Shein ramping up UK expansion with talks to buy Missguided

Since it exploded onto Western markets, Chinese fast-fashion firm Shein – pronounced she-in – has become a wardrobe staple for young women with its cut-price designs.

The group last week ramped up its presence in the UK by entering talks to buy clothing brand Missguided from Mike Ashley’s Frasers Group. The move came hard on the heels of its opening a pop-up store in Oxford Street as part of London’s Fashion Week festivities.

The company, which was founded in 2012 in Nanjing, China, and is now headquartered in Singapore, saw sales surge during the pandemic as it rode a wave of shoppers buying online during lockdown.

Business in the UK is also booming. The inaugural accounts for its British arm, filed this month with Companies House, revealed sales of £1.1 billion and a profit of £12.2 million for the 16 months to the end of December 2022.

But there is a darker side, critics say, to this fashion phenomenon. Little is known about its overall finances or the billionaire businessman who founded the company.

Getting in on the act: Pop star Katy Perry promoting Shein

Shein churns out thousands of new designs every day and relies heavily on direct selling through social media, often recruiting influencers on apps such as TikTok.

Celebrities have got in on the act, and the brand has previously been associated with the likes of Katy Perry, Rita Ora and Hailey Bieber.

It isn’t surprising that Shein appeals to the West’s cash-strapped youngsters. The front page of its UK website offers women’s dresses for as little as £4.85 and a sweatshirt for just over £5.

Shein also claims to have more than 10,000 employees and says it sells its products in more than 150 countries. It is thought to be the world’s largest fast-fashion retailer and in a recent fundraising was valued at over £53 billion – more than Swedish chain H&M and Zara-owner Inditex put together.

In July, the firm’s executives claimed in a letter to investors that it had amassed a record profit in the first half of 2023, although they declined to state the exact figure.

Such is the buzz around the company’s success that it is thought to be considering a listing on the US stock market, with recent reports indicating that it has recruited major investment banks, including Goldman Sachs, JP Morgan and Morgan Stanley, to draw up plans for a blockbuster float in the near future.

The firm is also backed by several major investors, including New York investment manager Tiger Global and the Chinese arm of US venture capital group Sequoia.

But despite its runaway success, little is known about the firm’s inner workings or about its secretive founder, Xu Yangtian, also known as Chris Xu, born in China in 1983, who with an estimated fortune of more than £8 billion ranks as one of the country’s richest people. Stories that have leaked to the press paint a picture of a ruthless and determined tech whizz who has battled and backstabbed his way to become the king of fast fashion in China’s notoriously cut-throat corporate world.

One anecdote from two former business partners tells of how Xu worked with them to set up an e-commerce business called Nanjing Dianwei Information Technology in 2008. In 2012, he founded SheInside, a wedding dress retailer and Shein’s predecessor, but the move sparked a falling out with his two partners. They claim Xu one day disappeared from the office, taking control of Nanjing Dianwei’s PayPal accounts with him, though the company denies this.

The firm then rebranded as Shein in 2015 and moved its headquarters to the city of Guangzhou while also opening an office in the US, where it launched two years later.

Despite its enormous success, the company has attracted controversy as it continues to expand and take an ever-bigger slice of the global fast-fashion market.

Earlier this year, it was embroiled in a scandal when it shipped several US influencers out to what it claimed was one of its factories in Guangzhou.

This provoked accusations of an attempt to whitewash criticism of its labour practices and treatment of workers.

Activists such as Hakan Karaosman, a professor at Cardiff University and the chairman of the Union of Concerned Researchers in Fashion, have also previously said Shein’s ultra-fast fashion business model is contributing to environmental ‘degradation’ and that it can only survive ‘as long as clothing is overproduced and overdistributed’. 

The practice often results in massive amounts of textile waste being dumped in poorer countries.

The firm has also been repeatedly accused of plagiarism and copying the work of fashion designers to then sell on its own website.

Shein’s labour rights record has already attracted the attention of US lawmakers in a move that could derail its plans for a New York listing. In May, a group of US politicians called on the Securities and Exchange Commission to block Shein’s planned flotation until the business could verify that it did not use forced labour from China’s oppressed Uyghur minority in its factories.

Despite the setbacks, the company shows no sign of tempering its ambitions.

Shein has been steadily shifting the centre of its operation towards Singapore and away from China, seemingly in a push to escape the country’s tight control over its business and strict rules on listing overseas.

Xu may be hoping to avoid the fate of Jack Ma, the outspoken founder of e-commerce giant Alibaba, who was considered one of the country’s most high-profile businessmen, but has barely been seen in public for the past three years after criticising China’s regulatory regime.

As they say in fashion circles, not a good look.

A spokesman for Shein said the company takes ‘all claims of infringement seriously’. They added that it is ‘committed to respecting human rights’ and has ‘zero tolerance’ for forced labour.

This post first appeared on Dailymail.co.uk