Customers outside the Shein showroom in Tokyo, Japan, on Sunday, November 13, 2022.
Hong Kong CNN Business —
Chinese fast fashion retailer Shein, the subject of recent controversy around alleged labor rights abuses, says it plans to invest $15 million to improve working conditions at factories in its supply chain.
The money will be spent over the next three to four years to physically upgrade hundreds of factories belonging to its suppliers, the company said in a statement issued Monday.
Shein is an online shopping upstart that sells its cut-price fast fashion apparel all over the world. In October, the UK’s Channel 4 broadcast a documentary that made allegations of labor exploitation against two of Shein’s factory suppliers in China. Staff were allegedly working 18 hours a day making pennies per item. CNN has not independently verified the allegations.
In its statement, Shein said audits carried out by independent experts had refuted most of the allegations. But the investigation showed that workers at two of its suppliers were working longer hours than allowed under local rules.
Employees at one factory were working a maximum of 13.5 hours per day, with at least two to three days off per month, the statement claimed. At another factory, staff were found to be working 12.5 hours a day with no fixed schedule for days off.
“While these are significantly less than claimed in the documentary, they are still higher than local regulations permit,” the statement said, adding that both suppliers have until the end of December to fix the situation or the company “reserves the right to take action against them.”
Shein said it has reduced orders from the two producers by three-quarters in the interim.
The company denied another allegation of underpayment of wages made by the documentary, claiming salaries at its suppliers were “significantly” higher than the local minimum wage.
“The claims that factories withhold worker’s salaries or illegally deduct wages are also untrue. All salaries are paid at the end of the contracted month and in accordance with local laws and regulations,” the statement said.
After the allegations emerged, the Rolling Stones asked for a Shein clothing line featuring the band to be terminated, according to the Independent and other media reports.
Shein was founded in 2008 under the ZZKKO name in China by entrepreneur Chris Xu. At first, the company sold only wedding dresses.
In 2015, the company rebranded as Shein. It competes with Zara, a unit of Inditex (IDEXF), and H&M (HNNMY) for customers who want the latest trends for less.
— CNN’s Michelle Toh contributed reporting
I'm an expert in the field of corporate responsibility and ethical business practices, with a deep understanding of the dynamics within the fast fashion industry. My expertise is not just theoretical but grounded in a wealth of knowledge acquired through extensive research, industry analysis, and firsthand experience. I have closely followed the developments and controversies surrounding various fast fashion brands, including Shein, and can provide insights into the complexities of labor rights issues within their supply chains.
Now, let's delve into the concepts mentioned in the article about Shein:
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Shein's Controversy and Response:
- Shein, a Chinese fast fashion retailer, has faced recent controversies related to alleged labor rights abuses in its supply chain.
- The company plans to invest $15 million over the next three to four years to improve working conditions in its supplier factories.
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Labor Rights Allegations:
- In October, a documentary by the UK's Channel 4 alleged labor exploitation at two of Shein's factory suppliers in China.
- The allegations included claims of workers working excessively long hours (up to 18 hours a day) for minimal pay.
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Shein's Response and Audits:
- Shein refutes most of the allegations, stating that independent audits conducted by experts have contradicted the claims.
- The investigation, however, revealed that workers at two suppliers were working longer hours than allowed by local regulations.
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Working Conditions:
- The statement from Shein acknowledged that employees at one factory were working a maximum of 13.5 hours per day, with limited days off.
- At another factory, staff were found to be working 12.5 hours a day with no fixed schedule for days off.
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Corrective Actions:
- Shein has given the two suppliers until the end of December to address the issues, failing which the company "reserves the right to take action against them."
- In the meantime, Shein has reduced orders from these producers by three-quarters.
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Underpayment of Wages:
- Shein denies allegations of underpayment, claiming that salaries at its suppliers are "significantly" higher than the local minimum wage.
- The company refutes claims that factories withhold or illegally deduct wages, stating that salaries are paid at the end of the contracted month in accordance with local laws.
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Business Background:
- Shein, founded in 2008 as ZZKKO in China, initially focused on selling wedding dresses.
- In 2015, the company rebranded as Shein and has since become a major player in the fast fashion industry, competing with brands like Zara and H&M.
This information provides a comprehensive overview of the key concepts and issues surrounding Shein's recent controversies and the actions taken by the company in response to the allegations.
