Shein’s strategist for Europe and the USA: “We produce only 200 pieces of clothing. If it is successful, we will mass produce it” | Economy

Shane is the fashion industry’s greatest revolutionary in recent years. However, little is known about his business. Only that its business valuation reached $64,000 million after the latest round of financing, that it sells in 150 countries and that its workforce reaches 16,000 people, 10% less than Inditex. It is estimated that his income has already surpassed that of the Galician giant, but Shein, who was born in China and is now based in Singapore and operates only in an online channel, does not share his financial information. The focus is on its upcoming IPO and whether its supply chain complies with minimum labor rights. Its head of strategy and corporate affairs for North America and Europe, Peter Pernot-Day, doesn’t go beyond “speculation.”

Ask. How do you define Shane’s business model, its operation and its impact on the fashion industry?

Reply. Our vision is to make fashion accessible to everyone. The principles behind this idea have resulted in something unique in the industry. A model that allows us to initially produce from 100 to 200 pieces of clothing, put them up for sale on our website and check the interest they generate among our customers. Only when we discover that this is happening do we produce them. This allows us to offer a wide range of clothing at affordable prices.

question. They are not the first to offer clothing at low prices.

RBut our innovation solves a problem in retail. Everyone wants to put the consumer at the center, to make sure they like their clothes… Our model truly allows customers to choose what they want to wear. They are not limited to a specific design or capsule collection. It changed the industry for us. Another point is that the costs associated with production are reduced by making these few copies rather than producing more until we know what will sell. We can significantly reduce associated costs. Some estimates put the industry’s excess inventory at 20% to 30% of the total. We are significantly lower. This is another thing we are changing about traditional retail.

TO. They are a Chinese company, but they moved to Singapore. Why did they take this step?

R. We have a model that tends to be localized. We are present in 20 countries and offices in key markets: North America, Latin America, especially Brazil, and Europe, mainly Dublin and Poland. Having these local teams allows us to reach a wider customer base. We mainly sell outside of China. And I think moving to Singapore was a logical step in implementing this strategy.

TO. Little is known about its founder, Sky Xu. There are almost no photographs of him.

R. He is one of the four founders of the company and the current CEO. He is actively involved in the day-to-day operations, development of the company’s vision and strategic direction. He is a visionary leader in his contributions to retail, especially the concept of the on-demand model.

TO. We also don’t know much about the company’s performance. Why aren’t they public?

R. We are a private company and not listed on the stock exchange, so we do not disclose figures.

TO. Many private companies publish their financial results.

R. Our position is to comply with all laws, regulations and requirements placed on us.. If there is a legal requirement to describe our information in detail, we will comply with it to the letter. An example is our UK subsidiary, whose reports we publish. (Shein UK turnover reached £1.55 billion in 2023)

We are a private company that is not listed on the stock exchange and therefore do not disclose our financial performance in detail.

Peter Pernot-Day

TO. Its profits are estimated at $2 billion and 45 billion in products sold. Are these the correct numbers?

R. I can’t confirm this.

TO. Your company’s performance then remains in the hands of third-party assessments.

R. As I said, we strive to be transparent where required by law. There are many ways to run a company and we have chosen the one to be transparent where we need to be, but we are not going to reveal anything about our current financial position.

TO. Do you think Shein is a transparent company?

R. We like to talk about our business and be open and accessible to governments, civil society and the press. I think transparency is a somewhat subjective term. We believe that we are very transparent. Others may disagree. It depends on the perspective. We comply with all transparency, governance and publication standards applicable to private companies. When required by law, we will disclose information. We’ve done a great job of transparency. No company works 100%. Apple will never tell you what new product they are going to develop.

Transparency is a somewhat subjective term. Apple will never tell you what new product they are going to develop.

Peter Pernot-Day

TO. Is the company willing to share all the information required for a listed company?

