Online fashion giant Shein plans US$2 billion global supply chain base in Chinese port hub

South China Morning Post

February 11, 2022 at 4:30 AM·3 min read

Shein, the fast-growing Chinese fast-fashion online retailer, plans to invest 15 billion yuan (US$2.3 billion) to build a global supply chain centre in the southern Chinese port city of Guangzhou, a new government plan revealed.

The project will cover an area as big as three football fields, according to an official list published Tuesday by the provincial Development and Reform Commission, showing key construction projects slated for 2022 in Guangzhou. As of Friday, however, the document could no longer be found on the government website.

Shein declined to comment on the plan when reached by the South China Morning Post on Friday.

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Made in China but not for China: why Gen Z loves Shein

Founded in 2008 in the eastern city of Nanjing by former wedding dress exporter Chris Xu, Shein now sells women and men's wear, accessories, and beauty products in more than 200 countries.

Last year, the company dethroned Spain's Zara and Sweden's H&M as the top-selling fast-fashion retailer in the US, according to data tracking company Earnest Research. It is currently the world's largest online-only fashion company, according to research firm Euromonitor International

As of this week, Shein is the second most downloaded iOS shopping app in the US and Canada, trailing only e-commerce giant Amazon, according to market intelligence platform Similarweb. The app, however, is unavailable in China.

The retailer is currently valued at US$50 billion, with annual sales reaching 60 billion yuan in 2020, according to a company job posting.

Last month, Reuters reported that Shein was planning an initial public offering in New York this year, with Xu considering a citizenship change to bypass proposed rules in China that would create additional hurdles for domestic companies to list overseas.

Xu, an extremely low profile entrepreneur, has made few public appearances. According to the government plan, Shein's new supply chain headquarters will be located in Zhongxin town in Guangzhou's Zengcheng district.

How US-China trade war turbocharged shopping app Shein's growth

Guangzhou is already home to Shein's main supply chain base, which mobilises thousands of workshops to fulfil orders through a digital central system based on real-time demand, according to Chinese media reports.

Following an agile model called "small order, fast return", Shein only produces a small amount of each new product, all of which can be manufactured within a week. The company then decides whether to increase or pause production based on sales numbers.

Shein's success has been attributed to its on-trend products, digitised supply chain, as well as effective social marketing campaigns targeting Gen Z and millennials, brokerage firm Zheshang Securities wrote in a recent research report.

The business model has drawn Chinese rivals hoping to replicate Shein's results by leveraging the country's massive manufacturing capacity to sell overseas, including Cider, Cupshe, and TikTok owner ByteDance's Dmonstudio.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2022 South China Morning Post Publishers Ltd. All rights reserved.

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