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--:-- Noelle King: Welcome to Today Explained. I'm Noelle King with Hilary Milnes, the Executive Editor at Vogue Business. She does not shop at Shein.
--:-- Hilary Milnes: I have to say the user experience on the website's not, it's just not for me. It's fine. She works at Vogue.
--:-- Noelle King: But the user experience on the website is for so many people that Shein dwarfs other fast fashion companies like H&M and Zara and is valued today at $66 billion. That's more than Zara and H&M combined.
--:-- Hilary Milnes: And so I think when people bucket them together, what doesn't really come into play or isn't really that common of knowledge if you don't know the fashion industry that well is just how big Shein is compared to these other companies.
--:-- Noelle King: And at the core of its business model is a very reactive, technology-based, algorithm-driven response cycle that can pick up trends very quickly as they're happening. They're tapped into what's happening on social media, on the internet, and regurgitating these trends as they're coming into popularity.
--:-- Hilary Milnes: And a big thing that Shein often talks about is that they then seed some styles onto the website, and then only if they start to perform will they mass produce them. So that's something that other fast fashion companies have done as well. But Shein is uploading like 10,000 products a day. So it's just a massive operation.
--:-- Noelle King: Give me an example of one of the trends that they've jumped on.
--:-- Hilary Milnes: The parachute pant. Yeah. That's very popular. I know like a lot of Gen Z's are really into that Y2K style. And so you'll see like the baggy low rise jeans, the parachute pant, the crop top.
--:-- Noelle King: And so you'll see influencers and celebrities wearing these parachute pants, and then that filters its way directly to Shein.
--:-- Hilary Milnes: And that used to take time and it now takes no time at all. A thing can show up in photos and it can be like, wow, that looks really good. That should be a trend. That will be a trend.
--:-- Noelle King: How does it make these things so quickly?
--:-- Hilary Milnes: Shein has accumulated a network of thousands. I saw 3,000, I saw 6,000, exactly how many, I'm not sure, but they have a really big network of manufacturers that are making clothing under the Shein label.
--:-- Noelle King: And I don't think you can talk about Shein without talking about their labor practices. And that is where a lot of the criticism, controversy, and scrutiny comes from because there have been exposés, documentaries, looking into the working conditions for Shein.
--:-- Hilary Milnes: And it is zero time off, 75-hour work weeks and, you know, accusations of forced labor and modern slavery. If you want to take a day off or go back to your hometown, your wages will be deducted.
--:-- Noelle King: This is completely unreasonable because there's no rest at all.
--:-- Hilary Milnes: Rotherton Bunch says most of the apparel stems from the Xinjiang province, an area where the U.S. State Department says there's a genocide happening. Members of the Muslim minority Uyghur population, often forced into prison and labor camps, produce the very goods that enter the U.S. through the apps.
--:-- Noelle King: Sheehan says that it has implements in place, internal teams, that ensure that none of the suppliers that they're working with are practicing forced labor or sourcing cotton from regions that have been accused of practicing forced labor.
--:-- Hilary Milnes: It's difficult to confirm because lots of what's wrong with Shein, I guess you could say, is that it is so incredibly non-transparent and it's hard to know exactly what is all laddering up to what we then ultimately see on the website.
--:-- Noelle King: What we do know, though, is that, you know, in the U.S. and some other countries around the world, they've started calling for investigations into their labor practices and wanting to really cut down on Shein's presence in the country.
--:-- Hilary Milnes: Tell me about some of the criticisms about sustainability and what it means to have very, very fast, very, very cheap fashion.
--:-- Noelle King: There is no way that you can make these clothes at this volume in a way that sustainable.
--:-- Hilary Milnes: I think a lot of companies, and this is across fashion, it's not just Shein. They look at regenerative or organic cotton. They look at alternative materials that put less plastic out into the wash whenever you wash them.
--:-- Noelle King: Shein could overhaul its entire material source, but at the end of the day, if they are still producing at the volume that they're producing at, it's never going to be sustainable.
--:-- Hilary Milnes: It outpaces the amount of production that could ever be healthy for the planet and within planetary boundaries. They've been hit with lawsuits around the toxic lead that is found in their products and the amount of carbon emissions that their facilities produce.
--:-- Noelle King: And then you bring in the human rights issues in the supply chain from top to bottom. It's not a sustainable company.
--:-- Hilary Milnes: Fashion is not a sustainable industry as a whole, but Shein is basically as far as you can get.
--:-- Noelle King: When you look at survey and polling data, you find that Generation Z cares more about sustainability than older generations. They're really concerned with climate change.
--:-- Hilary Milnes: How does Shein hold on to them if it's doing things that are like documented as really bad for the planet?
