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2021-09-17 14:02:03

GUANGDONG, South China — Inside a cramped, dingy workshop, workers hunch over sewing machines under the greenish glow of fluorescent strip lights.

It’s past 9 p.m., and the temperature inside the room is sweltering, but the women continue working at a rapid pace. As they finish each piece of clothing, they slip it into a turquoise plastic bag and toss it onto a towering pile of ready-to-ship items.

Each bag bears the same five letters in bold capitals: “SHEIN.”

You can listen to an audio version of this article via “China Stories,” a SupChina-produced podcast sharing the best writing on China.

The workshop is one of hundreds of tiny, unregistered businesses in this ramshackle “urban village” in Guangzhou — a southern Chinese megacity — that churn out garments for the secretive fast-fashion powerhouse Shein.

The ecommerce platform has become a favorite of Gen-Z shoppers in the West by offering thousands of new styles a week at ultra-low prices. It’s now valued at an estimated $15 billion and recently overtook H&M and Zara as the United States’ top-selling fast-fashion retailer.

Guests attend the Shein Summer Pop Up Preview Evening in London, May 23, 2019. David M. Benett via People Visual

Guests attend the Shein Summer Pop Up Preview Evening in London, May 23, 2019. David M. Benett via People Visual

But a Sixth Tone investigation has found that Shein uses a range of troubling practices to ensure it can produce clothes quicker and cheaper than the competition — tactics that leave thousands of Chinese workers vulnerable to exploitation.

In July, Sixth Tone traveled to Guangzhou — Shein’s main production base in China — and spoke with dozens of workers, factory bosses, and workshop owners involved with the company’s supply chain. While the sampling only covered a limited part of Shein’s sprawling Chinese supply network, this reporting uncovered a consistent pattern of loose oversight and poor working conditions.

Many of Shein’s manufacturing suppliers cut costs by subcontracting orders to small workshops located inside rundown “handshake buildings” — residential blocks so densely packed together, locals joke that neighbors in different towers can almost touch each other.

It’s a step backward in terms of the protection of workers’ rights in China.

These workshops frequently flout Chinese labor laws and are considered a fire risk, local factory owners and labor experts told Sixth Tone. Many are illegal businesses and have no formal contract with Shein, making it difficult for the company to verify whether workers are well-treated.

At a major Shein logistics center, meanwhile, warehouse staff said they struggled to cope with the intense work, which can involve walking dozens of kilometers a shift with few rest breaks. Shein recruits many of the order pickers via dispatch agencies — a controversial practice in China that can prevent workers from defending their rights — staff at the center told Sixth Tone.

Though Shein is far from alone in using such practices, experts told Sixth Tone that the company’s aggressive business model — and especially its use of an opaque network of subcontractors — is undermining efforts to improve labor conditions in China’s fast-fashion industry.

“(It’s) a step backward in terms of the protection of workers’ rights,” said Huang Yan, a professor at the South China University of Technology in Guangzhou whose research focuses on labor conditions in China. “The interests of workers are more likely to be ignored.”

A view of the interior of a factory that works as a direct supplier to Shein, in Guangzhou, Guangdong province, July 2021. Wu Peiyue for Sixth Tone

A view of the interior of a factory that works as a direct supplier to Shein, in Guangzhou, Guangdong province, July 2021. Wu Peiyue for Sixth Tone

Opening the ‘black box’

Shein has gone to great lengths to keep its supply chain hidden from the world. Despite its spectacular success, the company has a reputation for extreme secrecy, leading one investor to dub it “China’s most mysterious billion-dollar company.”

The firm started out as an e-commerce outfit based in the eastern Chinese city of Nanjing in 2008, which focused on exporting made-in-China wedding dresses to the Western market. In 2012, it adopted the name SheInside.com and expanded into a broader range of women’s apparel.

The turning point for the company came three years later, when its founder — Xu Yangtian — decided to reinvent the business as a fast-fashion brand. He shortened the company name to Shein and shifted its headquarters from Nanjing to Guangzhou — China’s leading clothing manufacturing hub. 

There, Xu hired a team of in-house designers and built up a large supply network among local factories. This allowed Shein to identify designs trending in the West and produce similar items ready for export in just a few days — a model now known as “ultra-fast-fashion.”

A view of Shein’s office buildings in Guangzhou, Guangdong province, July 2021. Wu Peiyue for Sixth Tone

A view of Shein’s office buildings in Guangzhou, Guangdong province, July 2021. Wu Peiyue for Sixth Tone

It was a winning formula. From 2017, the company’s sales skyrocketed, and in May 2021 Shein surpassed Amazon as the most downloaded shopping app on Apple’s U.S. App Store.

