United Kingdom: Meet Shein: The secretive Chinese fast-fashion firm taking over online retail

Shein was founded in 2008 in China by Chris Xu, an SEO specialist with a peculiar penchant for getting his way to the top of search engine rankings. His fashion firm – SheInside, then – pioneered a particularly Chinese approach to retail once he moved from hawking wedding gowns to selling women’s apparel in 2012.

Rather than working predicting what consumers might want, he simply asked; posting thousands of product lines, Xu’s firm waited until there was sufficient demand and only then sourced the actual goods themselves.

The company flew. Xu bought production in-house and plotted international expansion. A Series E funding round that closed in 2020 valued the firm at some $15bn, with Sequoia Capital China and Tiger Global Management chief amongst those piling in. And this month reports in the States suggested it was now a bigger online retailer than H&M and Zara in the US. Gen-Z is Shein’s heartland and one in which it’s made dramatic inroads, with online influencers at the heart of the marketing plan. So successful has it been that the firm even considered a bid for embattled Topshop in January, a sign of its increasing ambition in the UK.

But one question remains.

How do you sell it so cheap?

Even in a fast-fashion world in which people rarely bat an eyelid at low prices, SheIn’s website is staggeringly cheap. Denim jackets for £19, dresses for the price of two London pints, handbags at below-Primark prices.

Can a smart supply chain really bring costs down to that level? The firm offers precious little transparency on who, or what is behind the firm’s manufacturing processes.

Their main corporate website doesn’t even refer to the founder. The location of their factories is only something we can guess at – the only reference is to “globally positioned warehouses.”

And on the supply chain itself, Shein only says of itself that “advanced equipment and professional handiwork come into play.”

“When we visit the factories,” the website reads, “we sometimes lament the production-related inefficiencies. However, we are very pleased that through effective communication and cooperation, we are able to see shortened production cycles to release new products.”

Opacity in the fashion industry is not unique to Shein, but even by the standards of the industry well in need of the disinfectant of sunlight, it remains an enigma.

The Fashion Transparency Index, compiled by campaigners Fashion Revolution, gave Shein a total overall score of 1 out of 100 in a report compiled earlier this year. On traceability, one of the key metrics in the Index, Shein scored a zero.

Good on You, a fashion directory that also rates major fashion brands, is equally damning. Shein’s labour and environment rating are “very poor.”

“There is no evidence it has worker empowerment initiatives such as collective bargaining or rights to make a complaint. It sources its final stage of production from countries with extreme risk of labour abuse. There is no evidence it ensures payment of a living wage in its supply chain. It audits some of its supply chains but does not specify what percentage,” Good on You’s summary reads.

Fashion firms are under particular global pressure to be open about their supply chains – due to the outsized role Xinjiang, the autonomous area of China home to persecuted Uighur Muslims, plays in the global production of cotton.

Though denied by the Chinese authorities, most impartial observers believe Xinjiang is home to a network of forced labour and prison camps.

The Centre for Global Policy reckons some half a million ethnic minority Xinjiang residents have been coerced into picking cotton. Last year a coalition of human rights groups said “virtually the entire [global] apparels industry is tainted by forced Uighur and Turkic Muslim labour.”

“Long, exhausting working hours”

Shein, which does not publicise a press office in the UK nor advertise who runs their operations in the UK, did not respond to requests from City A.M. for more information on their supply chain.

Fashion Revolution’s Sarah Ditty told City A.M. that Shein makes it “difficult for anyone on the outside to know what they’re doing.

“The main concern with ultra-fast-fashion companies like this — and Shein isn’t the only company producing thousands of styles a week — is the lack of information. There’s a history of long, exhausting working hours for some garment workers,” she says.

“The prices are a huge red flag. How do you pay your workers when you’re selling so cheaply? We love ‘retail therapy’ to make ourselves feel good but the reality can be tragic. Worst-case scenario: People are buying into forced or child labour and human trafficking without realising.”

A statement on Shein’s corporate social responsibility page says the firm has a “strong belief in ethical working conditions for all workers” and that “neither we nor any of our partners are allowed to use forced labour.

“We actively campaign against unethical practices such as prison and indentured labour,” continues the statement, though there is no evidence provided.

The statement also says Shein “strictly abides by child labour laws in each of the countries we operate in” and that “any partners or vendors found to have violated these laws are terminated immediately and reported to the authorities.”

As a firm operating in the UK with a turnover north of £38m, Shein is obliged under the Modern Slavery Act to file a document detailing the work they are doing to identify and eradicate modern slavery in their supply chains. Firms are invited to file their records publicly, including on a searchable Government registry. At the time of writing, Shein’s statement had not been submitted to that registry.

The Government has committed to making the publication of modern slavery documents on that registry mandatory in the future as part of a strengthening of modern slavery legislation. 

The article has been summarised and the original full article can be found at cityam.com

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