Why Is Shein So Cheap — and Is It Ethical?

By most metrics, Shein is a leader. The online retailer releases 10,000 new products a day, offers consumers around 600,000 to 700,000 styles at a time, is the most visited fashion and apparel website in the world, and remains the face of “ultra-fast fashion.” Like Gap in the ‘90s, it’s also the brand young adults are talking about. On TikTok, views under the tag Shein have surpassed 70 billion — and the story is much the same on other platforms. But when it comes to the ethics of fashion, critics say the $100-billion company falls short. We investigated to find out why the clothes are so cheap, and if the brand is as unethical as critics claim.

What Is Shein?

Founded in 2008, Shein (pronounced SHE-in) is a fast fashion retailer from China that sells women’s and men’s clothing exclusively online, leveraging social media and influencers to sell its enormous inventory of dirt-cheap clothes.

The company, originally named ZZKKO, started out as a site that specialized in wedding dresses, all of which were sourced from China’s wholesale clothing market in Guangzhou. In 2011, founder Chris Xu renamed the site Sheinside and expanded its offerings to include women’s clothing, though it was still less a fashion company and more an e-commerce platform, leaving the design and manufacturing to other companies.

It wasn’t until the mid-2010s, when the brand shortened its name from Sheinside to Shein, that the company honed its business model and spread its reach, in part thanks to an acquisition of the Chinese e-commerce company Romwe. By 2016, the retailer had its own team of 800 designers and prototype makers, a key step in the company's pursuit for dominance.

Beyond its fast fashion model — Shein releases thousands of new products a day based on consumer data — the company found success thanks to social media and influencer culture. Instead of focusing on conventional advertising, Shein will send out free clothes to a legion of popular social media users in exchange for a shoutout, often in the form of haul videos. To date, there are more than 13.9 billion posts tagged Shein haul on TikTok.

The pandemic also accelerated Shein’s rise. With everyone stuck at home, flush with stimulus cash and watching TikTok, the online-only retailer managed to rake in $16 billion in sales in 2021. Although its sales have slowed, the private company continues to dominate on socials and was valued at $100 billion in April 2022.

Why Is Shein So Cheap?

Efficient Production

Shein dresses, T-shirts, sweaters, jeans — they all sell for as low as a few bucks, with some sale garments priced at just $1. Considering the labor, transport, operating costs, and other expenses that go into making a piece of clothing, those prices are staggering.

According to Molly Miao, one of Shein’s four founders, the company can keep its prices so low because it sells 98 out of a hundred garments it orders from producers.

“Very little of our merchandise isn’t sold. That’s how we can be so cost-effective,” Miao told The Wall Street Journal.

The retailer's high sell-through rate is thanks to its proprietary logistics software and network of 6,000 suppliers. Using consumer demand, browsing behavior, and other data, the algorithm helps Shein know when and what to order. Until a product takes off, Shein will order as few as 100 garments to reduce supply chain waste.

“When there’s production you can’t sell, waste happens and the costs of unsold inventory are passed on to customers,” Miao explained.

A Shein spokesperson told Cheapism that this "on-demand business model" also enables the company to "reduce the waste and overproduction typically associated with the fashion industry." But even if Shein only orders in small batches, the fact remains that its suppliers are still producing tens of thousands of garments a day to meet consumer demand. Given that the fashion industry produces between 80 and 150 billion new garments a year — nearly 60 percent of which ends up in incinerators in landfills within a few years — Shein's business model remains an environmental problem.

Low Overhead

The company has few overhead costs. Unlike fast fashion brands with brick-and-mortar stores — H&M has over 4,000 worldwide — Shein sells its products directly to consumers online. What’s more, Shein’s marketing strategy is dominated by mid-tier influencers, many of whom are members of Gen Z. Compared to producing an advertisement, sending out bags and bags of clothes to young influencers is cheap.

Shein has also been accused of more controversial cost-saving measures including tax evasion and intellectual property theft. Thanks to a 2016 rule that exempts import taxes on shipments valued at $800 or less, Shein avoids paying import taxes in the U.S.

Like other fast fashion brands, Shein also steals ideas from other fashion designers, a practice that’s technically legal under outdated U.S. copyright laws. When asked about designers' copyright claims, a Shein spokesperson said that it "takes all claims of infringement seriously," adding that suppliers must ensure that their products don't infringe on intellectual property.

Which brings us to our final question: Is Shein ethical? Critics of the fashion company would say no, and not just because it takes advantage of tax loopholes.

Is Shein Ethical?

Aside from what we’ve already mentioned, critics rail against Shein for three main reasons: labor conditions, environmental degradation, and offensive designs.

Labor Conditions

A Channel 4 investigation found that two factories that supply clothes to Shein are in violation of China’s labor laws and Shein's own code of conduct. The network discovered that employees were working 18-hour days with only one day off a month. Pay was also dismally low, with one factory paying just four cents per garment.

When asked about its working conditions, a Shein spokesperson told Cheapism that the retailer is "committed to respecting human rights and adhering to local laws and regulations," noting that the company has doubled its spending on its responsible sourcing program. Shein also directed us to its factory wage investigation report, which audited 150 factories (around 2.5% of its producers).

