Controversy fails to take shine off Shein

Recently placed under investigation by South Africa’s department of trade, industry and competition, Chinese online fashion and beauty phenomenon Shein has been accused of deliberately sending its goods in small packages to reduce import duty costs. In spite of global criticism, the brand remains the world’s top fast-fashion brand – but at what cost?

In the age of fast fashion where the latest catwalk trends are rapidly mass produced at low cost, Shein’s appeal is undeniable. With a legion of loyal South African shoppers – including large Shein resale groups in our community – it’s worth more than $100 billion (R1.8 trillion). Shein sells a multitude of fashion items at considerably low prices to customers in more than 150 countries, including South Africa. “The majority of South Africans cannot just spend without thinking like before,” says Cara-Lee Herr, a former fashion editor at Fair Lady and an entrepreneur in the fashion industry.

“They are extremely price sensitive but still want nice, on-trend items, so fast fashion ticks both boxes. The majority aren’t going to bother to see where it’s made, but rather care about the price. Fast-fashion retailers have the money to put behind their marketing, especially on social media channels which drive consumer behaviour.” Fast-fashion items are, however, often discarded as rapidly as they’re produced, raising concerns about excess waste.

Demonstrating how Shein has taken fast fashion to another level, fashion retailer Zara produces 20 000 new styles annually in comparison to the 6 000 per day added by Shein.

In an investigation making international headlines, South African unions and clothing groups are arguing that the company is using tax loopholes to offer unrealistically cheap clothing prices. Bringing clothes into the country in small quantities means Shein pays less import taxes, something local clothing retailers cannot escape.

“Local clothing retailers pay 45% import tax on one item,” Michael Lawrence, the executive director of the National Clothing Retail Federation (NCRF) of South Africa, which has raised import-tax concerns with authorities, told City Press. The NCRF is an umbrella body made up of retailers such as Woolworths and The Foschini Group.

Speaking to the SA Jewish Report, Lawrence says, “If there’s fair play in respect of the business and trade legal and regulatory requirements, then all RSA retailers get to engage in their own diverse competitive activities, depending on market segment, product offering, and geographic footprint.” Though he points to the success of RSA retail at all levels in remaining competitive, he cannot comment on Shein’s impact on local sales figures.

Internationally, Shein has come under fire for its environmental impact as well as the alleged unfair labour practices in its supply chain, with two of its suppliers accused of making employees work up to 18 hours a day. “As a global company, Shein takes visibility across our entire supply chain seriously,” Emily Workman, Shein’s director of corporate communications, told the SA Jewish Report. “We’re committed to respecting human rights and adhering to local laws and regulations in each market we operate in. Our suppliers must adhere to a strict code of conduct aligned to the International Labour Organisation’s core conventions.”

Legions of satisfied shoppers remain undeterred by the controversy. “Do we ever question where exactly the clothes in our local stores come from?” asks Staci Lyons-Jacobson, the admin of a Shein Curve – Shein’s plus-sized fashion line – WhatsApp resale group.

For adults, larger-sized items at local clothing retailers tend to be “bobbadik”, she says. However, on Shein Curve one can get exactly the same clothing items as those sold in smaller sizes. Even though Shein’s clothing prices have risen recently, she says, they’re still cheaper than most retailers and make-up and accessories remain incredibly reasonable.

Convenience is also a drawcard with items delivered to customers’ doors via Shein’s courier partners, often taking just 10 days to arrive. Lyons-Jacobson admits that the clothing can sometimes be “hit and miss”, which is why she started her WhatsApp group, but she says the quality is generally of a high standard.

Points systems as well as vouchers accumulated by being on the app also allow for considerable discounts on products purchased, she says. She has also calculated what to spend on Shein orders to avoid excessive taxes and duty fees – about R1 200 to R1 400.

But it’s not easy to send things back to Shein, says Necia Hirschson, which is why she started her WhatsApp resale group called “Shein shopping oopsies” which has 280 members. “The fact that they’re cheap means that it doesn’t matter if you or the kids wear the clothes for only one season and then throw them away,” she says. This tendency to briefly wear and then discard clothing before making your next purchase, explains why fast fashion is such a lucrative but environmentally concerning business model.

Herr says the duty fees on Chinese imports are generally lower because they mass produce. “The more units they can make, the cheaper the production there. Here, units produced are a lot more expensive as they are made in smaller batches. We’re dealing with huge inflation here because of factors like petrol prices and loadshedding increasing manufacturing costs. So, outsourcing from China is looking better in terms of affordability.”

Yet, she says, legitimate factories in China are also experiencing higher raw-material costs especially following the COVID-19 pandemic, which casts doubt on Shein’s practices. “In my opinion, there has to be bad practice involved in Shein,” Herr says. “The factories I use in China who are all above board can never produce for so cheap. At Shein, somewhere along the chain, someone is either not being paid enough or working too many hours. I get the concept of Shein – it’s a unique type of retailer – I wouldn’t even compare it to a fast-fashion retailer. I understand that it’s cutting out the middleman, but that still doesn’t explain how it can be this cheap considering global raw-material costs.”

Workman, however, claims that Shein is able to keep prices low through its unique on-demand business model.

“This enables us to reduce the waste and overproduction typically associated with the fashion industry by producing an ultra-small batch of each style on our site, gauging market response, and then communicating this feedback to supplier partners almost immediately,” she says. “We therefore respond with larger production only if it’s warranted, reducing the unsold inventory percentage to single digits versus an industry average of 30%. This leads to cost savings, which are passed on to our consumers through our affordable pricing.”

Many remain unconvinced. Susan Frankel, the owner of Kerry’s Fashions, a Joburg-based modest clothing store featuring locally manufactured clothing for women and girls, says that small local businesses will never be able to compete with what she terms “sweat shops”.

“The fast-fashion industry has made the already damaging impact of COVID-19 worse for us as people want cheap options no matter the quality and the sweat that goes into making them,” she says. “Consumers aren’t aware that the cost of good quality materials has risen quite substantially, exacerbated by import costs.” Yet building on its long history, loyal customer base, and alteration offerings – ironically often on Shein garments – Kerry’s Fashions is here to stay, she says.