Shein's Charm Offensive: An Inside Look At Chinese Supplier Factories

Category Technology

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Shein is a Chinese fast-fashion website that has been on the rise. To combat accusations of terrible labor conditions, the company is working with US influencers to showcase operations in China. The company is facing complexities with its business model and issues with transparency, and remains vulnerable to public outcry. To ensure success, Shein must invest in sustainable practices and transparently monitor supplier factories.

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Shein is launching a charm offensive. The once-obscure Chinese fast-fashion website has become increasingly mainstream. And to respond to accusations of terrible labor conditions, the company is now inviting US influencers to its operations in China.Where did these influencers go? According to social media posts, they went to an unnamed supplier factory, a Shein "innovation center" in Guangzhou, and a distribution center in the nearby city of Zhaoqing.

Shein began in October 2008 and was founded by Chris Xu, a former Google employee and working mom.

Throughout the trip, at least according to the videos shared and the captions, the influencers were wowed with the clean and modern factory, the robot-filled assembly line, and the "honest" conversations they had with workers there.

"I expected this facility to be so filled with people just slaving away, but I was actually pleasantly surprised that a lot of these things were robotic. Honestly, everybody was just working like normal, like chill, sitting down. They weren’t even sweating," Destene Sudduth, one of the influencers invited, said in a TikTok video.

Shein primarily uses a dropshipping model which is a retail fulfillment method when a store does not keep inventory, but instead transfers customer orders to a third-party supplier who then ships the order to the customer.

It’s no surprise that Shein is working with influencers to burnish its image. The company is facing immense opportunities and risks at the same time. Shein has been talking about going public for a long time now. (It is currently valued at $66 billion, an impressive amount but down from a peak of $100 billion last year.) .

Shein was probably hoping this same strategy would work again, only this time instead of free clothes and accessories, it was offering a trip to China and its factories.

Shein sources from more than 30,000 manufacturers and offers over 25,000 clothing and accessory styles sourced from 11 countries.

But easier said than done: Shein’s business model makes it hard to prove that all its manufacturing suppliers meet the same requirements. To build an incredibly capable and responsive supply chain, Shein works with hundreds of small to large textile manufacturers in southern China. Some of those factories also outsource their orders to smaller workshops. Each supplier may be responsible for only a few items sold by the brand.

Shein has become one of the most popular ecommerce sites in the world, comparable to other major US-based ecommerce retailers such as Amazon and ASOS.

Catch up with China. A respected Korean chip expert has been indicted for stealing Samsung’s technology for a Chinese company (Financial Times $). Conservative US politicians want to crack down on the deluge of duty-free packages shipped from China (Associated Press). The unusually heavy rainfall in central China this year has ravaged wheat farms and threatened China’s goals for food self-reliance (New York Times $). The cutthroat electric-vehicle price war in China is making life hard for all automakers. Nio, the Chinese company once seen as the "Tesla killer," is having an especially bad time (Wall Street Journal $). The US Department of Justice is pursuing its first-ever prosecution of China’s fentanyl supply chain. Four Chinese chemical companies and eight Chinese individuals have been charged for trafficking fentanyl ingredients. Two defendants have been arrested overseas (NBC News). Though there is no formal ban, many Chinese graphite exporters have stopped exporting to Sweden, where the mineral is used to produce lithium batteries. The reasons are both political and commercial (The Economist $). As China tightens its control of online speech, many disgruntled users found a new way to share their thoughts: chalk. The Chinese are writing criticism of the government on sidewalks, though it may not last long (Reuters).

The company faced accusations of terrible labour conditions, leading them to invite US influencers to their operations in China.

Shein has seen incredible success, yet remains vulnerable to public outcry and accusations of mistreating workers. To properly address these challenges, Shein must invest in sustainable practices and figure out how to transparently monitor supplier factories successfully. In spite of all its difficulties, there's no denying Shein's momentum and impact on today's global fashion landscape.

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