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Introduction

With its headquarters located in Singapore, Shein is an online fast fashion store. Established as ZZKKO in October 2008 by businessman Chris Xu in Nanjing, China, Shein expanded to become the biggest fashion retailer globally by 2022.
Shein is well-known for selling clothes at comparatively low prices, and its popularity among Generation Z customers has been linked to its success. Since the company only sourced products from Guangzhou’s wholesale garment market and did not engage in design or manufacture, it was first compared to a drop shipping company. Shein started building its own supply chain system in 2012 in an effort to become a fully integrated retailer.By 2022, the company will have more than 3,000 suppliers in its Guangzhou-based supply chain.
For financial, regulatory, and global expansion reasons, the firm relocated its whole headquarters from China to Singapore in 2022, leaving its supply networks and warehouses in China. Shein brought in US$24 billion in revenue in 2022—nearly as much as well-known stores Zara and H&M.Upon completion of a funding round in April 2022, Shein was valued at $100 billion.The China-US trade war has helped Shein’s business model, according to Bloomberg Business week and others, especially in terms of tax benefits. Shein has been embroiled in a number of scandals in the past few years, including ones involving tax evasion, copyright disputes, human rights abuses, and safety and health issues.

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Shein: What is she?

Shein is a fast-fashion store with headquarters in China that manufactures clothing and accessories. Every day, it adds up to 10,000 new products on its app. The company has been a Gen-Z favorite because to its affordable prices, quick production, and popularity on TikTok. With a $66 billion valuation, it is one of the largest fast-fashion firms globally, surpassing the combined value of Zara and H&M.

What specific remarks did Shein’s influencers make?

In an apparent effort to improve its reputation in the United States, Shein sent a team of social media influencers to China last month so they could post favorable content from its warehouses. Influencers raved about well-kept factories and contented workers. Influencer Destene Sudduth shared with her 4 million+ TikTok followers that “after interviewing the workers, a lot of them were really confused and taken back with the child labor questions and the lead-in-the-clothing questions.” Not that they were perspiring. It was us who were perspiring!
Another influencer, Dani DMC on Instagram, shared a video about her trip that has since been removed. It features footage from inside multiple factories, one of which she refers to as the “Shein innovation center.” Dani, a self-described “investigative journalist,” says she was “excited and impressed to see the working conditions” and what “a developed and complex” organization Shein is after speaking with employees.At the conclusion of the movie, she states, “I think the most important thing I learned from this trip was to be an independent thinker, get the facts, and see it with your own two eyes.” “In the United States, we’re given a certain narrative, and I always like to remain open-minded and seek the truth. I wish the same for you people, and I’m thankful for it about myself.
Dani deleted a video she had posted defending her remarks about Shein after receiving negative feedback online. She apologized to her fans in a more recent video that was uploaded last week and announced that she was ending her business relationship with the corporation.
The influencers’ “social-media videos and commentary are authentic, and we respect each influencer’s perspective and voice on their experience,” a Shein representative said in a statement to the Cut on June 23 regarding the brand trip. We’re excited to be sharing more information about our on-demand operations and business model.

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Marketing

Shein can be accessed via its website and through certain mobile applications; it is also accessible on the Huawei AppGallery, Google Play Store, App Store, and Galaxy Store. According to CNN, a TikTok habit of purchasing clothing in quantity from Shein and showcasing it to their audience in the style of a typical haul video has contributed significantly to the platform’s ability to attract buyers to the company’s website. The amount of downloads for Shein’s app exceeded that of Amazon on May 17, 2021. Shein was the most downloaded app in May 2022 and the second most popular shopping app worldwide in 2021.
Shein asserts that in order to expand, it uses the psychology of the younger generation and adjusts its marketing tactics accordingly. Shein was the fourth most talked-about brand on Instagram in 2020 and the most talked-about brand on TikTok and YouTube. Teenage online shoppers on a tight budget are drawn to its inexpensive pricing, which encourage them to share their purchases on social media.
The business offers comparatively low costs to encourage demand and user growth. Customers are rewarded with additional discounts for larger purchases, which they are encouraged to use on their subsequent shopping excursions. Shein uses its algorithm-driven recommendation system in addition to drawing users to the platform on a regular basis to complete tasks like adding products to their cart, watching live streams, and participating in its contest show in order to earn points that may be redeemed at a later time.

