Shein: How the fast fashion disruptor ran into real world problems

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1:14Happy Thanksgiving to all of our friends in the United States. Enjoy it while you can because tomorrow means only one thing. Black Friday, a slightly stressful and slightly sweaty day of deals and steals. But while we Americans may have created an entire holiday around consumerism, it's a company founded in China that's supercharging the world of bargain hunting. It's useful to think of Shein, the ultra fast fashion brand, as more like an Amazon than Azara or H &M. And the company is now valued at an estimated$30 billion. That's more than either of those major rivals. But behind the big numbers, there's also been some major criticism.

1:57There are questions over how the company treats the workers who make its clothes and the environmental impact of shipping millions of small packages of clothing all around the world. From the BBC, I'm Asma Khalid in Washington, D.C. And I'm Tristan Redman in London. And today on The Global Story, how did this previously little-known Chinese e-commerce site become a global fashion giant that's managed to survive and thrive despite controversy and criticism?

2:39This is a story about how a Chinese online company revolutionised ultra-fast fashion, but then arguably made a major misstep by opening its first brick-and-mortar store in Paris, the so-called fashion capital of the world. People can be angry at a website, but it's just a website. As soon as there's a physical shop, there's a place to focus the anger. When Sheehan opened up in BHV, a major Paris department store, earlier this month, that's exactly what happened. There were protests both inside and outside of the shop. And the French government's even trying to get the Sheehan website suspended.

3:16Now, when I'm not hosting this show in London, Paris is my home. So I pop down to the Sheehan store to see what the fuss is about. yeah okay so where are we going we're going on up to the sixth floor is that right yes okay sixth floor that's the sixth floor the christmasy now i am here with my daughters who know a lot more about fashion than me they are 11 and 7 oh yeah look shane look uh they're pretty excited to be here and we're and see what Sheehan has to offer.

3:58There's so much clothes. Leather jackets, shorts, coats. What have we got here, girls? So there's a shirt with lots of tiny diamonds stuck to it. Do you think they're real diamonds? No. 23 euros, so it's not diamonds.

4:24I want to try it Here I come So it's kind of a black pleather jacket Isn't it? Yeah And then the inside is like brown fur Fake fur isn't it? This is made for me Why is it made for you? Because it's fluffy It's almost 100 euros isn't it? It's not that cheap Shall I try it on? What do you think? Oh yes let's do that Okay hold this Okay hold this I'm holding it, I'm holding it. Here you go, here you go, Peppa, your leather jacket. Monsieur, monsieur, monsieur, your leather jacket. Okay, girls, so what did you make of Sheehan? I liked one thing. I would have liked it a lot more if it were better quality and had nicer materials.

5:16Would you spend your pocket money in that store? No. Well, Maxine is a shopaholic, so she'll spend her money in any store. Who said that? OK, guys, should we go home and have some dinner? So these two characters are obviously a bit sceptical about Sheehan, but I spoke to a bunch of the other shoppers as well, and they didn't seem too convinced either, I have to say. They told me that the clothes were made with poor quality fabrics. Some of them said they were quite concerned about the ethics of how the clothes might be made. There was another pair who said that they thought the prices were too high in the bricks and mortar store compared to online.

5:58One woman even told me she thought it was, quote, shameful that Shein was in Paris. But there are clearly plenty of people around the world who bought the hype and are buying the clothes. So to find out more about Shein, Asma has been speaking to someone who's close to the source. All right. Well, Laura, it's great to have you back on the show. Very different circumstances. We're not talking about Xi Jinping and, you know, world leaders meeting on the global stage, but a topic that interests me nonetheless, which is fashion. So thank you for joining us. Yes, we are talking about$12 dresses. Exactly.

6:35Who doesn't like a bargain? Laura, can I have you just self-ID yourself for us with your name and your title? Hi, this is Laura Bicker. I am the BBC's China correspondent. So I first became aware of Shein through social media, because obviously one of the things everybody knows about Shein is that as soon as you turn on any of your kind of major social media, perhaps Instagram, you're looking at a number of people who would try on their Shein hauls. I have already got all my Black Friday goodies, everything in this box right here from Shein. I'm doing another haul. I've done the biggest autumn winter sheen shop.

7:17Yeah, we're going to go ahead and bust this open. A lot of it is aimed at young people between around 16 to 24, but they were kind of showing off each of their bargains. I'm absolutely speechless at this dress. This is like topped, topped here. For this, I paid£11.69. Dress it up, dress it down. I love it. I love it. I love it. As you can see, it's very loose. However, for the price, I feel like you can't go wrong. And I thought, well, I need to go and find out more about how they're made, where they're made, and who are the people making all of these clothes that are traveling around the world.

