US Group Calls for Chinese Shein Shutdown

US Group Calls for Chinese Shein Shutdown
Photo: shein.com 27.03.2023 728

A campaign called Shut Down Shein against the Chinese ultra-fast fashion giant seeks to expose Shein's questionable and anticompetitive business practices. Shein denies the allegations and reaffirms its adherence to U.S. laws and regulations. 

According to a statement, a coalition of “like-minded individuals and businesses” is behind this campaign. It is known to be led by media strategist Chapin Fay.

This campaign will educate “relevant US government officials” and the American public to the ways in which SHEIN is alleged to be committing human rights abuses, exploiting import laws to evade billions in tariffs and making its unwitting American consumers accomplices in the process.

In the first three weeks of March, PDD Holding’s Temu became the most downloaded app in the US, followed by TikTok’s video editing app CapCut, TikTok itself, and SHEIN, according to market analysis firm Sensor Tower. In addition, the new coalition alleges that Shein maintains strong connections with TikTok and has been disregarding ethical business practices.

In particular, Shein was criticized for poor working conditions, and the company's clothing contains banned cotton from China’s Xinjiang region harvested under forced labor of the Uyghur people. With their use of Xinjiang cotton, Shein is violating Federal Law, the Uyghur Forced Labor Prevention Act (UFLPA).

Shut Down Shein recognizes that, much like Amazon started with books, Shein is using inexpensive apparel advertised on TikTok as a precursor for its expansion into all retail sectors “to crush law-abiding American businesses”.

In the first three weeks of March, PDD Holding’s Temu became the most downloaded app in the US, followed by TikTok’s video editing app CapCut, TikTok itself, and SHEIN, according to market analysis firm Sensor Tower.

Apart from the US, SHEIN is also encountering challenges in South Africa. According to The Wall Street Journal, the South African government announced an investigation into SHEIN in mid-March following complaints from the local textile union and industry association that the company may be exploiting tax loopholes to gain an unfair advantage in Africa’s most developed economy.

The Indian government banned SHEIN in June 2020, among 59 apps, including TikTok and WeChat, that it deemed “prejudicial to sovereignty and integrity of India, defence of India, security of state and public order.”

In March, it was reported that Shein is set to raise around $2 billion in a new funding round this month and is aiming for a U.S. listing in the second half of this year.

Founded in 2008, Shein has a well-defined target market of female consumers aged between 18 and 35. The secret of Shein's popularity is variety and availability. For example, in 2021 Shein released 1.3 million new models in the U.S., while Zara and H&M — only 60 thousand. Yet the prices offered on Shein are 40-60% lower.

The company's algorithms have practically replaced the work of fashion designers - they research the Internet in search of trends and current images, adapt catwalk novelties for the mass market, and then send the information to the computers in the factory workshops. It takes five to seven days to create one collection.

Shein was repeatedly accused of plagiarism and design theft. Lawsuits were filed against the company by Levi Strauss, Ralph Lauren, Dr. Martens, Zara and local artists and designers from all over the world.

Shein quickly entered the North American market, mostly through a partnership with TikTok. The company’s financial report shows a significant decline in its revenue growth rate and profit income over recent years. In 2021 and 2022, the company’s revenue growth rate decreased sharply to 60% and 52.8%, respectively. Additionally, due to increased air transportation and production costs, the company’s profits decreased by 36% year-on-year, falling to $700 million in 2022.

Sources: Pandaily, Tech in Asia

digital markets  China 

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