Chinese company Shein has rapidly taken over as the world’s largest fast fashion company, raking in about $100 billion in sales last year.
Its merchandise is made by thousands of small suppliers in China, and consumers in the United States and Europe make up most of its market. While many are enamored by Shein’s cute and cheap offerings, others are sounding the alarm about the ethics of its practices.
This post is based on the You Magazine article, The truth about Shein, the world’s fastest fashion brand, by You Magazine, February 19, 2023; the Time article, Shein Is the World’s Most Popular Fashion Brand—at a Huge Cost to Us All, by Astha Rajvanshi, January 17, 2023; and the YouTube videos in the Spotlight. Image source: Shutterstock/humphery
1. What operations strategies are used by Shein?
Guidance: Shein appears to focus on a low cost/low price strategy. In addition, responsiveness is also key. Observers say that Shein can get fashion items from design through production in small batches in less than a week. Its volumes of production as well as lead time in getting new designs to market have dwarfed the efforts of rivals such as Zara and H&M.
2. How does Shein implement these operations strategies, and how does the implementation affect the ethics and sustainability of its business?
Guidance: Some of the means used to achieve low costs seem unobjectionable. For instance, because Shein is strictly an online retailer, it’s fixed costs are relatively low. It doesn’t have to pay for physical stores or wholesalers, and it ships to 150 countries around the world directly from factories in China.
Other practices have received backlash in recent years.
Shein doesn’t own factories directly, but subcontracts to thousands of small garment manufacturers in China. Shein received negative publicity as a result of a couple of undercover investigations into the working conditions at a couple of these factories.
Shein has been accused of utilizing suppliers whose employees work 17 or 18 hour shifts with one day off a month (in violation of Chinese 40 hour/week work laws). Workers are said to have to work long hours to meet short lead times for getting products ready for market. The company has also been accused of paying about $20/day, requiring workers to generate 500 items, and then taking up to $14 of their pay if there are quality problems with any of the garments the workers made. Unsafe working conditions and unhappy workers were observed as well.
Shein denies all of these things, saying it has launched investigations which disprove the allegations. Shein says it actually pays far more than the local minimum wage in Guangzhou, or the average wage of workers in similar companies in the area.
It is difficult to judge the truth of these rebuttals.
Shein has also been accused of using cotton that comes from Xinjiang in order to keep costs low. This directly violates the United State’s “Uyghur Forced Labor Prevention Act,” designed to prohibit the import of certain goods from that area due to human rights abuses and forced labor among ethnic minorities in the region.
Shein saves money on marketing by sending large shipments of free garments to social media influencers in exchange for favorable reviews. Some question the ethics of a company that expects good reviews in exchange for free products.
Finally, as a fast-fashion giant, Shein adds about 6,000 new items to its listings every day. In contrast, Zara, another market leader in fast fashion, creates about 10,000 new items per year. Shein claims that its small lot sizes keep unsold inventory to a bare minimum, as compared to industry averages in the 25-40 percent range.
However, the creation of about $100 billion of inexpensive clothing items last year, which are often worn only a few times before being thrown out, is considered by many to be an unsustainable model, because the disposal of discarded garments has become a huge global problem.