Since breaking into Western markets, Chinese fast fashion brand Shein (pronounced she-in) has become a staple of young women’s wardrobes with its cut-price designs.
Last week, the group increased its presence in the UK by entering into talks to buy clothing brand Missguided from Mike Ashley’s Frasers Group. The move came hot on the heels of the opening of a pop-up store on Oxford Street as part of London Fashion Week festivities.
The company, which was founded in 2012 in Nanjing, China, and is now based in Singapore, saw a surge in sales during the pandemic as it capitalized on a wave of shoppers shopping online during the lockdown.
Business in the UK is also booming. The inaugural accounts for its British subsidiary, filed this month with Companies House, revealed sales of £1.1bn and a profit of £12.2m for the 16 months to the end of December 2022.
But, according to critics, this fashion phenomenon has a darker side. Little is known about its overall finances or the billionaire businessman who founded the company.
Getting in on the action: Pop star Katy Perry promoting Shein
Shein produces thousands of new designs every day and relies heavily on direct sales through social media, often recruiting influencers on apps like TikTok.
Celebrities have gotten in on the act and the brand has previously partnered with the likes of Katy Perry, Rita Ora and Hailey Bieber.
Not surprisingly, Shein appeals to cash-strapped young Westerners. The front page of her UK website offers women’s dresses for just £4.85 and a sweatshirt for just over £5.
Shein also claims to have more than 10,000 employees and says it sells its products in more than 150 countries. He is believed to be the world’s largest fast fashion retailer and in a recent fundraising was valued at more than £53 billion, more than Swedish chain H&M and Zara owner Inditex combined.
In July, company executives said in a letter to investors that it had made a record profit in the first half of 2023, although they declined to give the exact figure.
Such is the buzz around the company’s success that it is thought to be considering listing on the US stock market, and recent reports indicate that it has enlisted major investment banks, including Goldman Sachs, JP Morgan and Morgan Stanley, to put together plans for a very successful float in the near future.
The company is also backed by several major investors, including New York investment manager Tiger Global and the Chinese arm of US venture capital group Sequoia.
But despite its overwhelming success, little is known about the internal workings of the company or about its secret founder, Xu Yangtian, also known as Chris Xu, born in China in 1983, who with a fortune estimated at more than 8,000 million Libra is one of the richest people in the country. Stories that have leaked to the press paint a picture of a ruthless and determined tech genius who has fought and backstabbed to become the king of fast fashion in China’s notoriously ruthless corporate world.
An anecdote from two former business partners tells how Xu worked with them to establish an e-commerce company called Nanjing Dianwei Information Technology in 2008. In 2012, he founded SheInside, a wedding dress retailer and predecessor to Shein, but the move sparked a fight with his two partners. They claim that Xu disappeared from the office one day and took control of Nanjing Dianwei’s PayPal accounts, although the company denies this.
The firm was then renamed Shein in 2015 and moved its headquarters to the city of Guangzhou, while opening an office in the US, where it opened two years later.
Despite its enormous success, the company has generated controversy as it continues to expand and take an increasing share of the global fast fashion market.
Earlier this year, it became embroiled in a scandal when it sent several American influencers to what it claimed was one of its factories in Guangzhou.
This sparked accusations of an attempt to cover up criticism of its labor practices and treatment of workers.
Activists such as Hakan Karaosman, a professor at Cardiff University and president of the Union of Concerned Fashion Researchers, have also previously said that Shein’s ultra-fast fashion business model is contributing to environmental “degradation” and can only survive “while clothing is produced and distributed in excess.”
This practice often results in huge amounts of textile waste being dumped in poorer countries.
The firm has also been repeatedly accused of plagiarism and copying the work of fashion designers and then selling it on its own website.
Shein’s record on labor rights has already attracted the attention of US lawmakers in a move that could derail its plans to go public in New York. In May, a group of U.S. politicians asked the Securities and Exchange Commission to block Shein’s planned IPO until the company could verify that it was not using forced labor from China’s oppressed Uyghur minority in its factories.
Despite the setbacks, the company shows no signs of moderating its ambitions.
Shein has been steadily shifting the center of its operations toward Singapore and away from China, apparently in an effort to escape the country’s tight control over its businesses and strict rules on overseas listings.
Xu may be hoping to avoid the fate of Jack Ma, the outspoken founder of e-commerce giant Alibaba, who was considered one of the country’s most prominent businessmen but has barely been seen in public for the past three years after criticizing politics. from China. regulatory regime.
As they say in fashion circles, it’s not a good look.
A spokesperson for Shein said the company takes “all allegations of infringement seriously.” They added that it is “committed to respecting human rights” and has “zero tolerance” for forced labor.
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