SHEIN Refutes Risk of Shutdown in the US
A recent report suggested that Chinese fast fashion retailer SHEIN could face the threat of a “Shut Down SHEIN” campaign. This movement is comprised of a coalition of individuals and businesses working towards exposing SHEIN’s questionable and anticompetitive business practices. SHEIN has denied the allegations and affirmed its adherence to US laws and regulations. The company also stated its determination to protect its rights and interests.
According to Shut Down SHEIN, SHEIN’s policies establish users as importers of record when they create an account, meaning every user is an individual importer. The company itself contends it is not the importer and not responsible for tariffs. As long as a SHEIN order is below $800, it does not trigger reporting requirements to US Customs and Border Protection. As a result, SHEIN is shipping billions of dollars worth of merchandise into the US, but because each account holder is the “importer of record,” SHEIN avoids the tariffs that every other legitimate business must pay.
In addition, the new coalition alleges that SHEIN maintains strong connections with TikTok and has been disregarding US laws and ethical business practices. Recently, TikTok CEO Shou Zi Chew participated in a special hearing in the US, where several topics were discussed, including the protection of user privacy and consumer information on TikTok, the impact of platform content on minors, and TikTok’s relationship with Chinese officials.
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In the first three weeks of March, PDD Holding’s Temu became the most downloaded app in the US, followed by TikTok’s video editing app CapCut, TikTok itself, and SHEIN, according to market analysis firm Sensor Tower.
Founded in 2008, SHEIN has a well-defined target market of female consumers aged between 18 and 35. By offering low-priced and frequently updated styles, SHEIN gained rapid entry into the North American market, largely through its association with TikTok. However, as the initial period of cross-border e-commerce growth has slowed down, SHEIN’s market expansion has also begun to decelerate.
The company’s financial report shows a significant decline in its revenue growth rate and profit income over recent years. In 2021 and 2022, the company’s revenue growth rate decreased sharply to 60% and 52.8%, respectively. Additionally, due to increased air transportation and production costs, the company’s profits decreased by 36% year-on-year, falling to $700 million in 2022.
Apart from the US, SHEIN is also encountering challenges in South Africa. According to The Wall Street Journal, the South African government announced an investigation into SHEIN in mid-March following complaints from the local textile union and industry association that the company may be exploiting tax loopholes to gain an unfair advantage in Africa’s most developed economy.