Shein Says It Will ‘Launch a Targeted Investigation’ Following Latest Allegations of Exploitative Working Conditions
Chinese fast-fashion brand Shein, pronounced “she-in,” has captured many wardrobes as the top shopping app in the U.S. — but recent scrutiny is snagging its success.
Test-and-learn fashions, mammoth ad spend and tax breaks all line the imprint of Shein’s success with exceptionally low-cost fashion. But scrutiny around each, as well as emerging investigations on environmental sanctity (per a CBC Marketplace investigation from October highlighting high levels of toxins lingering in fast-fashion hauls) and supplier noncompliance (the latest investigation from Swiss watchdog Public Eye) also nudge the company into an unwanted limelight out of the shrouds of so-called secrecy.
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The Public Eye report published Nov. 12, titled “75-hour weeks for Shein: Public Eye looks behind the Chinese online fashion giant’s glitzy front,” examined parts of the company’s supply chain. What it found: 75-hour work weeks, fire building safety hazards and lack of compliance with employment law.
Two undercover researchers with decades of experience cataloged visual and written reports of 17 identified suppliers to Shein in the Guangzhou region. (Shein works with hundreds of contract manufacturers and more than 6,000 small- to midsized suppliers).
Of the two dozen worker interviews that baselined the report, none surfaced proof of employment contracts (which is a legal requirement and infringement of Shein’s Code of Conduct). Without it, workers (many of whom are migrant women) are barred from social security benefits.
“Shein takes all supply chain matters seriously. Upon learning of the report, we have repeatedly asked Public Eye for the list of specific factories and locations so we can launch a targeted investigation and take action if noncompliance is identified,” a Shein spokesperson told WWD. “We continue to await their response.”
Shein was in touch with Public Eye prior to the report’s publication.
The spokesperson added that, “In the meantime, we have launched our own investigation,” pointing back to the company’s “strict supplier Code of Conduct which includes stringent health and safety policies and compliance with local laws.”
Shein’s Big Break
Boohoo, H&M, Inditex be warned: Shein global sales are projected to hit $20 billion in 2022, per analyst estimates.
A number of trade workarounds have fueled the fanfare. Amid near-term trade wars under former President Donald Trump, companies in China could still avoid taxes on shipments direct to buyers under the de minimis exemption, which waives duties for daily shipments valued at $800 or less, propelling Shein — which has no stores and ships direct — further into the shopaholic’s vernacular.
A 99-page Morgan Stanley report from October found that tax breaks alone have allowed the company to sell items at prices 20 percent lower than fast-fashion rivals Boohoo and H&M. In that same report, the investment bank said Shein’s current price advantage “may not be sustainable if tax policies in China, Europe or the U.S. change.”
Many Chinese fast-fashion brands, like Shein and Cider, source in Guangzhou, centralizing production across small suppliers. Shein has had its headquarters there since 2017.
Shein batch-produces styles to test the market, sticking to “50 to 100 pieces per new product,” before undergoing “large-scale production,” according to the company.
“Most industry peers have minimum orders of 1,000 to 2,000. Our fully integrated and technology-powered supply chain enables us to produce and source products in very small batches, as little as 100 pieces per style,” the Shein spokesperson said. “With real-time analysis to track fashion trends, if the sales trend is positive, we re-up the order immediately and if the sales don’t go as expected, we stop production.”
Then there’s the influencers who test it all out.
The brand boasts 22.3 million followers across Instagram and 3.1 million on TikTok. The hashtag “Sheinhaul,” a video style where shoppers show off the bags full of items they purchased, a consumption tactic not unique to the brand, but all the more obvious when tied to a promotional discount, racks up 3.7 billion views on TikTok.
An October report from social media and intelligence platform BrandTotal and Advertising Week NYC, found Shein topped ad spend — dominating 94 percent of all ads (or sponsored impressions) compared to brands like Boohoo-owned PrettyLittleThing, at 3 percent, or Princess Polly, at 2 percent share of voice.
Only 44 percent of Shein’s impressions targeted Gen Z, while Zaful, Princess Polly, Boohoo and PrettyLittleThing funneled a majority of targeted ads (at the low end, Zaful at 68 percent and on the high end, Princess Polly at 94 percent) to Gen Zers.
Shein is “beating PrettyLittleThing and Princess Polly soundly,” according to Alon Leibovich, chief executive officer and cofounder of BrandTotal, by spending “considerable dollars in this category” and “outpacing their rivals.”
The report tracked thousands of paid social media campaigns from more than 30 ultra fast-fashion companies including Shein, Boohoo, Princess Polly, Fashion Nova, PrettyLittleThing and Zaful across Facebook, Instagram, YouTube, Twitter and LinkedIn. The study ran over a 90-day period from July 8 to Oct. 5.
But Environmentally Sound?
The company said its tight management of inventory allows it to “avoid waste” while innovation helps to “reduce waste and water use,” although no substantiating metrics were provided. A spokesperson said Shein has “approximately 300 employees across the company committed to ESG-related initiatives.”
Not unique to Shein, but fast-fashion chemicals are another story.
In August, about 2,320 sleepwear sets produced by Tkala Fashion and sold on Shein were recalled by the U.S. Consumer Product and Safety Commission for failing to meet flammability standards for children’s sleepwear. The sleep sets were sold at shein.com for $8 from August 2019 through January 2021.
Shein voluntarily recalled the sleepwear sets, providing refunds and $10 gift cards for customers.
Trailing this news, a CBC Marketplace report revealed how fast-fashion hauls from Shein, AliExpress and Zaful (including children’s purses and jackets) were ripe with elevated levels of chemicals — among them lead, phthalates and PFAS.
While not commenting on the specificity of either event, a Shein spokesperson underlined the company’s commitment to “quality, safe and affordable products” with the obligation for suppliers to obtain a hazardous waste license and disposal plan. These efforts and more allow for Shein to “ensure our suppliers adhere to the highest standards of quality control and labor practice.”
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