Written by Helen Reid and James Davey
Shein, the fast fashion retailer, has announced a significant investment of 250 million euros ($271 million) over the next five years in the UK and Europe. This move comes as Shein faces criticism for its business model that involves shipping inexpensive clothing and accessories directly from Chinese factories to customers worldwide.
While Shein already sources some of its products from factories in Turkey, the majority of its items are manufactured by approximately 5,400 suppliers in Guangzhou, China. The company has been accused by textile associations and politicians in Europe of undercutting local industries by flooding the market with low-priced garments, made possible in part by tax breaks for parcels valued below 150 euros in the EU and 135 pounds in the UK.
The EU is considering eliminating this tax break as part of a customs reform project proposed by the Commission in May 2023. In response, Shein has set aside 50 million euros for potential investments in research and development, pilot production facilities in Europe or the UK, and initiatives to help regional brands and designers expand their reach through Shein’s marketplace.
Shein, renowned for its affordable $5 tops and $10 dresses, reported sales of around $45 billion in 2023 and was valued at $66 billion in a recent fundraising round. The company’s executive chairman, Donald Tang, revealed that Shein is exploring opportunities to diversify its sourcing locations, with a focus on increasing production in Turkey.
Additionally, Shein plans to support more UK and European artists and designers through its incubator program, as it adapts to new EU regulations aimed at safeguarding intellectual property rights on online platforms. The company is also launching a 200 million euro circularity fund to back startups and businesses in the region developing textile recycling technologies.
“Given Shein’s scale and influence, we believe Shein can drive widespread adoption of these solutions across the industry,” Tang stated. Shein is inviting businesses, financial institutions, and sovereign wealth funds to co-invest in the fund.
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