7:57I have seen your reporting where you visited the Chinese factories that fueled this company's success, and it feels like you're the perfect person to answer so many of my questions about where Xi 'an came from. What is the company's origin story? So it was founded way back in 2008 by a man called Chris Hsu. Now, he stays well in the background. We have asked for interviews, but of course, he's said no, as he said no to many, many others. He started it as a kind of e-commerce operation. And then it was really selling the likes of wedding dresses. That's where it started way back in 2008. But I think it wasn't really until maybe about 2020.

8:42That is when Sheehan's meteoric rise started. One of the major questions I have, Laura, is how Sheehan can sell its clothes so cheaply. So I'm looking at their website right now. I've got it open. So here I can see a pair of plaid-coloured low-rise wide leg pants. These are black and white plaid,$13.76. Pretty good bargain. Let's see, we've got a paisley printed, coordinated set of blouse and pants. Whole set,$15.53. I mean, these are unbelievable prices, even compared to like a good Black Friday sale in person at the mall. How are they able to do that? So we wanted that too. So we went to Guangzhou several times and we spent a lot of time in the factories trying to find out exactly how these clothes were made.

9:36For those who work in this warren of more than 5 ,000 clothes firms, the factory clock dictates their day. Now, what we saw as we walked through, this is a network. It is a warren of factory after factory after factory. This is the beating heart of an empire. The machines seldom stop. First of all, when they put an order in, each of these factories are standing by, they're waiting, but they don't order all the material in bulk. So they wait to find out what is selling and then the material is sent to the factory. So whatever you're seeing on your screen, the pattern then has to go to each of the factories that supply Sheehan.

10:26And then the workers will work to fulfil the order as long as it takes. they get paid by the peace. Workers travel thousands of miles to Guangzhou to earn money to send back to their families. Xi 'an is now one of their major employers. I think Xi 'an will become better and better. How many people do you think work for Xi 'an in this region, this area? I would say over 80 % of the people here work for Xi 'an. So, I mean, I asked how much they would earn to, you know, make a t-shirt, for instance. It's the equivalent of just under a dollar that they get paid for each T-shirt. And that's not unusual in this part of China.

11:10You know, this is really the kind of manufacturing heart, the textile heart of this country. But it's pretty cheap. So they know that, you know, not only are these qualified machinists, but they are able to kind of put out all of the T-shirts necessary in a couple of days. And that is how it works. The sound of machines fills the streets from about eight o 'clock in the morning to past 10 o 'clock at night. Some will go home, maybe, you know, eight or nine o 'clock, but many stayed well past the hours that you would expect. Hard work is a way of life here. I am proud that our textile industry is providing the world with cheap and good quality goods.

12:03As a Chinese person, this is the contribution I should make. And you could see when you went into each of these factories, you could see the bags and bags and bags of products, all with that familiar black lettering Sheehan on a white bag, all being ready to be shipped off. And these factories are owned by Sheehan, or is this kind of like an outsourcing operation? This is an outsourcing operation. There's no factory that has the word Sheehan over it. These are all independent suppliers that work for Sheehan. So they have very little overhead then in that regard. Very little overhead. And I could see when I went into the factories because there have obviously been a number of accusations of overwork, underpay, and even she and themselves found children working in their factories in the last couple of years.

13:02you can see evidence of them trying to clean up their act. There was a huge poster at the end of most of the factories we went into urging employees to report child labour, urging people to take breaks where they could. When we spoke to factory owners, they said that they were told to make sure that things were well ventilated and well lit. I know when we spoke to workers, what they said was actually yes they get paid less often times at Xi 'an mostly because it's a bulk order however they know that they will get paid I went to a lot of job fairs when I say job fairs these are massive markets in Guangzhou where you've got people with billboards and they're holding up chinos or t-shirts or jackets and they're showing prospective machinists how they would be made and I asked them, would you ever kind of machine for Sheehan?

14:02And they all looked at me and said, well, it is a guaranteed payday. But there was a sneer from some of them about the quality of Sheehan's products. They know that this is not the highest quality of product that you can make, but they also know, as I said, it's a guaranteed payday. What does Sheehan say in response to some of these accusations, allegations you say, which I've heard as well about the working conditions? What's been the company's response to this all? Well, we did ask for an interview with Sheehan after we spent several days, you know, after visiting the factories, speaking to workers.