R. Shein has sound management and accounting and control over its management. We have an international management team with many years of experience. I cannot comment on whether we will publish the information. I have a lot of trust in my colleagues.

TO. Will they be listed on the London Stock Exchange?

R. I can’t comment on speculation.

TO. It is known that they registered the relevant documents.

R. I know this information, but I cannot confirm or deny it.

TO. It was reported that US regulators did not allow them to list in New York due to alleged labor abuse issues. There are similar concerns in the United Kingdom.

R. I can’t comment because I can’t confirm if there is a process. I would argue that any multinational corporation of our size and scope should be subject to scrutiny by governments, regulators, the media or customers. We are open and ready to answer these questions. I don’t think it’s inappropriate to receive them.

TO. What is the relationship with the Chinese government? It is said that he did not like the move to Singapore.

R. We are a Singapore-based company and have government relations teams in the major regions where we operate. Our main objective is to develop our business and supply products to customers. I cannot provide further details about conversations with any government agency.

TO. Sooner or later will they become public knowledge?

R. Again, I can’t comment. I would tell you that if we were to implement this process, the main incentive would be to increase transparency, as we have been asked to do. Such demands placed on us will be resolved. If the company decided to do this, this would be one of the advantages.

TO. Are concerns about labor practices in China justified?

R. In our sustainability report, we include details of our audits, analysis of where we went wrong, and this speaks volumes about our commitment to ensuring there are no labor rights violations in our supply chain. We have a zero-tolerance policy and if there are cases, we disclose them and take action. We work to make the supply chain enjoyable for all workers. This means paying wages, keeping facilities safe, or ensuring there is no child labor or abuse.

TO. How many suppliers do you have?

R. 5800. Mainly micro, small and medium companies. Part of the success of our on-demand model comes from these types of companies. Bringing them into our delivery model has led to significant transformation.

TO. They were involved in purchasing cotton from areas of China such as Xinjiang where labor abuses had occurred. Do you buy cotton from this area?

R. I think the best person to answer this question is Ortain (a cotton provenance company) who we work with and who will explain our cotton program.

TO. Will selling an evening dress for 15 euros make a profit?

R. The company is profitable. We have shown that there are many inefficiencies in the traditional retail model that can be addressed through technology. And this is where clients win. One of the biggest misconceptions about our business is that we sell cheap because of volume. No. We achieve economies of scale through cost efficiencies, such as avoiding excess inventory, or through purely online sales. Physical stores have many benefits, but they can also be very expensive. We save by avoiding these costs, and that’s how we set our prices.

TO. Are you considering opening physical stores?

R. Not now. We will continue to use the experience of temporary stores, and I do not see them becoming permanent.

TO. They were accused of copying the design. Are you having problems at this moment?

R. We take the protection of intellectual property rights seriously. Our controls include a team of experts in California and China that review products to ensure they do not infringe other intellectual property rights. They rely on an artificial intelligence platform that scans the images and compares them. Even customers can warn us that a product may be a copy.

Physical stores have many benefits, but they can also be very expensive.

Peter Pernot-Day

TO. Now you accuse Theme of copying you.

R. Shein and Temu have a dispute in the United States. We filed a lawsuit and are waiting for a court date. I can’t comment further.

TO.What role does Spain play in your business?

R. This is a very important market. It’s dynamic and competitive. And very talented. We have 148 Spanish designers on our platform for creatives.

TO. Spain is the first European country where they opened their market to local brands. Does this mean that this is your main market on the continent?

R. In the top 3. I can’t say more specifically.

TO. Are you planning to invest here, for example at the logistics level?

R. I can’t talk about logistics investments because those are decisions that are announced when they are made. Regarding direct investments, I can say that in Spain we have a team that is growing, we have allies in last mile delivery, in logistics centers that process deliveries and returns. All this is beneficial for the country’s economy. We don’t give investment figures, but we see a lot of opportunities in Spain and I expect there will be even more as our business develops here.