In June, Shein faced backlash after sending a group of influencers on an all-expenses-paid trip to its factories in Guangzhou, an attempt to rehabilitate the company's image. While the influencers cheered the working conditions, consumers saw through the public relations stunt and criticized the trips on social media.

"The Shein influencer controversy is embarrassing," Imaeyen Ibanga, who works for AJ+, wrote on Twitter. "The trip isn't free, it's a barter system for good coverage. Investigative journalism isn't a cute phrase. It's real work."

Following Shein's controversial rebranding campaign, congress released a report titled "Fast Fashion and the Uyghur Genocide," which confirmed that the fast-fashion brand uses its direct-to-consumer model to avoid complying with a ban on imports from China's Xinjiang region, where at least 100,000 Uyghurs and other Muslim minorities are being forced to work.

Although a Bloomberg report found that lab tests showed that Shein's clothes were made with Xinjiang cotton, the company has both denied that it uses forced labor and has said that it doesn't have suppliers from the Xinjiang Region.

Environmental Degradation

When consumers shop at Shein, or any other fast fashion store, they see a huge catalog of on-trend, cheap clothes. They don’t see the tons of carbon released into the atmosphere, the trillions of gallons of wastewater, or myriad chemicals released into the environment. But that’s the reality of fast fashion’s business model, regardless of the brand. To put the industry's impact into perspective, fashion companies are responsible for 8 to 10% of global greenhouse gas emissions, more than the maritime shipping and aviation industry combined. Because fast fashion is predicated on constant demand and disposability — we have enough clothing already — it's particularly blameworthy.

Although many of these environmental concerns aren’t unique to Shein, a report from the Canadian Broadcasting Corporation found that a Shein jacket for toddlers contained nearly 20 times the amount of lead that Health Canada deems safe for children. Responding to those claims on Twitter, Shein wrote that it was “committed to product safety.”

“We regularly test products and take action when non-compliance is found, including terminating suppliers,” the company added.

To address critics' environmental concerns, Shein told Cheapism that it is committed to reducing greenhouse gas emissions across its entire value chain by 25% by 2030. (Zara's parent company and H&M have set more ambitious goals, committing to net zero emissions by 2040). Shein has also "publicly shared its vision of a fully circular textile economy by 2050," taking steps such as launching a more sustainable clothing line, a sustainability fund, and a peer-to-peer resale platform, among other minor programs.

While many of these gestures seem meaningful, consumers should know that companies often cover up their environmental harm through greenwashing.

Case in point: In an assessment that looked at more than 4,000 garments, more than half of companies' sustainability claims were misleading or unsubstantiated, according to Synthetics Anonymous 2.0, a fashion sustainability report. The report also critiqued Shein's peer-to-peer resale platform, citing it as an example of greenwashing.

"Recommence, if not coupled with an increase in quality and a reduction in production volume of clothes, is arguably redundant, and partnerships with resale platforms with limited sustainability strategies are also capped in impact. SHEIN unveiled its new resale programme in October 2022, providing an exemplary case of how ‘alternative’ business models have been greenwashed," the report reads.

Offensive Designs

Shein has sold a “metal swastika pendant” and a racist phone case showing a handcuffed Black person outlined in chalk, among other controversial designs. Although the company apologized for both items, it indicates that a lack of oversight is baked into Shein’s speedy business model.

The Bottom Line

Shein's innovative influencer marketing strategy, high sell-through rate, and low overhead mean that the Chinese brand can keep prices extraordinarily low. And that business model — one that prioritizes quantity and speed over quality and oversight — has propelled Shein to the apex of the fast fashion pyramid. But critics are right to point out the company's dubious ethics. 

Like most fast fashion brands, Shein's business practices are harming the environment and taking advantage of lax copyright laws to fuel its $100-billion enterprise. More egregious offenses, such as having employees work 18-hour days for pennies an hour, have also come to light. But is it fair to single Shein out? Yes and no. While we shouldn't brush Shein's troubling practices aside, many of the world's largest companies — H&M and Zara, for example — have faced similar criticisms for labor violations and environmental degradation.

Frequently Asked Questions

Is Shein legitimate?

Shein may sound too good to be true (where else can you buy a new pair of pants for a dollar?), but it is a legitimate fast fashion company. That said, it has faced criticism for its environmental impact, working conditions, and other ethical concerns.

Where is Shein located?

Although Shein was founded in Nanjing, China, it moved its headquarters to Singapore in 2022. Since it's mostly an e-commerce company, the few brick-and-mortar stores that Shein has opened have been pop-ups.

Does Shein use child labor?

There is no evidence that Shein uses child labor.

Is Shein good quality?

You get what you pay for. On the review platform SiteJabber, Shein scores three out of five when it comes to quality. Notably, many of Shein's pieces are made using cheap synthetic fabrics.

Is Shein ethical?

Shein has come under fire for violating labor regulations, stealing designs, releasing offensive garments, destroying the environment, and evading taxes.

What are some alternatives to Shein?

If you’re looking for affordable, high-quality clothes that will last, thrifting is a more sustainable and ethical alternative. Ethical brands like Girlfriend Collective and Everlane also purport to be more environmentally conscious.