Yet Shein has refused to disclose how it sources the clothes on its platform. Unlike other global fast-fashion brands, which have gradually become more transparent about their supply chains in recent years, the Chinese company — in the words of one domestic media outlet — remains a “black box.”

We are trying to gain greater control over those factories.

In July, Reuters reported that Shein had failed to make public disclosures about labor conditions in its supply chain, which are required by law in the United Kingdom. The latest Fashion Transparency Index report, compiled by the non-profit Fashion Revolution, gave Shein a total score of 1 out of 100 — above brands such as Tom Ford and Quiksilver, but far below the likes of H&M, Gap, and Nike. On supply chain traceability, the Chinese company was among the companies to score zero.

The company is so determined to maintain a low profile, it has even on several occasions ordered staff members to delete social media posts celebrating Shein’s success, a company insider — who requested anonymity as he wasn’t authorized to speak with media — told Sixth Tone.

The firm’s lack of transparency, however, has attracted unwanted media attention in recent months, with many questioning whether Shein’s low prices are sustainable while maintaining high ethical standards.

Into the urban villages

In Guangzhou, it quickly became clear that even Shein sometimes isn’t sure exactly where its outfits are made. 

After over a dozen failed attempts to convince Shein suppliers to discuss their relationships with the company, Sixth Tone traveled to an unregistered factory in a dilapidated industrial area on the outskirts of Guangzhou. 

Inside, the factory’s owner, surnamed Chen, confirmed that he manufactured garments for Shein, but said he didn’t deal with the company directly. Instead, he received orders via another factory.

Like most of the people Sixth Tone spoke with in Guangzhou, Chen referred to Shein as Zoetop Business Co. Ltd., a Hong Kong-registered company owned by Shein founder Xu Yangtian.

“There were times when Zoetop Business came to my friend with very urgent orders,” said Chen. “He had to seek help from his friends to deliver on time.”

When orders arrive, Chen said his staff often have to work 15-hour shifts to finish everything before the deadline. The lead times for Shein’s orders are normally just seven days, whereas other clients usually allow two weeks, he added.

An exterior view of the building where Chen’s factory is located, in Guangzhou, Guangdong province, July 2021. Wu Peiyue for Sixth Tone

An exterior view of the building where Chen’s factory is located, in Guangzhou, Guangdong province, July 2021. Wu Peiyue for Sixth Tone

Chen signed no contract with his friend, let alone with Shein. He gets paid by his friend once he has received payment from Shein, he said. Chen refused to provide more information about the factory that subcontracts orders to him.

“Why don’t you go to South Village and Tangbu West Village?” Chen said. “Almost all the factories there work for Zoetop Business.”

South Village and Tangbu West Village are both “urban villages” — crowded neighborhoods that sprang up during the height of China’s economic boom, when millions of migrant workers flooded into Guangzhou to work in the city’s rapidly expanding manufacturing sector.

Each area is a labyrinth of narrow lanes lined with high-rise “handshake buildings” of varying shapes and sizes — many of them constructed by local residents without government permission. The first floors of these residential blocks are often rented to small garment manufacturers, which process orders in full view of passersby.

Now, many of these workshops are making outfits for Shein. When Sixth Tone visited the villages, workers inside dozens of street-side businesses could be seen sewing garments amid piles of plastic bags bearing the Shein logo.

A GIF shows staff working on an order from Shein inside Chen’s factory, in Guangzhou, Guangdong province, July 2021. Wu Peiyue for Sixth Tone

A GIF shows staff working on an order from Shein inside Chen’s factory, in Guangzhou, Guangdong province, July 2021. Wu Peiyue for Sixth Tone

But like Chen, the workshops often have no contract — or even direct contact — with the company. 

Several workshop owners told Sixth Tone they received their orders from nearby factories. When Sixth Tone visited several of these factories, the factory bosses confirmed that they produced goods for Shein but declined to discuss their relationships with the company.

“Shein called us recently and reiterated that we shouldn’t share any company information with outsiders, as a lot of business spies are out there trying to copy Shein,” one factory owner said.

This casual subcontracting of orders happens regularly within Shein’s supply chain, and the company appears to only have a limited level of control over the process. 

I have no time to sit and take a rest ... I feel exhausted at the end of the day.

A supply chain analyst at Shein, who requested anonymity as he wasn’t authorized to speak with media, told Sixth Tone the firm is trying to collect more information about its subcontractors and conduct inspections on safety and labor conditions in their facilities.

