Shein organizes fashion shows to promote its online sales.
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It triumphs around the world for its ridiculous prices and the great variety of its offer, but its rise in the fast fashion market is not without problems.
In Japan and the United States, online clothing company Shein faces legal problems following complaints from its competitors, while in China the government is investigating.
Its expansion has put it in the eye of the storm at a time when the company wants to go public.
Japanese company Uniqlo sued her for allegedly copying a successful small bag nicknamed “Mary Poppins.”
The lawsuit demands that Shein stop selling its product, which Uniqlo says looks too similar to its mini crossbody bag. It is an “inferior and illegal” copy, Uniqlo said.
The Uniqlo bag has become famous on social media for being compact and, at the same time, very spacious.
The nickname Mary Poppins refers to a film starring Julie Andrews, in which a babysitter takes almost everything out of her magic bag.
Shein, founded in China but based in Singapore, has not yet commented.
Uniqlo said Thursday it will seek compensation of nearly $1.1 million for what it considers an infringement of its intellectual property.
The legal war with Temu in the United States
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Shein is one of the giants selling cheap clothes online.
Shein and its rival Temu have become fast-growing online shopping platforms.
While Shein holds the largest share of the “fast fashion” market in the United States, Chinese company Temu became the most downloaded app in the country last year.
Within a few months, Temu made his mark in the United States and his business grew rapidly.
Amid a legal battle between the two giants, Shein is suing Temu alleging that he hired social media influencers to make unfavorable comments against its brand.
Temu, meanwhile, has sued his rival before the US justice system for alleged intellectual property theft and for violating the country’s antitrust law by preventing its suppliers from working with the competitor.
Temu said his rival used alleged “mafia-type scare tactics” to force its suppliers to sever ties with the Chinese firm.
Shein called the lawsuit “meritless” and promised a legal counteroffensive.
“We believe this lawsuit is without merit and will vigorously defend itself,” the company said.
Research in China
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The company has opened some stores. Customers usually wait in long lines.
China has its eyes on Shein
According to the Wall Street Journal, the Chinese government is conducting a review of the company’s data management and sharing practices.
China’s Internet regulator is studying how Shein handles information about its partners, suppliers and workers in China and whether the company has the ability to protect such data from leaks abroad, the newspaper reported, citing sources close to the issue.
The government would also be interested in what kind of Chinese data the company discloses to regulators in the United States, as Shein seeks to make it public there.
Shein did not comment on the matter.
Shein’s expansion into Latin America
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Shain makes clothing in Brazil and plans to open a store in Mexico.
The fashion giant began producing clothing in Brazil in 2022 and now plans to ship products from its Brazilian factory to other Latin American markets.
Brazilian production director Fabiana Magalhaes commented that “the idea is that by 2026 Brazil will be ready to supply Latin America.”
The company has a network of warehouses around the world, including distribution centers in Brazil and Mexico.
Considered a key country in its expansion strategy across Latin America, Shein intends for Mexico to enter its “integrated markets” program, offering products from external sellers alongside its own products.
Marcelo Claure, Shein’s president for Latin America, commented last year that the country could become not only a supplier to Central America, but could also conquer the US market.
According to Reuters, Shein’s growing presence in Mexico comes as the company faces opposition from some lawmakers in the United States who support eliminating a tariff exemption used by e-commerce companies shipping low-cost products from China directly to buyers.
A similar idea was put on the table by the former president of Brazil, Jair Bolsonaro, to control what he called “unfair competition” between Chinese companies and local producers.
Harsh criticism
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The company is criticized for its environmental impact, alleged theft of intellectual property and for working with suppliers who do not comply with labor laws.
Shein, very popular among young people, has been criticized for its “fast fashion” business model, based on the production of large volumes of garments, with a lot of rotation and at very low prices, which generates a strong environmental impact.
The harshest criticism comes from journalistic investigations accusing them of collaborating with suppliers who violate labor laws.
The brand defends itself by claiming to have carried out “periodic internal audits” and to apply a “rigorous” code of conduct compliant with the law.
“When violations are detected, we take additional action, which may include termination,” the company said.
And as for intellectual property rights, it was criticized for allegedly copying the work of little-known designers, which Shein denies.
A senior Shein executive told the BBC in late 2021 that they have a team that reviews new designs offered by their suppliers before they are offered on their website, to try to filter out possible imitations.
Since its launch in 2008, the company, founded by Chinese entrepreneur Chris Xu, has become one of the largest online fashion marketplaces in the world.
In 2022, its market value had been estimated at around $100 billion, although that estimate fell significantly during a fundraising round last year, according to Reuters.
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