The Chinese company has become a fast-fashion juggernaut by appealing to budget-conscious Gen Zers. But its ultralow prices are hiding unacceptable costs.
Along with the free clothes, Romwe also pays Kelly a flat rate for her posts. She wouldn’t name her fee, though she said she makes more in a couple hours of video work than some of her friends with normal after-school jobs make in a week. In exchange, the brand gets relatively low-cost marketing, in the places where its target audience, teens and twentysomethings, prefers to hang out.
Wang and Li shared their recollections from that time. Wang said that he had met Xu as a work colleague, and in 2008, they decided to start a marketing and cross-border ecommerce business together. Wang took on business development and some aspects of the finances, he said, while Xu was in charge of a range of more technical matters, including SEO marketing.
All this time, Xu worked long hours, often staying at the office well after the others had gone home. “He strongly wished to succeed,” Li said. “It would be 10 pm, and he would be nagging me and buying me late-night street food and asking more. And then it could end at 1 or 2 am.” Li gave Xu advice over beer and meals—boiled and salted duck, vermicelli soup—observing that Xu listened carefully and learned fast.
In September 2012, Xu registered a company with a slightly different name from the one he had founded with Wang and Li—Nanjing Dianshang Information Technology—in which he held a 70 percent stake and a partner held 30 percent. Neither Wang nor Li were ever in touch with Xu again—which, as far as Li is concerned, is for the best. “When you are dealing with someone with bad morals, you can’t tell when he’s going to hurt you, right?” Li said.
Shein, in contrast, works largely with outside designers. Most of its independent suppliers both design and produce clothing. If Shein likes a design, it places a small order, 100 to 200 pieces, and the clothing gets the Shein tag. To get from concept to production takes as little as two weeks. Simon Irwin, a Credit Suisse analyst, has spent time puzzling out Shein’s low prices. “I cover some of the most efficient sourcing companies in the world, companies that source on a vast scale, have 20 years of experience, have incredibly efficient logistics systems,” Irwin told me. “Most of them admit that they couldn’t get product to market at the same price as Shein.”
The company recently earned a score of zero out of 150 points on a rubric maintained by Remake, a nonprofit advocating for better labor and environmental practices. The score partly reflects Shein’s environmental record: The company sells an enormous volume of disposable clothing, and it discloses so little about its production that it’s impossible to even begin to gauge its environmental footprint. “We still don’t have any real insight into their supply chain.
Cline told me that when companies such as Shein brag about how efficient they are, her thoughts leap to the people, often women, whose bodies and minds wear out so that the company can maximize revenue and minimize costs. “They’re the ones who have to be flexible and work all night so the rest of us can press a button and have a dress delivered to our door for $10,” she said.
Shein’s US base is in Los Angeles; the company also recently opened an Indianapolis-area distribution center and an office near Washington, DC. Its growing US presence comes at a time when Shein is already attracting the attention of regulators. In January, Congress introduced the Import Security and Fairness Act, which, if signed into law, would eliminate the tax exemption for packages from China worth less than $800.
In far more cases, though, small designers seem to be simply taken advantage of. Last spring, a 26-year-old musician named Katie Bailey found a strangely familiar image on Shein’s website: a T-shirt she had commissioned from an illustrator to promote her band, Southbound 17. The page had dozens of reviews from people who for months had been buying the T-shirt, listed at $9. But Southbound 17 hadn’t even started selling the shirt yet.
The document suggests that Shein’s reliance on suppliers for fast, cheap designs—which the company publicly describes as a competitive advantage—might be a problem. “It appears that our suppliers are searching the internet, including Instagram and Etsy, and copying other people’s works, then selling them to us.” The legal and PR costs fall on Shein, they write, hurting its reputation.
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