14:47What Sheehan did tell us in a statement was that they're committed to ensuring what they say is the fair and dignified treatment of all workers within their supply chain. And they're investing tens of millions of dollars in strengthening governance and compliance. They did say also that they strive to set the highest standards for pay and that they require all of the supply chain partners to adhere to their code of conduct and that they work with auditors to ensure compliance. I want to get a sense from you, Laura, of what's different about the way Sheehan's business works compared to other fast fashion retailers like H &M or Zara?

15:25Because I think for the unfamiliar, they might hear about Shein and think, oh, well, a lot of fashion these days is pretty quick turnaround fast fashion. But this seems really different. So there's a couple of things that are different. First of all, if the likes of Zara and H &M make a shirt, say, let's just take a simple T-shirt, you're making that T-shirt en masse. So you're taking it to your factories and you're saying to your factories, please make that t-shirt. Shein doesn't do that. And initially, they'll only make about 200, 400. And if it sells well, then they say to the manufacturers, go, go, go.

15:59And they'll make lots of them to fulfill demand. So on that point, it seems like if Shein is making clothing to order, perhaps it's not as wasteful as some other fast fashion companies. In terms of their manufacturing, they use synthetic fibers like polyester, like nylon. These are very prevalent in fast fashion clothing. Making this is really highly energy intensive. It produces large numbers and large amounts of microplastics. And that's why environmentalists are worried about it. And I think the other criticism that you may have heard of Shein is that that large amount of stock, that rapidly changing stock encourages people to buy more and not reuse the plaid shirt that you're continually buying.

16:49And also, of course, I mentioned the packaging, its products come in large amount of non-recyclable packaging. Now, Shein has tried, when we spoke to them about this, they said that they are doing their best to reduce that. It sounds like what you're saying is that there are valid environmental concerns over the company. In some ways, maybe it's not doing as badly as other companies, but in other ways, it's doing just as badly. Like, I guess I just want to understand where it falls. I'll be honest, I've been to Cambodia where I saw other fast fashion retailers. And, you know, there were issues, many, many issues there too.

17:25I went to many places where instead of using coal to burn fuel, they use the remnants of fast fashion. And we found labels from all number of fast fashion outlets. And if you look at what the UN environmental program has said, they estimate that the fashion industry accounts for 10 % of global carbon emissions. So it's by no means just Shein and others. It is sizable. We've talked about what the products are and how they are made. But it strikes me that one other big difference with Shein is how it gets its products to the people buying them. Like if I order, say, those plaid pants online, how would they arrive to me here in the United States?

18:15So if you're, say, Zara, and you make your T-shirts in Vietnam or in southern China, you're sending things en masse on boat to your shops. Things don't go en masse when it comes to Shein. It goes in individual parcels. And that's another reason why it's managed to do well. until recently, you know, these parcels would turn up on people's doorsteps straight from the manufacturer. Now, before Donald Trump came to office, it would be sent directly to your doorstep. You would be paying your$15.95, I think you said, for your whole set. And then that would be that. Nowadays, that has changed a little because Donald Trump has closed that loophole.

18:59and now Sheehan has to pay a tariff of 20 % on the parcels that is sent into the United States. And just to be clear on that change, Laura, what you're describing was the end of what's known here in the U.S. as the de minimis exemption. And just to explain this briefly to listeners, it used to be that shipments coming into the U.S. that were valued at under$800 were traditionally exempt from tariffs. But as you said, Donald Trump changed that. Have you seen a change in how Xi 'an is faring? No. No? Fascinating. Well, it is fascinating because, you know, how many times did I have to say the word de minimis on air?

19:41And we were speaking to business experts who wondered whether or not Xi 'an was going to have to put mass transportation sites elsewhere in the world, maybe base them in Vietnam, etc., so that it wasn't just coming from China. you know, whatever way round that they were trying to perhaps avoid this tariff. But there doesn't seem to have been, from what we've seen so far, a real impact on Sheehan's business model. Now, I think we might need to do a little bit more research. It's still early days. It's only been a few months. And I think I'll look into it for you more in the next year. But so far, we've not seen a huge change.

20:19Have they increased prices for customers, particularly American customers? I haven't seen a huge increase in prices. But just to be clear, on the de minimis exemption, what happens is it's passed on to the customer. So Sheehan isn't paying it. So those$15 some pants would now be$15 plus an extra 20 % now. Yeah, yeah, yeah. Okay. And I think that's been one of the interesting things about tariffs because the whole idea of these tariffs is to perhaps make you think again and maybe buy something American. made rather than Chinese made. But at these prices, you know, the prices that you're seeing on the website, they are quite tempting to someone who's getting their pocket money or who's earning, you know, doing a weekend job and thinking, right, well, I would like a new bit of fashion, please.