Manufacturing

Shein did not create its clothing at first. The Guangzhou wholesale clothes market in China was the company’s primary supply of clothing.But when Shein secured its supply chain system in 2014, it turned into a fully integrated store. These days, the business produces and distributes its goods through a network of suppliers and production partners.
Shein forecasts trends and starts producing products as soon as three days after a trend is identified. Shein also restricts its orders to small batches of approximately 100 products in order to measure consumer demand. In contrast, competitors such as Zara place larger orders of approximately 500 items, which increases their risk of losing money if orders are not filled in full. Bloomberg News reports that Shein’s small-batch approach is seen to be crucial to its success. As Shein’s operations grew in size, so did the suppliers who worked with them.

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Influencing

American federal lobbying records show that Shein retained Akin Gump Strauss Hauer & Feld and Ben Quayle in 2022. Shein’s lobbying effort, according to Politico, is intended to refute allegations of forced labor.

Tax accounting

Shein can generate higher profits by avoiding export and import taxes. Trade Facilitation and Trade Enforcement Act of 2015 (commonly known as “de minimis”), a U.S. legislative bill, stipulates that imports up to $800 per person are duty-free.[39] Shein now has a competitive advantage over domestic businesses in the USA since this bill allows Shein to ship to the country without having to pay taxes.
Brazilian authorities claimed in April 2023 that Shein had engaged in tax evasion and “smuggling” goods to Brazilian consumers by taking advantage of a legal gap.

Charges of tax evasion

When shipping low-value consignments (less than £135), overseas sellers are required by UK law to register for UK VAT, collect VAT from buyers, and send the collected amount to His Majesty’s Revenue and Customs. Shein’s website does not list its UK business registration number or itemize VAT, as required by UK law, and it has been reported that it did not do so for at least nine months after the regulation went into effect.

What is known about Shein’s methods of doing business?

Shein has drawn criticism on several occasions for its subpar working conditions, excessively hazardous chemical content in its apparel, piracy of goods from independent designers, and improper management of consumer information.
In October of last year, two Guangzhou factories that supply the fast-fashion behemoth with clothing were filmed by an undercover employee as part of an investigation by the British broadcaster Channel 4.
Channel 4 discovered that employees in one factory make 500 pieces of clothes a day with a base income of 4,000 yuan (about $556) each month, with the first month’s pay deducted from their pay. In another plant, workers were paid the equivalent of four cents per item. There was just one day off per month for the workers in both factories, who could put in up to eighteen hours a day. Women were observed at one plant shampooing their hair during lunch breaks, and employees who made a mistake on an article of clothing would be fined two-thirds of their day pay. China’s labor rules are broken by the alleged working conditions and hours.
Shein’s representative said, “Any non-compliance with this code is dealt with swiftly, and we will terminate partnerships that do not meet our standards,” in an October statement to Business Insider. This is the same statement the company has used in the past when it has been accused of engaging in illegal labor practices.

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Shein Transport

Each item went straight from China when I first started shopping from Shein years ago, thus it took over a month for everything to arrive. Since they now have a distribution facility in the US, a lot more items are shipped MUCH quicker.
Shein maintains multiple fulfillment centers across the globe in addition to its primary warehouses in China and Hong Kong. LA serves as the primary fulfillment center for the US.

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What is the duration of Shein’s delivery?

The majority of items take around 10 days to arrive in the US when shipped standard. Some products I’ve ordered have arrived in as little as five days (most likely inventory from the US fulfillment center). To find the estimated time of arrival, utilize Shein’s shipping estimator. In order to trace the whereabouts of your package, they also provide tracking. Once the order has been completed and shipped out of the Chinese warehouse, the tracking information is not updated.
Things usually arrive at my door in a week or two.

Fashion industry becoming aware of effects on the environment

Environmental concerns are further exacerbated by the huge volume of clothing generated by Shein’s quick cycles of supply and demand.
Since consumers are becoming more conscious of the environmental effects of wearing items quickly, even well-known firms in the fast-fashion business have been paying more attention to their carbon footprints, according to Winder.
Shein has also committed to lowering carbon emissions by 25% by 2030 throughout the whole supply chain.
In April, the firm brought that promise to Eaton Centre in Toronto by hosting an event that invited patrons to donate bags of gently used clothing to a nearby non-profit that outfits marginalized communities.
Regarding worries regarding its own supply chain, Shein told Global News in a statement that it may lower the quantity of unsold inventory in its manufacturing by beginning with a “small initial batch” of up to 200 products and subsequently increasing production to satisfy projected customer demand.
According to the spokesman, “this enables us to consistently achieve average unsold inventory in the low single digits, which means less resource waste right from the start.”
“We continuously maximize the effectiveness of the procedures throughout our value chain to preserve raw materials, energy, and water while reducing waste and consumption.”

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REFERENCES

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