“The company isn’t against subcontracting,” the analyst said. “For example, we know that some of our suppliers in Guangzhou subcontract a large part of their orders to their friends and relatives in Guangxi province, as the labor costs there are much lower. We are trying to gain greater control over those factories.”

Yet Shein’s network of subcontractors continues to expand. Its suppliers are increasingly subcontracting orders to lower-wage parts of China, such as the eastern Jiangxi province, according to the Shein analyst. The network even extends as far as Liaoning province in northeast China, he added.

It’s unclear how many of Shein’s suppliers are small workshops, but Panyu District — the southeastern part of Guangzhou where South Village and Tangbu West Village are located — is one of the company’s main production hubs, according to domestic media. Shein reportedly works with 300-400 “core” factories and over 1,000 smaller “sub-tier” suppliers in the district.

Many of Shein’s fast-fashion competitors refuse to work with so many small-scale manufacturers, said Huang, the professor. The more subcontractors there are, the harder it becomes for them to police labor conditions within their supply chains, he added.

“It’s easier for manufacturers to ignore their responsibilities, and it’s easier to obscure the voices of workers,” said Huang.

Goods are stacked outside a factory that works as a direct supplier to Shein, in Guangzhou, Guangdong province, July 2021. Wu Peiyue for Sixth Tone

Goods are stacked outside a factory that works as a direct supplier to Shein, in Guangzhou, Guangdong province, July 2021. Wu Peiyue for Sixth Tone

Paying the price

Local factories like to work with workshops in Guangzhou’s urban villages for two main reasons, said Kang Jianming, the owner of a children’s wear business that works with Shein. They can help process large orders quickly, and — more importantly — they’re cheap.

Cutting costs is especially important for businesses in South China. The region’s once-mighty garment industry is struggling to remain competitive as labor and operating expenses rise. Many fashion brands have moved production to cheaper markets like Vietnam, where factory wages are often less than half of those in China.

But Guangzhou’s workshops have partly shielded themselves from this trend. Rent in the urban villages is dirt-cheap by local standards, and the tiny businesses can often circumvent Chinese regulations. Their staff, however, often pay the price for these cost-cutting measures.

Though the workshops operate in broad daylight, many appear to be part of the gray economy. They not only failed to display a business license, as they’re legally required to do, many also didn’t have signboards indicating their company names.

An interior view of a factory that works as Shein’s direct supplier, in Guangzhou, Guangdong province, July 2021. Wu Peiyue for Sixth Tone

An interior view of a factory that works as Shein’s direct supplier, in Guangzhou, Guangdong province, July 2021. Wu Peiyue for Sixth Tone

Workshop owners frequently fill their workforces with family members and temporary workers, who have fewer labor rights than permanent staff members, said Kang. This allows the bosses to avoid making expensive social security payments.

The working environment in the urban villages is often poor. Despite the intense heat and humidity, many of the workshops Sixth Tone visited had no air conditioning and provided only a hanging fan for ventilation. They’re also frequently unsafe, said Huang.

“Unregistered workshops in urban villages are a problem,” he said. “The main reason is the increased risk of fires.”

Guangdong province has seen several deadly fires caused by garment workshops inside urban villages over recent years, including a 2014 blaze in the city of Puning that killed 11 people. Local officials — who used to adopt a laissez-faire approach to regulating Guangzhou’s large informal economy — have begun shutting down a growing number of workshops, citing government bans on the mixed use of residential buildings.

A view of a street in Tangbu West Village, Guangdong province, July 2021. Wu Peiyue for Sixth Tone

A view of a street in Tangbu West Village, Guangdong province, July 2021. Wu Peiyue for Sixth Tone

Climbing into the stove

Around 100 kilometers west of Panyu, by the side of an eight-lane highway in the neighboring city of Foshan, are two sprawling logistics parks, each housing dozens of cavernous warehouses. 

Known as the Dongbai and Anbo warehouses, the parks are the main portals connecting Shein’s Chinese supply chain with its customers around the world. Purple trucks packed with newly made outfits continually stream through the gates. Inside, thousands of order pickers rush to sort the items for delivery.

Working at the facilities, which operate 24 hours a day, isn’t for the faint-hearted. Chinese migrant workers call it taking the “Shein Challenge” — trying to withstand the brutally intense work so that they can claim the relatively attractive wages on offer.

On Kuaishou, a short-video platform, users swap stories about how quickly they quit due to the intense workload. One commenter likened working at the warehouses to “getting into a stove.” On forum site Baidu Tieba, another user said order pickers at the warehouses had to walk what felt like 50 kilometers per day.