21:09I think that's one of the things when I've spoken to environmentalists or people who are in the fashion industry who are trying to encourage people to think more sustainably. I said, well, hang on a second, you know, you want to tell an 18-year-old that you need to save up more of your money to say, look, buy something that's more sustainable. It's a difficult sell.

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22:52it sounds like what you're saying laura is that whether you love shein or you hate shein it has certainly changed the fashion market online it's changed the business model when we talk about technology algorithms it's changed the shipping model to some degree and so that makes me wonder you know i i hear so much criticism of this company And is that in part because this is a fashion company born in China? If this were an American company, would it be so reviled? Well, I think you're in the right place to answer that one. But I think in terms of why Shein is under so much scrutiny is because if you've risen so quickly to the top with very little transparency, and I think that's the key, they haven't revealed their factory list.

23:42they haven't revealed where their textiles are made. And then, of course, they were going to launch on the stock market. And I think, again, it forced politicians to look more closely at a company coming onto their shores. And it's difficult, obviously, for people to get information from the ground. I mean, that's one of the reasons why we did what we did. And, you know, I went from factory to factory to factory. The only way you can report in China, Phil, stop is by going on the ground. And that is the only way to see inside Sheehan's operation. You mentioned a moment ago that Sheehan has tried to be listed on the stock exchanges in various countries.

24:23I know here in the United States, it tried and failed to be listed on the New York Stock Exchange. There was some pushback from lawmakers in Washington. It's also tried to get listed on the London Stock Exchange. From your vantage point, why have American and European investors been so reluctant, so skittish to let Shane into the club? I think there are a few reasons for that. First of all, as I mentioned, the lack of transparency. So when they tried to launch in London or just before they tried to launch in London, there were various parliamentary inquiries. And they were asked where their textiles are made.

25:00And that includes if they are or not made in the region of Xinjiang, where there have been accusations of forced labour with regards to cotton. And they didn't answer it. So I think, you know, when it comes to politicians, they are looking at this company and wondering about the Chinese supply chain. And that's one of the reasons why politicians, I think, are so skittish. I think Xi 'an is now looking at Hong Kong. To be listed on the stock exchange in Hong Kong. That is what we've heard, but there have been no confirmation of that. China has continually denied allegations that Uyghur minority people in China are being forced to labour in Xinjiang.

25:49But it hasn't stopped many politicians thinking again when it comes to letting a Chinese company like Shein settle in their country. You know, my understanding is that Shein has also gotten into some hot water for selling some quite outrageous products online. The most recent has been the sale of what has been called sex dolls. Now, Sheehan has now banned the sale of all of these dolls on all its platforms all around the world. They were accused of displaying products with what were called a childlike appearance on its website. The first group to spot it was a French consumer watchdog. They raised concerns and they said that the description and categorization of the dolls left, in their words, little doubt as to the child pornography nature of the content.

26:44Now, the company says is permanently banned all seller accounts linked to these sex doll products, and they're going to tighten controls across all of its global platforms. And they say that this the fight against child exploitation is non-negotiable for Shein. For much of this conversation, we've been talking about Shein as an online company, as an e-commerce site. But it's also made headlines recently for opening up its first permanent brick and mortar store in Paris, which I think is known to many folks around the world as being a fashion capital. This physical shop is inside this iconic Parisian department store.

27:25And I want to get a sense from you, Laura, how you interpreted this move. Shein is very aware of the image it has of this fast fashion retailer with a lack of transparency that comes from China. and even with its headquarters in Singapore some said that the reason it headquartered in Singapore was to try to distance itself from China but obviously this shop in France was an idea to say right okay look we have a physical face when you open a shop, when you list on the stock exchange that gives you perhaps legitimacy and obviously it has backfired you know there were protests outside the shop front.

28:09But I think what they really want for their future is to be a kind of respected fashion brand. And that's one of the reasons why I think they're doing what they're doing. Well, thank you so much, Laura. You're very welcome. That was BBC China correspondent Laura Bicker and my co-host Asma Khaled. And I'm Tristan Redman. Today's show was produced by Hannah Moore and edited by Bridget Harney and James Shield. It was engineered by Travis Evans and our senior news editor is China Collins. If you have any ideas, suggestions or questions for us, please email us at theglobalstory at bbc.com and please rate us wherever you're listening.