Shein lights shadows mysterious Chinese online fashion giant that haunts Generation Z - "It is dangerous that there is a business model that sells clothes without question," summarizes Gema Gómez, executive director of the Slow Fashion Next platform, a pioneer in training in fashion, sustainability and business. Gomez talks like this to talk about an unprecedented giant: Shein.

Little is known about the company that emerged in 2008 in the Chinese city of Nanjing, capital of Jiangsu province in eastern China. It is not listed on the stock exchange and the official information about it is practically residual, but its figures, which draw a colossus of fast fashion, are not.

Its business covers more than 220 countries and regions around the world. In fact, in May it became the most downloaded shopping app in the United States, surpassing Amazon, Zara and H&M.

Your billing data, like much of everything around the company, is a mystery. Local media estimates that in 2020 the company recorded a turnover of more than 63,500 million yuan (9,715.7 million euros), double what it entered the previous year.

"Without a park of physical stores that add overhead and with products manufactured and exported largely to the rest of the world, Shein was particularly well positioned to weather the pandemic," says Luis Lara, professor at ISEM Fashion Business School.

Shein lights shadows mysterious Chinese online fashion giant

The figure, in fact, far exceeds what they generated through the online channel Inditex and H & M: 6,612 million scored by the Galician giant and 5,172, for its part, by the Swedish. And all this, both companies are experiencing exponential growth in two divisions.

Chris Xu is the name behind the company. Sometimes the alias of Sky Xu appears and sometimes the Chinese name Yangtian Xu, but in reality it is the same person. The manager was working in a marketing consultancy, where he specialized in SEO techniques. Xu is therefore a specialist in what has to do with the positioning of products within search engines such as Google and other platforms.

There he learned the commercial value of selling Chinese products to international markets, according to local media QQ news. So much so that Shein only sells outside its borders.

"After starting a journey as a manufacturer, explains Lara, the executive moved to direct marketing to end customers, tempting European and American consumers to a huge variety of product-unbranded - and low prices".

"It's much cheaper to sell clothes than to create a brand," says sustainable communication consultant Pablo Galaz.

Shein lights shadows mysterious Chinese online fashion giant

In 2012— and in a first approach -, Xu registered the domain sheinside.com Three years later, when internationalization was already a reality, he changed it to Shein.

Now, the company and the hundreds of factories that collaborate with it have merged into a productive cluster that has close similarities with the headquarters of Inditex, in La Coruña (Galicia), as Forbes notes.

In this way, Shein would have 4 R & amp; D facilities in China; 6 logistics centers spread around the world and 7 customer service centers. It is estimated that it employs 10,000 people, a small part compared to the more than 140,000 employees that the Galician giant adds.

No less important is its legion of designers, estimated to be around 800.

Earlier this year, the company launched its SheinX program for young artists to whom it provides a percentage of its sales. Galaz details that betting on new designers –mostly freelance– gives the company "a cost savings and an investment in terms of the growth of its stock".

Shein lights shadows mysterious Chinese online fashion giant

All this while lawsuits against the company for infringing intellectual property pile up: AirWair International, footwear manufacturer Dr. Martens, has been the last to go public. Levi's Strauss did it before.

Gómez says that in reality they do not design anything, but simply transfer trends that they detect through tools such as Google Trends. "As copies and you are not original, you need to make a lot of garments to have reliable data on what is going to be sold at a better rate," add other voices.

"Being in China they have the ability to control production closely," adds the director of Slow Fashion Next. On the other hand, its manufacturers must be located a maximum of 5 hours ' drive from the supply center, according to Bloomberg.

Your suppliers, in addition, must complete the design and production process in about 10 days, well above the famous 3 weeks it takes Zara to replenish a product.

This speed, says Angie Choroco, an expert in communication for fashion brands, is due to the fact that all processes —from pattern making to packaging— are centralized in a single company.

Shein lights shadows mysterious Chinese online fashion giant

Shein presents every month an average of more than 15,000 products– 500 per day-with prices ranging from the euro to almost 100 euros for its most premium range, Moft, according to its website.

They are quite low prices compared to those of Zara, which are around 35 euros on average, according to the price adjustment it makes according to the market it operates. Within the domestic market the average price drops to 28 euros. H & M, on the other hand, remains at around 27 euros per item in all its markets.

"For the model to work —says Raúl González, CEO of Ecodicta-it takes a high turnover, low price and quality garments, in addition to cheap labor. All of this interrelates and allows for room. That yes, as long as it sells a lot".

"The moment in which the price is no longer a differentiator in the sale and you can not compete with firms for that attribute, things become more difficult, the strategy changes and the margins too," Galaz adds.

Separate chapter deserves its social responsibility page. Despite reflecting an environmental commitment, it is not possible to find a single certification that attests to this. All this with the sector on its way to sustainable fashion.

Shein lights shadows mysterious Chinese online fashion giant

The executive director of Slow Fashion Next recalls when they proclaimed that they had the SA8000 certification —which reflects that the company considers the social impact of its operations. Unable to prove it, the old page disappeared.

"The interesting thing about this is that even if they don't have those certifications, they realize that they are necessary. It's only a matter of time before the hare rises," he adds.

Lara, for her part, explains that the Shein model only has a future if there is a lack of concern for sustainability and the environment: "It moves in the opposite direction to that of the sector".

The CEO of Ecodicta maintains that in his business model there is his condemnation: "Manufacturing in a massive way causes externalities at an environmental level that are not paying and that will cause the paradigm shift", he adds.

Shein lights shadows mysterious Chinese online fashion giant

But this in turn leads to another reality. This time social:

"There is a whole generation of young people mired in unemployment who do not know what is hidden behind a photo on social networks with a sweater they have just received," says Gómez.

Lara also agrees on this point: "Shein takes advantage of her huge community of young people and thousands of micro-influencers who post images wearing their outfits in the hope of being promoted by the official account."

All experts agree on the same thing: young Generation Z-born in the late 90s-find Shein irresistible. A wide variety of products and low cost prices do the rest.

Vicente Narváez, expert professor in fashion at the Antonio de Nebrija University, details that in the past designers thought about the reaction of the client before launching a creation.

"It was an exercise in getting it right or failing. With Shein, all that has changed, " he reflects. The company capitalizes on a change of script in the industry: the art of trendsetting based on trial and error.

"First they launch,"he adds," sometimes very small quantities to adjust future productions, and then they analyze purchasing patterns to adapt their subsequent products."

Shein lights shadows mysterious Chinese online fashion giant

For his part, the professor of ISEM Fashion Business School explains that just as "Aliexpress has killed the corner bazaar, Shein wants to do the same with the players of the fashion sector and be itself a reference".

"It represents— he points out-a threat for retailers because from China and the supplier factories you can reach the final consumer directly by eliminating intermediaries from the equation".

However, he adds that after 2020 of exceptional results, there is a need to monitor its activities. "Its status as a Chinese technology company can generate problems in countries like the United States that is engaged in an underground trade war with China."

Shein's reality is to lead an ecosystem with fierce margins, but no ability to create a brand. Given this, rumors that point to its immediate future through the acquisition of a local or global fashion chain to strengthen its model continue to gain ground.