Shein fashion keeps drawing criticism. Researchers working on behalf of Public Eye have reported before about working conditions that violate numerous state labor laws. Recently, heavily toxic products, an intended and prevented IPO in the US, a new IPO attempt in London, and lobbying activities by an ex-EU commissioner draw new criticism.
[ Updated ] Welcome to the largest textile company you may never have heard of. The TikTok generation, however, has long associated Shein fashion with a wide range of trendy clothing at the lowest prices, which are aggressively marketed on social media and make top dogs like H&M or Zara look old-fashioned. The heavily criticized company is making moves to improve its image, but those steps seem only to add to the pile.
Some women’s accessories sold by Shein and some other of the world’s most popular Chinese online shopping firms are found to contain toxic substances sometimes hundreds of times above acceptable levels, the authorities in Seoul said on Aug 14 (2024).
The explosive growth has led to increased scrutiny of their business practices and safety standards, including in the European Union and South Korea. Seoul officials have been conducting weekly inspections of items sold by online platforms.
In the most recent inspection, 144 products from Shein, AliExpress, and Temu were tested, and multiple products were found to contain significantly high levels of phthalates – chemicals used to make plastics more flexible – with one pair of Shein shoes 229 times above the legal limit.
EU lobby and toxic finance
To smooth its image, Shein recently appointed a former EU politician as a lobbyist, moved its headquarters to Singapore, and tried to sell shares via the New York Stock Exchange. The US authorities prevented that move because of its ties to the Chinese government and allegations of using forced labor.
Shein now eyes the London Stock Exchange as an entry point to the financial markets. Here too, not without making waves.
Allegations directed to the leader of the London Stock Exchange Group (LSEG) were made, that the exchange lowered its standards in pursuit of the 50-billion-pound ($64 billion) initial public offering (IPO) in the UK.
Rumors began swirling about the company setting its sights on London as a viable alternative for listing shares in February, and Reuters reported that Shein confidentially filed papers with Britain’s markets regulator in early June.
Meanwhile, a new campaign backed by British retail consultant and television personality Mary Portas has launched an online petition calling on the new Labour government to block fast fashion retailer Shein from listing its shares in London.
The campaign accuses Shein of exploiting workers, damaging the environment and avoiding tax, according to Reuters. Some senior UK lawmakers have questioned Shein’s suitability for going public in the UK and called for greater scrutiny of its labor practices, supply chain, and use of an import tax exemption.
Shein has further enlisted a former top European Union official to bolster its lobbying efforts across the region. The former EU budget commissioner Günther Oettinger was hired as a consultant to help it navigate the bloc’s policy environment, a company representative told Bloomberg News. Shein faces a raft of issues including a debate whether to impose customs duties on cheap parcels — a potential game-changer for Shein and other low-cost online retailers like PDD Holdings Inc.’s Temu
President Ursula von der Leyen denounced Shein previously as “poison” due to the environmental impact of cheap, disposable clothes.
Ultra-fast Shein fashion
The rising star managed to catch up with H&M and Zara’s parent company Inditex also in terms of revenue, but due to the direct delivery business model, there are no reliable figures on market share or profit. With a production cycle of three to four weeks, Zara has to date been the byword for fast fashion. Shein can supposedly produce a dress within a week – from design to packaging. Public Eye decided to find out who is paying the price for this super cheap, ultra-fast fashion.
Researchers, who must remain anonymous for security reasons, shed light on the other side of the glitzy Shein world. They traveled to the narrow streets of the megacity Guangzhou, where Shein fashion is headquartered and where its most important suppliers are located. The researchers located 17 of the 1,000 companies that produce for Shein, including numerous informal workshops with no emergency exits and with barred windows that would have fatal implications in the event of a fire.
Violations, violations
The employees, who without exception come from the provinces, graft for 11 to 12 hours a day and have only one day off per month. That makes for 75 hours of work a week, which violates not only Shein’s Supplier Code of Conduct but Chinese labor law, on numerous counts. Anyone willing to work in practice two jobs – and what’s more without a contract or premium for overtime – won’t earn more than 10,000 Yuan (CHF 1,400), even in good months.
Similar conditions prevail in Shein’s huge main warehouse located an hour’s drive from Guangzhou, China. It employs over 10,000 people and operates 24/7. Twelve-hour working days are common practice. Employees also complain of such “Chinese standards” at the logistics center in Liège in Belgium, where European returns were processed until recently and where we [ Public Eye, ed.] saw the situation for ourselves.
The most frequent cause of dismissal there is failure to meet unrealistic performance targets, which must be achieved to earn the wage of EUR 12.63 an hour. Until June, 30,000 returns – including from Switzerland – were repackaged here daily. Since then, packages have likely been making the full journey back to China. Public Eye also scrutinized the new fashion empire’s complex corporate structure. We found many offshore entities to disguise ownership and avoid taxes, which appears to be a common practice in China, too.
Recent research by Bloomberg ties the brand to Xinjiang, the Uigur region, and the forced labor that has allegedly been practiced there.
Dangerous levels of toxic chemicals found in Shein fashion
A Marketplace investigation found that out of 38 samples of children’s, adult’s and maternity clothes and accessories, one in five items had elevated levels of chemicals — including lead, PFAS and phthalates — that experts found concerning.
Scientists found that a jacket for toddlers, purchased from Chinese retailer Shein, contained almost 20 times the amount of lead that Health Canada says is safe for children. A red purse, also purchased from Shein, had more than five times the threshold. These toxic levels make the products qualify as hazardous waste, one scientist commented.
Shein ‘s unsustainable business model
The company releases between 700 and 1,000 new items a day, writes Euronews. Shein says each product is only produced in small numbers (between 50-100 pieces), thereby minimising how many raw materials are wasted. When a product is popular, it’s then mass-produced on a larger scale.
But even a product produced on a small scale is still contributing to carbon emissions and waste. Based on the numbers above, and using the most conservative figures, that’s still at least 35,000 items being produced every day – and at worst 100,000.
Sustainability is ultimately about buying and consuming less. Shein’s business model is set up to fuel demand, guaranteeing that there is almost always something new that a consumer will want to buy.
When experts examined the company’s website, they found that 70 per cent of its products in stock are less than three months old. At other fast-fashion retailers, like Zara and H&M, this number is between 40-53 per cent.
No responsibility, please
Shein fashion’s business model is set up to control as much of the value chain as possible while taking on as little responsibility as possible. Through its combination of a cutting-edge online strategy and archaic working hours, the Chinese newcomer is perfecting the fast fashion industry in a particularly insidious manner. In doing so, it is taking the sector’s tradition of shunning responsibility to another level. The only means of countering this development is to impose a requirement for transparency in relation to supply chains and to introduce political guidelines on corporate responsibility. It is up to authorities and industry associations to act to this end.
Read the full Public Eye story
Image: @PanosPictures / PublicEye
This article was first published on November 23 20222 and updated on August 16 2024.
