Fast fashion giant Shein announced plans to invest 250 million euros ($271 million) in the UK and Europe over the next five years. This move comes as Shein faces criticism for its business model, which involves shipping low-cost clothing and accessories directly from factories in China to customers worldwide.
Current Sourcing and Potential London Listing
Shein, which is considering a potential listing on the London Stock Exchange, already sources some products from factories in Turkey. However, most of its items are made by around 5,400 suppliers, primarily located in Guangzhou, China.
European textile associations and politicians have accused Shein of harming local industries by flooding the market with cheap garments, making it difficult for domestic factories and retailers to compete. This is partly due to Shein benefiting from tax breaks on parcels worth less than 150 euros entering the EU and less than 135 pounds ($173) entering the UK. The EU is considering removing this limit as part of a customs reform project proposed in May 2023.
Investing in Local R&D and Production
On Tuesday, Shein announced it has set aside 50 million euros for potential investments in research and development or pilot production facilities in Europe or the UK. The company also plans to support local brands and designers by helping them reach a larger market through Shein’s platform. Known for its affordable $5 tops and $10 dresses, Shein reportedly achieved sales of about $45 billion in 2023 and was valued at $66 billion in a recent fundraising round.
Open Sourcing Options
Shein executive chairman Donald Tang told Reuters the company is keeping its options open regarding where to start sourcing from. He mentioned that the facilities would likely be suppliers rather than being owned and operated by Shein. He noted that while the share of Shein products made in Turkey is currently small compared to China, it is growing quickly.
Supporting Local Designers
Additionally, Shein plans to include more UK and European artists and designers in its incubator program. This announcement comes as Shein adapts to new EU rules designed to ensure online platforms do not violate intellectual property laws.
Launching a Circularity Fund
Shein also launched a “circularity fund” with an initial investment of 200 million euros. This fund aims to support startups and businesses in the region that are developing textile recycling technologies. Tang said that Shein, given its scale and reach, could help promote widespread adoption of these recycling solutions across the industry. The company is inviting businesses, financial institutions, and sovereign wealth funds to co-invest in the fund.
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