--:-- Noelle King: I think what it comes down to is no matter who you are, the allure of cheap, trendy clothing is pretty hard to resist when you don't have the means to spend on more expensive fashion.
--:-- Hilary Milnes: And I think over time, clothing itself has become separated from quality. That's just not what people buy clothing for. They are not thinking about what can last. They're thinking about what they'll look the best wearing and what event they're going to and what they need a new outfit for.
--:-- Noelle King: And I think you already have seen a new type of customer behavior pattern come up with Gen Z. They are very into resale. They're very into secondhand shopping and thrifting has gone online.
--:-- Hilary Milnes: And so I think people will justify new purchases by saying, oh, I can just resell it. And then that even comes down to the Shein purchase, even though ultimately these are pieces of clothing that are disposable.
--:-- Noelle King: So it's very contradictory.
--:-- Hilary Milnes: And I think, you know, it's like the hive mind versus the individual urge that's at play.
--:-- Noelle King: All right. This company's been around since 2008. But all of a sudden, I'm reading about it everywhere. In Forbes, in Bloomberg, in The New York Times, in The Wall Street Journal, and in Vogue. Why have we hit like peak Shein here? Why is everyone talking about it right now?
--:-- Hilary Milnes: Where it like blew up into public consciousness was on TikTok.
--:-- Noelle King: I spent $500 on Shine. If you look at Shein's rise in the U.S., it's pretty in step with TikTok's. It's over the past, you know, three years or so.
--:-- Hilary Milnes: And the Shein purchase behavior is like perfect for the TikTok haul. I kind of want to do a try on haul.
--:-- Noelle King: And so you have creators, influencers on TikTok who will buy, you know, hundreds of dollars in Shein clothing, that's a massive haul, and then they're trying it on.
--:-- Hilary Milnes: The hashtag Shein haul is trending everywhere.
--:-- Noelle King: I heard Shein's getting banned or something, or sued or something, so I had to get my last big order in, and let's do a haul.
--:-- Hilary Milnes: And I got this pink case and this pink shirt. I love it. Now we have this houndstooth set. I'm obsessed with it. Love it.
--:-- Noelle King: So I have a few more things coming, because I just kept ordering, and I couldn't stop. So there's definitely going to be part two.
--:-- Hilary Milnes: And it's kind of normalized that behavior, even though it's overconsumption kind of flying in the face of the sustainable ethos or thoughts that Gen Z is said to be having.
--:-- Noelle King: At the same time, you have the pushback. And so that gains momentum as well, because, you know, a lot of people don't agree with Shein's behaviors.
--:-- Hilary Milnes: And at the same time, that's gone up to lawsuits and potential congressional action against Shein as well.
--:-- Noelle King: Which I think also goes back to the TikTok question because we're seeing some more scrutiny around Chinese-based companies over data and privacy.
--:-- Hilary Milnes: And so they've already kind of brought TikTok in front of Congress for that.
--:-- Noelle King: And so the question is, is Shein next?
--:-- Hilary Milnes: And it wants to go public. That's right. So there are rumors that Shein is considering an IPO, which is an initial public offering, which means that it would be a publicly listed company on the New York Stock Exchange or NASDAQ or Wall Street.
--:-- Noelle King: And Shein has not confirmed or commented on whether or not they actually are considering an IPO.
--:-- Hilary Milnes: But we do know that they have spent hundreds of thousands of dollars in lobbying efforts in the U.S. so far this year.
--:-- Noelle King: There's definitely a precedent for Chinese companies doing very well in the U.S., but we'll see, I guess, if the mood changes around it and if they decide, like, OK, this would really open us up to scrutiny.
--:-- Hilary Milnes: Coming up, is Shein really stealing from designers? And if so, how is it doing it? A designer is going to walk us through it.
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--:-- Joanna Cosentino: I am a crochet designer where I sell my crochet plushies, accessories, and I also design clothing and then I sell the pattern.
--:-- Noelle King: I think my designs get popular because nowadays, like the trend I would say is color and expressing yourself through color.
--:-- Joanna Cosentino: My patterns kind of, they're simple, but like they are colorful and like sometimes have a fun graphic on it. And I think people like that.
--:-- Noelle King: It was, I believe the summer of 2021, a follower had messaged me on Instagram and they said that they were online and they saw my strawberry vest.
--:-- Joanna Cosentino: It's like a circular kind of shape. It has mint green on it with pink trim at the bottom and like pink trim around the shoulders. And then in the middle is like a really plump red strawberry with some green leaves.
--:-- Noelle King: And they sent me a screenshot of this strawberry vest that Shein was selling.
