Shein's rise: How the wildly popular but controversial Chinese brand became the most feared fast-fashion retailer in the world

Billionaire founder and CEO Chris Xu started the business in 2008 as an e-commerce site selling wedding dresses that were made in China, later adopting the name SheInside.

In 2015, Xu shifted the business to focus on fast-fashion apparel and rebranded as Shein, pronounced "she-in." But the company's rise didn't come until 2020, when quarantined shoppers gave a boon to e-commerce.

Xu's background in SEO and marketing has benefitted the company's digital-first approach. Not much is known about Xu, who is even more private than the company he built.

People first began embracing cheaply made clothing in the 60s and 70s as fashion trends began to change more frequently and companies turned to offshore textile manufacturing to cut costs, Fashionista reported.

But it wasn't until the late 90s and early 2000s that H&M, Zara, and Forever 21 popularized the fast-fashion model as we know it today.

In the last few years, Shein has quickly become the world's biggest player in fast fashion. The company sells clothing that is cheaply and rapidly produced, then sold at incredibly low prices — many items are under $10.

Shein gave fast fashion a whole new meaning by using AI technology to identify trends and an online-only model to churn out thousands of garments in record time.

Analysts have dubbed Shein's business model "real-time retail" because new designs can take as little as three days to produce, Vox reported. Because of this, there are as many as 600,000 items listed on the site at any given time, according to BBC.

Customers and influencers on TikTok have driven much of Shein's international appeal. Creating a #Sheinhaul is a right of passage for many teens and 20-somethings. Shoppers dump piles of Shein-branded packages from large cardboard boxes onto the floors of their bedrooms, where you'll also probably see garlands of fake ivy and string lights hanging from the walls. One woman filmed a box truck delivering a giant box to her driveway after she said she bought $2,000 worth of Shein products.

Shein is the second most-downloaded shopping app in the US, according to UBS Evidence Lab data. Shein has more followers on TikTok than any other apparel retail brand and is the most Google-searched apparel retailer in the US, according to UBS data.

Shein's average customer is a 34.7-year-old woman who earns $65,300 in annual income and reports spending $100 per month on women's clothing. That's 60% higher than the average US woman, UBS reported.

In 2022, Shein raised $1 billion in a funding round that valued the company at $100 billion, more than H&M and Zara combined, the Wall Street Journal reported.

Earlier this year, Shein's valuation dipped to $66 billion, and it generated $23 billion in revenue last year, the Wall Street Journal reported. As of this writing, H&M's market cap was $20 billion and Zara's parent company Inditex had a market cap of $117 billion.

Along with Shein's colossal success, comes mounting criticism. The company is known for its secrecy and lack of supply chain transparency. It's come under fire for producing extremely high volumes of garments, which reports say contribute to overcrowded landfills and 6.3 million tons of carbon dioxide emissions per year.

According to its 2021 Sustainability and Social Impact Report, Shein uses The United Nations Sustainable Development Goals (SDGs) as a framework for its sustainability efforts and social impact. On its website, Shein says that its digital supply chain limits excess inventory and reduces waste. It also says it uses digital printing methods that use less water and attempts to sell unsold inventory before donating it.

But some critics say these efforts pale in comparison to the company's output of an estimated 314,877 new styles per year, according to a Business of Fashion article, which used data from retail analytics firm Edited. H&M produces a meager 4,414 new styles in comparison.

Shein has headquarters in Singapore and in the manufacturing hub of Guangzhou, China. It works with over 6,000 suppliers throughout China. The company has been accused of using manufacturers that have violated labor rights.

A 2021 investigation by the Chinese digital publication Sixth Tone uncovered a pattern of "loose oversight and poor working conditions" at some of Shein's manufacturers. It discovered that Shein's suppliers often subcontract orders to small workshops inside rundown buildings to cut costs. Because these businesses don't deal directly with Shein, the company cannot verify their working conditions.

Shortly after the company's $100 billion valuation in 2022, Shein's sales took a downturn. Business of Fashion reported that the company's sales declined for five months before slightly increasing in December, based on online spending data from Earnest Analytics.

In May 2023, the company raised $2 billion in funding and some sources say the company is eyeing an initial public offering as early as 2024, Bloomberg reported.

US lawmakers have lobbied to delay Shein's public offering until they can verify that the company does not benefit from forced labor.

An interim report by the House Select Committee on the Chinese Communist Party found that Shein and online retailer Temu are responsible for more than 30% of all packages shipped to the US every day without payment of import duties. Companies are exempt from paying US tariffs on products with a retail value less than $800 if they are shipped directly to individual customers.

This loophole, lawmakers concluded, makes it difficult to obtain data on Shein's suppliers to verify whether they are violating the Certa Uyghur Forced Labor Prevention Act (UFLPA), which prohibits international imports manufactured by forced labor, particularly in the Xinjiang region of China.

Shein has repeatedly told the media it does not use manufacturers in Xinjiang.

Despite the bad press, UBS analysts suggest that Shein could continue to take major market share from US apparel companies. In a recent report, they attributed much of the company's success to its marketing prowess. Shein's loyal customers are not only driven by its low prices, but by a strong community bolstered by in-person events.