According to the Tianyancha APP, Zara’s Chinese affiliated company Zara Commercial (Shanghai) Co., Ltd. has recently got a new piece of administrative penalty information, and the decision document number is Shanghai Municipal Supervision Office [2021] 062021000101. The punishment was for producing and selling unqualified products as qualified ones, and the punishment includes confiscation of illegal income of RMB 1,231.03, a fine of 7,076.81 yuan and an order to stop illegal activities, which were imposed by Shanghai Jing’an District Market Supervision and Administration Bureau.
According to the administrative penalty decision, the “ZARA” branded products sold by the Fuzhou Pushang Avenue Branch of Zara Commercial (Shanghai) Co., Ltd. including 4302/605/800 denim skirts, 2423/520/010 men’s shoes, 2422/ 520/040 men’s shoes, 8601/530/105 “ZARA” boy sandals sold by Hangzhou Yan’an Road Second Branch of Zara Commercial (Shanghai) Co., Ltd., and girls’ sandals with the item number 2600/531/100 sold by Hangzhou Fuchun Road Brand were judged to be unqualified.
This is not the first time that ZARA has been punished by Chinese regulatory authorities due to quality problems.
Six Zara administrative punishment records can be found in Tianyancha. The reasons for the punishments include violation of clearly marked price regulations, not selling goods under their real names and marks, adulteration in products, etc.
For example, in 2017, Zara was confiscated illegal proceeds of RMB 23,456.83 and fined RMB 30,000 by Shanghai Baoshan Market Supervision Bureau for adulterating its products, using fake products as genuine, substandard products as good products, or substandard products as qualified products.
In 2019, for the same reason, the Jiading District Market Supervision Bureau confiscated 2,484.96 yuan of illegal income, fined 7,689 yuan, and ordered the suspension of sales of Zara.
In 2020, ZARA was confiscated by the Shanghai Municipal Market Supervision Bureau of its illegal income of RMB 10,359.11, fined RMB 36,742.5, and ordered to make corrections due to the production and sales of substandard products posing as qualified products.
The relevant market supervision department pointed out that these penalties were all made in routine inspections, in accordance with the provisions, the penalty amount does not exceed 3 times the value of the goods. And every administrative penalty is only on the merits of the case. Compared with the penalty amount, its product quality itself should cause attention more.
ZARA is a subsidiary of Inditex Group (stock code ‘ITX’) established in Spain in 1975. It is not only a clothing brand but also a chain retail brand specializing in ZARA brand clothing. The brand opened its first store in Spain in 1975 and currently has more than 1,900 stores in business centers in 87 major cities in the world.
ZARA established Zara Commercial (Shanghai) Co., Ltd. in Shanghai in 2005. Its business scope includes men’s wear, women’s wear, children’s wear, baby wear, underwear, apparel, home accessories, etc. In the second year, ZARA opened its first store in mainland China. At its peak, ZARA had more than 190 stores in mainland China, but the COVID-19 pandemic has caused it to continuously shrink offline stores in recent years.
Affected by the pandemic, sales of Zara’s parent company Inditex have also fallen sharply. Data show that Inditex’s sales in 2020 fell by 25% to 20.4 billion euros; its net profit fell by 69.4% to 1.1 billion euros. In this regard, Inditex plans to close 1,000-1200 small stores that account for 13%-16% of the total number of stores of the group in 2020 and 2021.
Source: Chutian Metropolis Daily