--:-- Joanna Cosentino: It was mint green with a pink trim, strawberry in the center, the exact same color scheme and design as mine except it was made with like a fake knit stitch so it was clearly mass-produced with a much cheaper material.
--:-- Noelle King: I sell the PDF pattern to make it yourself on Etsy for about $10.
--:-- Joanna Cosentino: But if I were to make the strawberry vest by hand and sell it, I usually sell it for anywhere between $90 to $100 just based on the materials, the labor.
--:-- Noelle King: They were selling the finished piece for $12.
--:-- Joanna Cosentino: And obviously this wasn't actually crocheted by hand. It was a machine mock knit stitch.
--:-- Noelle King: The fact that they were selling it for $12, which is only $2 shy of just the pattern for it, says a lot about how exploited the labor is.
--:-- Hilary Milnes: This had been happening to like so many crocheters that I follow, like mutual designers in the community that I wasn't surprised when they sent me this message.
--:-- Noelle King: And then I posted on Instagram a side by side of the screenshot of Shein's design and my design with me wearing it next to it.
--:-- Hilary Milnes: And I just announced it to my followers that, hey, this happened to me. Shein is like this really shady company. Like if you can just do not support them.
--:-- Noelle King: The picture kind of blew up.
--:-- Hilary Milnes: That said, there are some interesting nuances about the Shein lawsuit that stand out and make it feel a bit different.
--:-- Noelle King: The most recent lawsuit, I think on the designer side, was a few coming together.
--:-- Hilary Milnes: And they accused Shein of being in violation of the RICO Act, which was set up, I think, in the 1970s to fight organized crime and racketeering.
--:-- Noelle King: So this lawsuit is different in that it's not saying, you know, look at my design. Shein ripped it off.
--:-- Hilary Milnes: This was a standalone offense, but it's saying that design theft is a core part of Shein's business model, basically implying that if Shein did not rip off design from other designers en masse, then Shein would have no business.
--:-- Noelle King: Oh, because there's no, like, there's no Coco Chanel. There's the design house, but there's no designer. So the brains are coming from elsewhere, more or less.
--:-- Hilary Milnes: You know, in this day and age, I think you could look at this and say, this company uses technology to identify trends, and then it makes them.
--:-- Noelle King: How does that become illegal?
--:-- Hilary Milnes: It's not illegal on its own. We look at how many companies and, you know, design houses themselves are starting to use AI and technology to help inform the design process.
--:-- Noelle King: So the narrative is typically how is fashion combining art and science and, you know, where, how do you get the right balance?
--:-- Hilary Milnes: And a lot of fashion is, you know, creating the trends, not just following them, not just repeating them.
--:-- Noelle King: So you need to have some element of, you know, I know what my customer will want before they even want it.
--:-- Hilary Milnes: You know, if you bring in too much data, then you're just going to kind of be in the same repetitive process.
--:-- Noelle King: So Shein is not using its own customer data to inform its design trends and then bringing in exactly what you said, that designer element on top that creates something new out of what they are predicting their customer will want.
--:-- Hilary Milnes: It is sourcing customer data from all over the internet in order to pick up on what trends the customer will want to buy en masse as close as possible to as soon as they're wanting it.
--:-- Noelle King: So it's reactive, it's not leading any sort of design trend.
--:-- Hilary Milnes: You know, you mentioned, is it illegal?
--:-- Noelle King: I think that's what we're going to find out whenever we see how these lawsuits go.
--:-- Hilary Milnes: But one thing that the recent lawsuit from the designers mentioned was that Shein was worse than TikTok in terms of how it protected or you know did not protect customer data and privacy which again is notable considering TikTok was questioned by Congress in terms of how they used customer data in the U.S.
--:-- Noelle King: Okay, so this company is facing just about every kind of criticism a company can face up and down the ladder.
--:-- Hilary Milnes: Has it tried to fix its reputation? Has it done any sort of public outreach?
--:-- Noelle King: Yeah. So I think the most notable example of Shein trying to change the narrative around its business and its practices was the June influencer trip.
--:-- Hilary Milnes: Oh, yeah. Essentially, Shein flew some influencers out to a couple of their manufacturing plants. Showed them around and really fed them topics to talk about.
--:-- Noelle King: Getting to see the whole process of Shein clothing from beginning to end with my own two eyes was so important.
--:-- Hilary Milnes: So they were showing basically how the technology is such a core part of Shein.
--:-- Noelle King: And they were very complimentary in terms of like how advanced Shein was.
--:-- Hilary Milnes: And met some of the workers and talked about how well treated they were.
--:-- Noelle King: Everybody was just working like normal, like chill, sitting down. They weren't even sweating.
