Shein Brand Facing Ethical and Legal Issues

A recent brand transgression against stakeholders for unethical labor practices and environmental harm related to greenwashing and lack of transparency in its supply chain is Shein, a fast-fashion retailer (Fast Fashion, Slow Justice: Labor Conditions in Shein’s Supply Workshops – Business & Human Rights Resource Centre, 2025).

Shein was investigated by China’s Labor Watch and found to be exploitive working conditions, child welfare risks, and possible Xinjiang textile sourcing in its Guangzhou factories per Business and Human Rights Centre (Fast Fashion, Slow Justice: Labor Conditions in Shein’s Supply Workshops – Business & Human Rights Resource Centre, 2025).

Korea and the European Commission Safety Gate found excessive amounts of toxic chemicals in children’s items (lead, formaldehyde, phthalates), that could cause cognitive disabilities, hormone interference, and carcinogenic chemicals. These products are considered dangerous as they can be absorbed through the skin, ingested, or inhaled; therefore, extremely toxic to children who are vulnerable as they developing (UHBlog, 2025).

Shein has been summoned to appear before U.S., U.K. and the EU parliament committees on labor law practice compliance regarding their supply chain transparency and environmental impacts (Koroma, 2025).

Consumer Perception Impacts

Due to these issues, Shein’s consumer perception impact and engagement have eroded trust, fueled activism, and exposed other regulatory vulnerabilities. Despite its image as a socially responsible retailer these issues have caused severe reputational damage in the fast fashion industry causing activism such as “Shut Down Shien” and “Stop Shein” campaigns pressuring consumers to avoid the brand (Global: New Campaigns Highlight Shein’s Alleged Human Rights Abuses and Unethical Business Practices, Incl. Co. Response, 2023). Ultimately, even despite its ultra-low pricing and trendy fashion marketing, these issues have caused its loyal audience of Gen Z, to backlash and distance themselves from the brand and buy from competitors (Carter, 2026).

Ultimate Implications for Shein

Due to ongoing multi jurisdictional investigations regarding non-compliance , Shein has increased its overall business costs, compliance costs, with additional ongoing legal liabilities yet to be announced. Due to increased scrutiny there is an expectation that more robust laws and regulations both regional and multinational to be introduced in response an d require more stringent compliance by companies to mitigate risks in their supply chains. Overall, it’s long-term market share has been eroded due to consumer activism and consumer preference of switching to more ethical brands; thus impacting Shein’s bottom line and market share position, therefore. it is has market vulnerability (Koroma, 2025).

What Shein C0uld Have Done Differently

1. Shein should’ve promoted and invested in its product safety and environmental commitments by researching and investing in third party tested materials with full transparency in its disclosures, as this could’ve mitigated both regulatory and reputational risks.
2. Have a proactive supply chain transparency model that has regular independent audits with full disclosure of all supplier conditions and corrections if any defaults found as this builds trust and accountability (Koroma, 2025).
3. If any infractions found they should immediately begin to resolve the concerns before they escalate and includes early engagement with any activists and regulators to decrease overall backlash from public and regulatory bodies, to prevent or reduce negative public campaigns and help maintain its brand trust and loyalty (Global Brands, 2025).

References

Carter, L. (2026, March 13). » The Impact of Generation Z on Shein’s Customer Insights: Trends and Shopping Preferences. Sovicar.com. https://sovicar.com/us/the-impact-of-generation-z-on-sheins-customer-insights-trends-and-shopping-preferences/

Fast Fashion, Slow Justice: Labor Conditions in Shein’s Supply Workshops – Business & Human Rights Resource Centre. (2025). Business & Human Rights Resource Centre. https://www.business-humanrights.org/en/latest-news/fast-fashion-slow-justice-labor-conditions-in-sheins-supply-workshops/

Global: New campaigns highlight Shein’s alleged human rights abuses and unethical business practices, incl. co. response. (2023, June 19). Business & Human Rights Resource Centre. https://www.business-humanrights.org/en/latest-news/global-stop-shein-campaign-highlights-alleged-human-rights-abuses-and-unethical-business-practices/

Global: New campaigns highlight Shein’s alleged human rights abuses and unethical business practices, incl. co. response. (2023, June 19). Business & Human Rights Resource Centre. https://www.business-humanrights.org/en/latest-news/global-stop-shein-campaign-highlights-alleged-human-rights-abuses-and-unethical-business-practices/

Koroma, A. (2025, March 4). Shein’s Labour Practices Under Scrutiny: A Legal Perspective on Corporate Accountability. The Student Lawyer. https://thestudentlawyer.com/2025/03/04/sheins-labour-practices-under-scrutiny-a-legal-perspective-on-corporate-accountability/

UHBlog. (2025, May 22). Do Your Child’s Clothing, Bedding and Mattress Have Toxic Chemicals? Uhhospitals.org; University Hospitals. https://www.uhhospitals.org/blog/articles/2025/06/do-your-childs-clothing-bedding-and-mattress-have-toxic-chemicals