Few bosses of international companies are more enigmatic than Chris Xu, head of SHEIN (pronounced she-in) – the Chinese fast-fashion company that has been testing the mettle of established giants such as Zara and H&M on the back of explosive growth during the pandemic. As one analyst told CNN Business: “they’re making fast fashion look slow”.
What is disconcerting for incumbents is that this $50bn “mysterious upstart” appears to have come from nowhere, says CNN. SHEIN has succeeded in building “a cult following” among “a global army of teen fans on TikTok” – not just because it turns round the latest fashions at “hyper-fast” speed and sells them at bargain-basement prices, but because of its radically different model. Youthful shoppers are encouraged to check-in daily to win points “for everything from opening the app, to watching live streams and entering outfit design contests”. One describes the experience as like playing a mobile game, adding: “It is pretty addictive”.
Ghosts and shadows
SHEIN has been so disruptive – blowing previous disruptors such as Boohoo and ASOS out of the water – that everyone in the rag trade wants to know what makes it tick. Yet despite its heft, the ecommerce giant has a “ghostly PR presence”, says Charged Retail. One of Google’s most searched queries last year was: “Is SHEIN a legit company?” Indeed, until quite recently, many were convinced that its shadowy founder may not actually be Chinese at all. In 2021, no less an authority than Forbes had Chris Xu pegged as “an American-born graduate of Washington University”.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
The reality is rather different. Local Chinese media report that he was born as Xu Yangtian in 1984 in Zibo in the Shandong province, the son of poor farmers. The family deemed education important and Xu worked his way through high school, winning a place to study international trade at the Qingdao University of Science and Technology, while continuing to work part-time. His big break was getting a job in charge of search-engine optimisation (SEO) at a company in Nanjing that claimed to be China’s “first cross-border ecommerce marketing service provider”. In 2008, he quit to form his own company, Nanjing Dianwei Information Technology, with two partners.
At first the trio traded pretty much anything, says Wired: hawking cheap Chinese-made goods, from teapots to mobile phones, to international buyers. But by 2009 – apparently inspired by his fiancée’s hunt for a wedding dress – Xu had decided to major in apparel. His partners reportedly didn’t agree with the idea and were shocked to arrive in the office one day to discover that Xu had done a flit – having changed some company passwords and, they alleged, retained control of its PayPal accounts. (A SHEIN spokesman disputed these allegations to Wired and said Xu and his partners “separated peacefully”.)
A mob of influencers
In 2011, Xu registered the website that would eventually become SHEIN, calling itself “a leading worldwide wedding dresses company”, but within a year it had broadened into street fashion. According to CB Insights, the company raised its first round of venture-capital funding in 2013 from JAFCO Asia, following that up with a $47m investment in 2015, when it moved its Chinese HQ to Guangzhou to be closer to its supplier-base, and “quietly opened” a US HQ near LA. By 2019, Coresight Research estimated SHEIN was turning over $4bn – a figure that quickly multiplied when the lockdowns hit.
These days, both Xu and his company are reportedly based in Singapore, says The Street – a choice aimed at making “a US listing easier”. But despite rumours of an imminent initial public offering, it has repeatedly been shelved. Meanwhile, SHEIN’s only public face continues to be “a federation of influencers”, filming their “hauls” of cheap clobber, says CNN.
Can SHEIN continue its explosive growth out of the spotlight? The jury’s out, says Wired. Some analysts admit they can’t get their heads around how it makes its numbers stack up; others claim its “ultra-low prices are hiding unacceptable costs” in terms of exploitation of workers and the environment, not to mention potential copyright litigation. As Credit Suisse points out in a research note, it is “highly likely” that US lawmakers will try to rein in fast-fashion – and that “SHEIN in particular will struggle to comply”. Whether he likes it or not, the firm’s mysterious founder may soon find himself in the spotlight.
-
8 of the best houses for sale for around £500,000Some of the best houses for sale for around £500,000 – from a 19th-century stone farm cottage in North Yorkshire and a two-bedroom apartment in Edinburgh’s New Town to a converted Methodist chapel in Norfolk
-
What will the unravelling of US-China trade mean for the economy?What will a US-China decoupling mean for the global economy?
-
Trapped in a time of zombie governmentIt’s not just companies that are eking out an existence, says Max King. The state is in the twilight zone too.
-
America is in deep denial over debtThe downgrade in America’s credit rating was much criticised by the US government, says Alex Rankine. But was it a long time coming?
-
Bank of England raises interest rates to 5.25%The Bank has hiked rates from 5% to 5.25%, marking the 14th increase in a row. We explain what it means for savers and homeowners - and whether more rate rises are on the horizon
-
UK inflation remains at 8.7% ‒ what it means for your moneyInflation was unmoved at 8.7% in the 12 months to May. What does this ‘sticky’ rate of inflation mean for your money?
-
VICE bankruptcy: how did it happen?Was the VICE bankruptcy inevitable? We look into how the once multibillion-dollar came crashing down.
-
Would a food price cap actually work?Analysis The government is discussing plans to cap the prices of essentials. But could this intervention do more harm than good?
-
UK inflation slides to 8.7% - what does it mean for your money?News Inflation has dropped below 10% for the first time in months, but with food prices at a 45-year high, is this good news and what does it mean for your money?
-
Why the UK equity market is shrinkingAnalysis The crisis has been building for 25 years, says Max King, and it will take decades to reverse the trend.