--:-- Hilary Milnes: Now I can go home feeling reassured, feeling confident in my partnership with Shein.
--:-- Noelle King: It looks very clean. You know, it did not match any sort of notion of what we think a sweatshop would look like.
--:-- Hilary Milnes: Shein sent influencers to its factories to show them, I guess, that they don't abuse their workers, the influencers took their PR spin for gospel and reported back to their millions of combined followers.
--:-- Noelle King: The takeaway was to be, oh, you know, this is just a very technology-advanced company. They are treating their workers well, and they are, you know, working in environments that are very safe and friendly and, you know, able to be toured in a very modern-looking, like, office environment.
--:-- Hilary Milnes: Okay, so all of this, and on top of that, the OG influencers, American congresspeople, are mad at Shein too.
--:-- Noelle King: You have select committees in Congress who are calling on Shein to change its practices and wanting to dig into these forced labor allegations, as well as looking into Shein's shipping practices into the U.S.
--:-- Hilary Milnes: And so the way that Shein is able to get so much volume into the U.S., they've actually found a shipping loophole.
--:-- Noelle King: It's called de minimis shipping.
--:-- Hilary Milnes: And it basically says that any company that if you're shipping goods under $800 worth of value into the U.S., they will not be taxed import taxes.
--:-- Noelle King: And they will also not be scrutinized as much as any other retailer might be.
--:-- Hilary Milnes: So it's not going through customs basically in the same way.
--:-- Noelle King: So this has really been a key mechanism for Shein when it comes to growing its business in the U.S.
--:-- Hilary Milnes: And I think Congress is now kind of picking up on the fact that Shein, as well as Timu, both building their businesses off of this practice.
--:-- Noelle King: Bulk sales from China over $800 are subject to American tariffs.
--:-- Hilary Milnes: But because each Shein sale is processed individually and cheap, both companies are able to sell hundreds of millions of dollars worth of clothes in the U.S. tariff-free.
--:-- Noelle King: I'm an old millennial, so I heard about Shein not through the TikTok or through the Insta.
--:-- Hilary Milnes: I actually read news stories about it and heard like this is a company that potentially is doing some terrible things.
--:-- Noelle King: And then I went on their website and I was like, oh, my God, this is so cheap. This is so trendy.
--:-- Hilary Milnes: And I filled up a cart and then I thought through what was happening and I closed out.
--:-- Noelle King: I didn't buy anything. I went to L.L. Bean instead.
--:-- Hilary Milnes: And it makes me think, I mean, I am not the generation that Shein is meant to appeal to, but I wonder if you think, does the responsibility for ensuring that this company does better, does it just lie with the people who are going to go on and fill up their carts?
--:-- Noelle King: Absolutely not.
--:-- Hilary Milnes: I don't think we can expect most people to have the Shein to L.L. Bean cart pipeline.
--:-- Noelle King: And I think that a lot of the thinking around customers will vote for their dollars is kind of a myth when it comes to sustainability.
--:-- Hilary Milnes: When your dollar just isn't going that far and you know, you are either, you know, believe you don't have the extra, you know, money to spend on nicer clothing or you're just, you know, someone who's young, you're in college and you have a lot of events that you're going to.
--:-- Noelle King: You're constantly seen on social media. You're keeping up with your friends who are also buying the trends.
--:-- Hilary Milnes: It just becomes such a force that can't count on the customer to make those decisions to such an extent that it will put this company out of business.
--:-- Noelle King: I think at the end of the day, it is going to come down to legislation, regulation and kind of like the market forces to rewrite this company because we just can't ask customers to take them down themselves.
--:-- Hilary Milnes: Hilary Milnes of Vogue the magazine.
--:-- Noelle King: Today's show was produced by Halima Shah.
--:-- Hilary Milnes: Editing by Matthew Collette and Amina El-Sadi.
--:-- Noelle King: Facts by Laura Bullard.
--:-- Hilary Milnes: Engineering by David Herman and Patrick Boyd.
--:-- Noelle King: Now, before we go, we would love it if you could help us out on a show that's going to be airing next week about this new medication for postpartum depression.
--:-- Hilary Milnes: If you've experienced postpartum, if you've heard about this medicine, if you have questions, we would love to hear from you.
--:-- Noelle King: You can give us a call and leave us a message at 202-688-5944.
--:-- Hilary Milnes: 202-688-5944. Give us your name. Tell us where you're calling from. Let us know what's on your mind.
--:-- Noelle King: 202-688-5944. And just know that we might use your voicemail in an upcoming episode.
--:-- Hilary Milnes: Thank you.
--:-- Noelle King: I'm Noelle King. It's Today Explained.
