Shein responds and ‘will launch targeted investigation’ after report – WWD

Chinese fast-fashion brand Shein, pronounced “she-in,” has conquered many wardrobes as America’s best shopping app – but recent scrutiny hangs on its success.

Testing and learning modes, gigantic ad spend, and tax breaks all mark the imprint of Shein’s success with exceptionally cheap fashion. But close scrutiny of each, as well as emerging investigations into the sanctity of the environment (according to an October CBC Marketplace survey highlighting high levels of toxins persisting in fast-fashion transportation) and non- Supplier compliance (the latest investigation by the Swiss watchdog Public Eye) is also pushing the company into the unwanted spotlight from the shrouds of so-called secrecy.

Public Eye’s Nov. 12 report, titled “75 Hours a Week for Shein: Public Eye Looks Behind the Glitzy Facade of Chinese Online Fashion Giant,” examined parts of the company’s supply chain. . What he found: 75-hour work weeks, fire hazards in buildings and non-compliance with labor law.

Two undercover researchers with decades of experience cataloged visual and written reports from 17 vendors identified in Shein in the Guangzhou area. (Shein works with hundreds of contract manufacturers and over 6,000 small and medium-sized suppliers).

Of the two dozen worker interviews that formed the basis for the report, none revealed any evidence of an employment contract (which is a legal requirement and a violation of Shein’s code of conduct). Without it, workers (many of whom are migrant women) are excluded from social security benefits.

“Shein takes all matters related to the supply chain seriously. After seeing the report, we have repeatedly asked Public Eye for a list of specific factories and locations so that we can launch a targeted investigation and take action if a non-compliance is identified, ”a spokesperson said. Shein told WWD. “We are still awaiting their response. “

Shein was in contact with Public Eye before the report was released.

The spokesperson added that “in the meantime, we have launched our own investigation”, recalling the “strict code of conduct for suppliers which includes strict health and safety policies and compliance with local laws”.

Shein’s big break

Be warned by Boohoo, H&M and Inditex: Shein’s global sales are expected to reach $ 20 billion in 2022, analysts estimate.

A number of commercial workarounds have fueled the fanfare. Amid short-term trade wars under former President Donald Trump, Chinese companies could still avoid taxes on direct-to-buyer shipments under the de minimis exemption, which removes duties for daily shipments from a worth $ 800 or less, propelling Shein – who has no direct stores and ships – further into the vernacular of shopaholics.

A 99-page Morgan Stanley report from October found that tax breaks alone allowed the company to sell items at prices 20% lower than fast fashion competitors Boohoo and H&M. In the same report, the investment bank said Shein’s current price advantage “may not be sustainable if tax policies in China, Europe or the United States change.”

Many Chinese fast fashion brands, such as Shein and Cider, source their supplies from Guangzhou, centralizing production from small suppliers. Shein has been headquartered there since 2017.

Shein produces styles in batches to test the market, sticking to “50 to 100 pieces per new product,” before going through “full-scale production,” according to the company.

“Most industry peers have minimum orders of 1,000 to 2,000. Our fully integrated, technology-based supply chain allows us to produce and source products in very small batches, from 100 pieces per style, ”said Shein’s spokesperson. “With real-time analysis to track fashion trends, if the sales trend is positive, we immediately reorder and if sales don’t go as planned, we stop production. “

Then there are the influencers who test everything.

The brand has 22.3 million followers on Instagram and 3.1 million on TikTok. The hashtag “Sheinhaul”, a video style where shoppers show bags full of items they have purchased, a consumer tactic that is not unique to the brand, but all the more obvious when linked at a promotional discount, accumulates 3.7 billion views on TikTok.

An October report from social media and intelligence platform BrandTotal and Advertising Week NYC, found Shein to exceed ad spend – dominating 94% of all ads (or sponsored impressions) over brands like PrettyLittleThing, owned Boohoo, at 3%, or Princess Polly, at 2% of the vote.

Only 44% of Shein’s impressions were targeting Gen Z, while Zaful, Princess Polly, Boohoo and PrettyLittleThing sent a majority of targeted ads (at the bottom of the scale, Zaful at 68% and at the top of the scale, Princess Polly at 94%) to Generation Zers.

According to Alon Leibovich, CEO and co-founder of BrandTotal, Shein “beats PrettyLittleThing and Princess Polly hard”, spending “considerable dollars in this category” and “beating their rivals.”

The report followed thousands of paid social media campaigns from over 30 super-fast fashion companies, including Shein, Boohoo, Princess Polly, Fashion Nova, PrettyLittleThing, and Zaful on Facebook, Instagram, YouTube, Twitter, and LinkedIn. The study took place over a 90-day period, from July 8 to October 5.

But ecologically sound?

The company said its careful inventory management allows it to “avoid waste” while the innovation helps “reduce waste and water consumption”, although no supporting action has been provided. . A spokesperson said Shein had “about 300 employees across the company engaged in ESG-related initiatives.”

Not unique to Shein, but the fast fashion chemicals are a different story.

In August, approximately 2,320 sets of sleepwear produced by Tkala Fashion and sold on Shein were recalled by the United States Consumer Product and Safety Commission for failing to meet flammability standards for children’s sleepwear. The sleep sets were sold on shein.com for $ 8 from August 2019 to January 2021.

Shein voluntarily recalled the sleepwear sets, offering refunds and $ 10 gift cards to customers.

After this news, a report from CBC Marketplace revealed how high the fast fashion shipments of Shein, AliExpress and Zaful (including children’s handbags and jackets) were high in high levels of chemicals, among which the lead, phthalates and PFAS.

Without commenting on the specificity of either event, a spokesperson for Shein underscored the company’s commitment to “quality, safe and affordable products” with an obligation for suppliers to obtain a hazardous waste license and a disposal plan. These efforts and many more allow Shein to “ensure that our suppliers meet the highest standards in quality control and work practices.”