RE: Oh dear Shein26 Aug 2024 08:08
The Chinese-founded start-up Shein, valued at $66bn in its latest funding round, hopes to go public in London in the coming months, bringing a much-needed boost to the listing-starved UK exchange. Its explosive entry to the fashion world at the turn of the decade, undercutting European rivals Zara and H&M with its seeming impossibly cheap prices — from $5 dresses to $2 T-shirts — has raised questions about the wages of the workers producing the wares.
But going to the heartland of Shein’s supply chain, it was clear that its low prices are in spite of, not because of labour costs, which have been rising in China as the working age population shrinks and young migrant workers shun factory jobs for the lower-paid service sector.
Factory workers that source to Shein typically get paid between Rmb7,000 ($982) and Rmb12,000 monthly, depending on how many clothes they finish. By contrast, the average wage for other blue-collar workers in the area is between Rmb5,500 and Rmb6,500.
Part of the reason the clothes are cheap is, well, because they are cheap. One factory manager held up a baggy dress — likely destined for the US or UK — and joked that she would never sell such low-quality clothes to a more discerning Chinese clientele. She says she uses cheaper fabrics for Shein orders than for Alibaba’s Taobao, because the domestic platform gives more money to the factories to cover their costs.
Shein has also cut out expensive middlemen by shipping goods directly from warehouses in China to shoppers in the west — a model that has the added benefit of the great majority of its packages bypassing import duties.
Panyu highlights the attraction of Chinese manufacturing. Like other manufacturing hubs specialising in anything from socks to sex toys to steel pans, it has the entire supply chain concentrated in one district. That means factories can within half an hour place an order, take delivery of fabric or get an engineer to fix sewing machines with components made nearby.
Shein has said it will source more outside China, including Brazil and Turkey. But these destinations cannot meet the efficiency needed for the fast-fashion platform to constantly update its product portfolio.
China’s migrant worker population also brings it an edge. While in Vietnam and Bangladesh workers tend to return home to their families at night, the labourers in Panyu sleep in nearby dormitories, cutting down commuting time and meaning they can work longer hours if a large order arrives.
For many industries, China remains the best place to manufacture. But the coming demographic crisis means there is a huge risk in over-relying on domestic manufacturing. Several factory managers spoke of the growing difficulty of hiring skilled workers. According to China’s National Bureau of Statistics, average wages in private sector manufacturing have more than doubled in the decade through 2022.
The contrast to the legions of young office workers and food delive
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