Shein Boosting UK Expansion: Exploring Acquisition of Missguided

Since bursting onto Western markets, Shein, the popular Chinese fast-fashion brand pronounced she-in, has become a must-have for young women with its affordable and trendy designs.

Recently, Shein made headlines in the UK by entering talks to acquire clothing brand Missguided from Mike Ashley’s Frasers Group. Additionally, the brand opened a pop-up store in Oxford Street during London’s Fashion Week, further solidifying its presence in the UK.

The company, founded in Nanjing, China in 2012 and now based in Singapore, experienced a surge in sales during the pandemic as online shopping became more popular during lockdowns.

Shein’s business in the UK is thriving as well. According to its inaugural accounts filed with Companies House, the British arm reported sales of £1.1 billion and a profit of £12.2 million for the 16-month period ending December 2022.

However, critics argue that there is a darker side to this fashion phenomenon. Limited information is available about the company’s overall finances and its billionaire founder.

Getting in on the act: Pop star Katy Perry promoting Shein

Getting in on the act: Pop star Katy Perry promoting Shein

Shein’s success is fueled by its ability to produce thousands of new designs daily and heavily rely on direct selling through social media, often partnering with influencers on platforms like TikTok.

Celebrity endorsements have also contributed to its popularity, with stars such as Katy Perry, Rita Ora, and Hailey Bieber associated with the brand.

It’s no wonder Shein appeals to budget-conscious young people in the West. The company’s UK website showcases women’s dresses starting at £4.85 and sweatshirts for just over £5.

Shein boasts over 10,000 employees and claims to sell its products in more than 150 countries. With a recent valuation of over £53 billion, it is believed to be the world’s largest fast-fashion retailer, surpassing the combined value of Swedish chain H&M and Zara-owner Inditex.

In July, the company’s executives communicated to investors that it had achieved record profits in the first half of 2023, although the exact figure was not disclosed.

The company is also supported by major investors, including New York investment manager Tiger Global and the Chinese arm of US venture capital group Sequoia.

Despite its remarkable success, little is known about Shein’s internal operations or its enigmatic founder, Xu Yangtian, also known as Chris Xu. Born in China in 1983, Xu is one of the country’s wealthiest individuals with an estimated fortune exceeding £8 billion. Leaked stories depict Xu as a ruthless and ambitious tech entrepreneur who navigated the fiercely competitive corporate world of fast fashion to become its king.

Anecdotes from former business partners reveal that Xu collaborated with them to establish an e-commerce venture called Nanjing Dianwei Information Technology in 2008. However, in 2012, Xu founded SheInside, a wedding dress retailer and precursor to Shein, which led to a falling out with his partners. They claim that Xu disappeared from the office one day, allegedly taking control of Nanjing Dianwei’s PayPal accounts, although the company denies this.

In 2015, the company rebranded as Shein and relocated its headquarters to Guangzhou while opening an office in the US two years later.

Despite its immense achievements, Shein has faced criticism as it expands its market share in the global fast-fashion industry. Earlier this year, the brand was embroiled in a scandal when it invited several US influencers to one of its factories in Guangzhou, sparking accusations of attempting to mask labor practice controversies.

Activists, including Hakan Karaosman, a professor at Cardiff University and chairman of the Union of Concerned Researchers in Fashion, argue that Shein’s ultra-fast fashion model contributes to environmental degradation and can only sustain itself through excessive clothing production and distribution.

This business practice often leads to significant amounts of textile waste being dumped in developing countries.

Shein has also faced repeated accusations of plagiarism and copying the work of fashion designers for its own website.

The brand’s labor rights record has attracted attention from US lawmakers, potentially posing a threat to its plans for a New York listing. In May, a group of US politicians urged the Securities and Exchange Commission to block Shein’s planned IPO until the company could verify that it does not exploit forced labor from China’s oppressed Uyghur minority in its factories.

Despite these setbacks, Shein remains unwavering in its ambitions. The brand has been gradually shifting its operations towards Singapore, distancing itself from China’s strict business regulations and listing rules for overseas markets.

Perhaps Xu hopes to avoid the fate of Jack Ma, the outspoken founder of Alibaba, whose public appearances have been scarce since criticizing China’s regulatory regime.

As they say in fashion, it’s not a good look.

A Shein spokesperson stated that the company takes intellectual property claims seriously and is committed to respecting human rights, with zero tolerance for forced labor.

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