The turbulent market conditions force every section of the supply chain to rely on temporary workers.

But many are still willing to accept the challenge. Zhang Xiaojun — who spoke using a pseudonym for privacy reasons — told Sixth Tone he earns more than 10,000 yuan per month working as an order picker at the Dongbai warehouses, which he considered a good income. But he added the tough demands of the job had taken a toll on his health.

The 30-something said he’d lost a lot of weight due to the physical exertion of sorting packages in the warehouse. He also struggled to sleep due to the warehouses’ rotating shifts: Every two weeks, he has to switch between an 8 a.m. to 8 p.m. and an 8 p.m. to 6 a.m. schedule.

“I have no time to sit and take a rest,” said Zhang. “I feel exhausted at the end of the day.”

After another two years, Zhang said he’d probably no longer be able to physically cope with the work. Yet he wants to hold on as long as he can, in an attempt to pay off the mortgage on his home in his native region of Guangxi Zhuang Autonomous Region before he turns 40. Previously, he earned just 6,000 yuan a month working at an electronics factory in the southern metropolis of Shenzhen.

“It’s much more exhausting, but it’s my personal choice,” Zhang said.

Other warehouse staff who spoke with Sixth Tone pointed to another potential issue at the facilities: Their use of dispatch agencies.

A promotional photo used by Shein to show its logistics operations. From the website of Shein

A promotional photo used by Shein to show its logistics operations. From the website of Shein

When Sixth Tone arrived at the Dongbai warehouses, two young women from the eastern Anhui province were carrying their luggage to the staff dormitory. They said they had been hired to work as order pickers at the warehouse just a few days previously.

The pair — who were both still in their teens — had got the jobs via a recruitment agent who had advertised the role on 58.com, a Craigslist-like classified ads platform. They had no previous warehouse working experience, but were attracted by the promised salary and low entry threshold.

“The HR said workers are paid by the piece, and beginners can earn 7,000 yuan a month,” one of the women told Sixth Tone. “We want to give it a try.”

Shein appears to rely extensively on agents to staff the warehouses. According to a manager at the Dongbai facility — who requested anonymity as he’d signed a confidentiality agreement with the company — Shein stopped directly recruiting workers for its logistics centers two years ago and now uses dozens of dispatch agencies to hire new staff.

Labor dispatching has become common in China, as it enables employers to outsource responsibility for processing employees’ wages, income tax, benefits, and social security payments. But many in China oppose the practice, as dispatch agencies are associated with a host of labor problems. 

“The biggest problem with dispatch companies is that they don’t pay the promised wages at the agreed time,” Li Qiang, a labor rights expert, told Sixth Tone. “However, the dispatching agencies are sometimes too small to be held accountable, which makes it more difficult for workers to defend their rights. It also helps manufacturers and large companies minimize their legal responsibilities. When labor problems arise, they are directed to dispatching agencies.”

A screenshot from a recruitment ad for one of Shein’s warehouses in Foshan, Guangdong province. From Kuaishou

A screenshot from a recruitment ad for one of Shein’s warehouses in Foshan, Guangdong province. From Kuaishou

On Baidu Tieba and Kuaishou, several users have posted comments below recruitment ads for Shein’s logistics centers warning that some agencies don’t pay the promised salary to workers. However, Sixth Tone wasn’t able to verify how extensive disagreements over wages are inside the facilities. Several calls to the Sanshui Labor Security Supervision and Law Enforcement Bureau, the local body that supervises the warehouses, went unanswered.

For Huang, Shein’s “ultra-fast-fashion” strategy — with its unpredictable order volume and pressure for extreme delivery turnarounds — provides incentives to companies across the fashion supply chain to make use of labor dispatching.

“The turbulent market conditions force every section of the supply chain to rely on temporary workers, resulting in a lot of chaos in order subcontracting and labor dispatching,” said Huang.

Chinese labor laws state that dispatch workers cannot account for more than 10% of a company’s total workforce. However, many companies — including Foxconn, a major supplier to Apple — have been accused of exceeding this limit at its Chinese facilities. It’s unclear whether Shein violates the quota.

Sixth Tone sent multiple requests to Shein for comment on its use of dispatch agencies and other issues raised in this article. The company had not responded by time of publication.

Editor: Dominic Morgan.

(Header image: Workers process orders at a garment workshop in Tangbu West Village, Guangdong province, July 2021. Wu Peiyue for Sixth Tone)