Fast fashion has been around for approximately 50 years, but a company that came from seemingly nowhere four years ago has managed to be the best at it. Driven by data analytics and small-batch manufacturing, Shein (pronounced SHE-IN) has taken fast fashion to another level, accounting for nearly one-fifth of the global fast fashion retail market share in 2022. As stated on its website, Shein is committed to fostering integrity, equitable empowerment, and sustainable innovation throughout its supply chain. With the company’s current plans for global expansion, Shein has the opportunity to bring their expressed goals to life, pioneering a new form of fast fashion that is more sustainable, transparent, and responsible.
Shein’s meteoric rise
The Chinese company has been around since 2008, but it skyrocketed in popularity in 2020 mainly because of its emphasis on social media and influencer marketing. By utilizing algorithms to predict fashion trends and responding rapidly to consumer demand, Shein was able to outpace competitors and churn out new styles daily.
According to Alexandra Smith, a faculty associate at Arizona State University’s fashion school ASU FIDM, high inflation has made consumers more comfortable purchasing fast fashion items. Also, many sustainable brands struggle to keep up with the rapid turnover rates of companies like Shein, and with consumers increasingly prioritizing affordability and variety, fast fashion brands are dominating the market.
Shein is currently focused on global expansion. The company was considering a public offering in the United States but was met with bipartisan scrutiny due to concerns over business operations and consumer data protection. In the wake of this backlash, Shein confidentially filed to go public in London. Additionally, the company recently partnered with Reliance Industries, India’s largest conglomerate, and has also opened a pop-up retail store in South Korea. It’s also trying to sell its supply-chain software to companies across the globe, bringing up more security concerns.
Criticism
And that’s not even the biggest issue facing the company. In 2018, Shein failed to disclose a data breach compromising over 39 million users’ login details, raising concerns about its ability to protect consumer information. Shein’s inconsistent product quality has also disappointed many consumers, while multiple designers have brought copyright infringement lawsuits against the company. Additionally, the brand’s rapid production cycles have led to significant textile waste and pollution, while their low prices promote overconsumption. Shein did recently respond to this concern by investing around $270 million in businesses pursuing textile-recycling technologies in Europe and the U.K.
Finally, labor practices within Shein’s supply chain have also come under intense scrutiny with a report in 2021 by Public Eye detailing poor working conditions, 75-hour work weeks, inadequate wages, and lack of valid contracts. After the Channel 4 report “Inside the Shein Machine: UNTOLD” was released in the U.K. in 2022, Shein responded almost instantly, committing $15 million to upgrade hundreds of factories in its supply chain and conducting a factory wage investigation. Public Eye released another report this year refuting Shein’s claims of improvement.
What does accountability look like?
According to Allen Morrison, professor of global management at Arizona State University, it is important to assess global corporations objectively, without letting cultural biases and ethnocentric ideas cloud our judgment. He also stated that targeting Shein because it’s a Chinese company can detract from actual discourse about corporate accountability, and we run the risk of ignoring similar behavior from corporations in other countries. “We focus on the shiny issue of the day,” he said, referring to the disproportionate focus on Chinese companies due to current US-China tensions.
There is “a tendency that we all have to see the world in a very ethnocentric, or very egocentric kind of way, and with that comes the interpretation of ethical appropriateness…Trying to meld these two perspectives is very different. So when you say corporate accountability, it’s a much easier conversation to address in your own country with a unified culture,” he continued.
Due to the complexity and nuances associated with international corporate accountability, Morrison states that consumers should not have to be the ones holding companies accountable. “Companies should hold themselves accountable…it really is an internal battle, not an external one,” he said. While consumers can influence corporate behavior through their purchasing decisions, expecting them to bear the burden of driving change is unrealistic. He further explained that consumers may lack the necessary information to make fully informed decisions, partly because Shein, and many other companies, are not sufficiently transparent about its internal practices and supply chain.
Preventing Shein from launching an IPO could make this issue worse. By blocking Shein from listing on U.S. stock exchanges, it strips the company of a significant incentive to improve its transparency and ethical standards. According to Mary Sully de Luque, professor of global management at Arizona State University, the potential for public scrutiny and regulatory oversight that comes with being a publicly traded company could drive Shein to adopt better practices, ultimately benefiting consumers and the industry as a whole.
Doug Guthrie, Executive Director of Thunderbird China and a Professor at Arizona State University, believes that “engagement is better than isolation…if you care about these issues, we should continue to have collaborative engagement.”
Moreover, placing the complete burden on consumers ignores Shein’s significant influence and resources to enact meaningful change. According to Sully de Luque, companies have the ability to implement sustainable practices, improve labor conditions, and ensure ethical supply chains at a scale that individual consumers cannot match.
The main issue with Shein is its fragmented and expansive supply chain, where the absence of detailed disclosure makes it difficult to assess the actual working conditions in Shein’s locations.
Diane E. Long, a former auditor, states that the company can potentially consolidate some of the worst offenders in its supply chain by implementing stringent compliance measures. “They can say, ‘if you haven’t been through any audit and there’s not a little star next to your name in our database, you’re not getting an order.’ Believe me, the factory owners will figure out how to solve that problem real quick,” she said.
“Don’t wait until it’s too late,” ASU FIDM’s Smith warns. Planning strategically about what the organization wants to achieve is crucial. Shein is already expanding, and now is the ideal time to undertake these necessary changes. Internal audits and investments in environmentally sustainable practices would come at a monetary cost, but according to Sully de Luque, “the most recent research shows that it doesn’t hold a business back. When you’re comparing socially responsible companies with not socially responsible companies, they perform the same.”
Think long-term
“You can be successful pretty much with any business over a short period of time,” said Sully de Luque. “If you want to be sustainable, it takes a longer term view and a longer term planning about what your organization is going to do and going to be.”
According to industry experts, fast fashion is never going to vanish completely. If Shein eventually fizzles out, there will be a new corporation to fill that gap in the market, since there will always be a need for accessible clothing. The best path forward for Shein would be to reevaluate themselves and invest in addressing each and every concern raised against them one by one, eventually creating a blueprint for other fast fashion brands that are in for the long game.
