SHEIN is Trying to Whitewash Its Image by Partnering with Forever 21. Don’t Fall for It.

By Elizabeth Brotherton-Bunch
Oct 30 2023 |
Photo by Jeepers Media via Creative Commons

The online retail giant and the mall mainstay are tightening their bond just as SHEIN is looking toward an Initial Public Offering. That timing is not coincidental.

If you can’t beat ’em in a race to the bottom, join ’em.

SHEIN and Forever 21 on Monday officially announced they are expanding their partnership by signing a long-term agreement that will see SHEIN “design, manufacture and distribute a line of Forever 21 apparel and accessories” that will be for sale on SHEIN’s massively popular website. Back in August, the two fast fashion retailers struck a deal to bring SHEIN clothing to Forever 21’s brick-and-mortar locations — and gave SHEIN a one-third interest in Forever 21’s operators the SPARC Group, a joint venture between Authentic and Simon Property Group, while SPARC became a minority owner of SHEIN.

SHEIN’s ever-surging popularity is considered a big threat to in-person retailers like Forever 21, so it makes some sense that the mall mainstay entered the partnership. But even before SHEIN came on the fast fashion scene, Forever 21 was struggling, having declared bankruptcy in 2020. The COVID-19 pandemic threw another big hurdle at the retailer.

So, teaming up with SHEIN gives Forever 21 a boost. SHEIN clothing is for sale in Forever 21 stores, hopefully bringing in some additional foot traffic. And selling Forever 21 clothing on SHEIN’s site brings the brand to a massive young audience.

The bigger question is: What does SHEIN have to gain with this partnership?

Well, CNBC nailed it:

Shein, which is rumored to be exploring an initial public offering (IPO) in the United States, has been working to sanitize its reputation and beat back accusations that it uses forced labor in its supply chain, exploits U.S. tariff law and steals designs from independent artists. It is facing increasing pressure from lawmakers and regulators, who also have concerns about Shein’s ties to China, the country where it was founded and where its supply chain is primarily based…

In its partnership with Sparc, Shein doesn’t just get its clothes in malls, it now has a powerful ally on its side, which could help legitimize the company in the eyes of U.S. regulators and work to assuage concerns from lawmakers. 

SHEIN’s entire business model is exploitative, something that has been great for its bottom line but is now an issue as it looks to go legit with an IPO.

SHEIN exploits labor, via both the use of sweatshops and likely connections to forced labor, including by using cotton made in Xinjiang in its products. SHEIN exploits the environment, making up to 100,000 new pieces every day, most of which will wind up in landfills. SHEIN exploits other designers, as it stands accused of stealing intellectual property. SHEIN exploits U.S. law, using the “de minimis” loophole to send orders directly to consumers from China without paying a tariff — and dodging enforcement like the Uyghur Forced Labor Prevention Act.

All of this has led to big pushback among U.S. policymakers. A bipartisan group wrote the Securities and Exchange Commission (SEC) in May urging the agency to mandate that SHEIN “certify via independent verification” that it does not use forced labor as a condition for its potential IPO. A group of 16 state attorneys general wrote the SEC in August with a similar request, noting that an “I.P.O. of this magnitude — involving a foreign-owned company that is facing credible concerns about its core business practices — cannot move forward on self-certification alone.”

That leaves SHEIN with some choices. The company could get its supply chains out of China, start paying its workers a fair wage, stop making such an obscene amount of throw-away clothing, stop stealing intellectual property, and start paying its fair share of tariffs. Or, it could mount a flashy public relations campaign to try to win enough powerful people over to get its IPO.

Guess what SHEIN decided to do!

But just because SHEIN is opting to do the wrong thing doesn’t mean that policymakers have to give any ground. If anything, SHEIN’s deal with Forever 21 should increase the scrutiny the company is facing.

Lawmakers and others are right to try to put the brakes on SHEIN’s IPO, and the SEC should take their concerns seriously. And there’s a lot of other things lawmakers can do to rein in some of SHEIN’s most egregious practices — starting with closing the de minimis loophole.