Just Style

Week in review: Shein’s ‘profit-over-people’ strategy could prove costly

Shein could be set to carry out the second-largest IPO in the history of the London Stock Exchange soon but once again it is making headlines for the wrong reasons; this time with allegations of “widespread” use of toxic chemicals in children's products. When will the scandals end?

Over the weekend, Sky News learned that Shein is preparing to file a prospectus with the Financial Conduct Authority for approval ahead of its potential float that could take place in June.

The IPO would value Shein at around £50bn ($63bn) and could make it London’s most high-profile public float for years.

But ethical concerns over Shein's business practices have sparked global attention. Last week (30 May) South Korean regulators claimed to have found phthalates at levels hundreds of times above safety limits in Shein kids' leather shoes and goods. It's a stomach-churning revelation that should jolt any parent.

It's not the first time the Singapore-based e-commerce giant has been the subject of such allegations. In 2022, a report from Greenpeace alleged Shein had a “business model based on hazardous chemicals and environmental destruction” after 15% of 47 products that were tested contained toxic chemicals that broke EU regulatory limits, with five breaking the limit by 100% or more.

The allegation of toxic chemicals was explained away with corporate platitudes about the company’s dedication to safety testing and selling "reliable products," said a Shein spokesperson.

In the latest accusation, a spokesperson told Just Style that Shein took its product safety very seriously and “immediately removed” the products from its site whilst conducting an investigation.

But repeat offences on the chemical safety front are raising questions around how seriously the ultrafast fashion giant actually takes the matter.

It also points to why the US has been keen to repel Shein from further penetrating the market, rebuffing attempts for a New York bourse listing.

What is rather concerning is that the UK, on the other hand, seems quite keen to welcome Shein with Jeremy Hunt, chancellor of the exchequer, meeting with Shein bosses in February and urging them to pursue a float.

A recent parody by Saturday Night Live (SNL) exposed how the public is effectively overlooking Shein's behaviour in part due to the benefits it gets such as access to the latest styles at rock-bottom prices. The sketch portrayed a fictitious ultra-fast fashion brand "Xiemu" churning out $5 lead-tainted dresses and gasoline-scented tops, complete with Hollywood a-lister, Jake Gyllenhaal, having a nosebleed after sniffing his “lead-free” shirt.

Shein has attempted to brush off such criticism as unfair isolated incidents. But as reports continue to pile up with even more damning evidence against it, it is clear its profit-über-alles (above all else) attitude that enabled its dizzying ascent is now its greatest liability.

Shein is rapidly approaching that moment of truth—a real awakening. Miss that wake-up call, and the fall could be as steep as the rise.