
According to U.S. documents seen by Reuters, Shein is already facing over 90 lawsuits alleging it has plagiarized others' designs or products. In an August letter, 16 U.S. state attorneys general noted that Shein frequently blurs the lines of intellectual property and copyright and called for the Securities and Exchange Commission to conduct an independent audit before Shein is allowed to go public.
How does Shein design its products?
According to analysts and investors, Shein's business model leverages a network of suppliers mainly based in China, who break traditional manufacturing trends by accepting small initial orders and scaling up based on demand. Most of the clothing sold by Shein is manufactured by its 5,400 suppliers in Guangzhou, China.
Peter Pernot-Day, Head of North America and European Strategy and Corporate Affairs at Shein, stated at an e-commerce conference on Thursday that the company's rapid design and flexible production methods give it a competitive edge among global retailers.
