THE MUSCLE BEHIND SHEIN’S MODEL
There is, however, one group with reason to celebrate: the vast network of suppliers in southern China that powers the retail juggernaut.
Concentrated in the southern part of Guangzhou, thousands of small factories, making mostly clothing, are the muscle behind the ultra-fast-fashion model. A close-knit, tightly integrated supply chain located in a compact area allows Shein to identify trends, place tiny initial orders and get them ready for delivery within two weeks.
That is especially true in women’s fashion, the category it still dominates, despite intense competition from PDD’s Temu.
The irony is that this is the network that the fashion giant had once tried to play down by moving to Singapore and rebranding as a global company to appeal to Western investors. That strategy failed due to fierce US opposition, as well as an inability to reproduce in countries like Brazil and Turkey the speed, flexibility and low costs of its primary production base.
The IPO should bind those suppliers even more closely to Shein. The company plans to devote 40 per cent of the proceeds to technology, according to the prospectus, including investments designed to improve the manufacturing network at the heart of the business.
Read the full article here
