It’s been a very bad week for Dani Carbonari, Marina Saavedra, Aujené, Fernanda Stephany Campuzano, Kenya Freeman, and Destene Sudduth – the six women who went on the Shein influencer trip to China. If you’re reading this, I’m going to assume you know what happened on the brand propaganda trip. The specifics of what each influencer said has already been well documented (this is a good refresher). Basically, you can’t say things like “they [the workers] weren’t even sweating!” on the Internet about a company known for clothes made by exploited workers.
The backlash was swift. Most of the influencers have removed their videos, some have made apologies. The backlash was also unanimous – a good sign that the general public does understand that Shein, and companies like it, operate in ways that’s bad for its workers, bad for the environment, and bad for us. Very rarely do you see TikTok, Instagram and Twitter comments in uniform agreement like this.
But the responsibility for Shein’s destructive business model and obscene growth does not fall on the influencers who were copping this backlash. Actually, it doesn’t fall on any influencers. Alongside Shein itself, the people responsible are venture capitalists. Investors.
Investors fund the dominance
Shein is planning for a US IPO (initial public offering) later this year, on the New York Stock Exchange. Here’s the 101: an IPO turns a company from being privately-owned into a publicly-owned one by issuing shares. An investment bank assesses the value of the company, setting the share price listed on the exchange for the first time – which is the price any member of the public pays if they want to buy shares in the company.
When a company lists for the first time it is the one selling to the buyers (and therefore, getting the money). To make the most money possible, any company would want their IPO value to be as high as buyers will pay. It’s a first impression thing – you want your business to look really good, so the assessing banks give you a higher value.
In preparation to get the best possible valuation for a potential IPO, Shein has been raising a lot of money from private investors and venture capital funds. According to Crunchbase, Shein has secured $4billion over seven rounds of fundraising. Half of this comes from its most recent fundraising round in May. The company is valued at $66 billion, and insiders have told the Wall Street Journal that Shein’s 2022 revenue was $23 billion, making $800 million in profit, and it plans to increase revenue by 40% in 2023.
The investors from this latest round have also invested in Shein before:
- Sequoia Capital, an American investment firm based in California
- General Atlantic, an American investment firm based in New York
- Tiger Global Management, an American investment firm based in New York
- Mubadala Investment Company, an investment firm wholly-owned by and investing on behalf of the Abu Dhabi government
While it seems like a straightforward fashion ecommerce business to us, from a VC perspective Shein is a tech company. It uses artificial intelligence and machine learning to constantly crawl data and identify what items or trends people are searching for in the current moment. Anything with enough data behind it is either pushed to the internal design team or matched to an item that one of its 6000 contracted factories already produces. A small number of the item is initially made, but once listed Shein’s software collects the data on whether the product is gaining traction – it automatically reorders if there are initial sales, and automatically cancels production if sales drop off.
This almost entirely automated process is already happening much faster than my brain can comprehend. But Shein execs want it to be faster still. COO Molly Miao has written about wanting to offer “close to infinite style options” that are produced and restocked instantly. The acceleration of this technology leads us to a place where a company like Shein can produce an item to sell in the exact moment the term first appears or is searched – before it is even a trend
It’s a horrifying concept. The technological functionality, agility and power to create something like that requires a lot of development and a fuckload of money. This is not something one can bootstrap into existence… which is where the investor money comes in.
Venture capitalists provide funds to a company with the intention to get a return on their investment. Basically: they loan you $1million to build a new feature, that feature helps grow your business and make more money, and one year later you pay them back $1.25million (the real numbers are obviously much bigger than that).
Let’s be very clear: Shein’s prices would not be possible without exploitative labor. Its technology would not be possible without enormous funding.
That combination – exploitation and technology – is what enables Shein to produce and price so aggressively, attempting to drive all other competition for fashion retail out of the market. Fashion business expert Aja Barber explains this in a recent Twitter thread: “Very few fashion businesses are going to survive this time, both ethical business and high street… The result is less choice for everyone who isn’t wealthy. Fewer high street stores, which are imperfect but a little better, and fewer ethical brands all together because they’re going to be harmed the most. Your choices will start to look like luxury OR Shein.”
But of course, none of this matters to investors and venture capitalists. The funding they provide will be used to help Shein produce more. More than the 78,000 new items listed each month; more than the 180 coal-fired power plants worth of CO2 that it emits each year; more items to be manufactured by workers already doing 18-hour days, seven days a week, paid as little as 4c per item.
The investors only care about making more money. They do not care about the planet, nor human lives, and they do not care about you.
So, back to the influencer PR disaster. If Shein simply wanted to market itself as a fashion brand to consumers and show off upcoming collections, it could have taken these six American influencers on a fun, fashion girlie trip. Why specifically take them to a factory to ‘learn’ about Shein’s manufacturing practices? For consumer-focused content, it’s very dry.
Some journalists and commentators have suggested that the purpose of the trip was to cultivate public messaging around Shein’s practices specifically in preparation for the IPO. Perhaps it was never about convincing the public, but having some evidence created by non-employees – and Americans, no less – to convince investors that worker exploitation stores were just rumours? By showing off a pristine, calm ‘stunt’ factory in public, and highlighting selective reports from only the best contracted manufacturers, you could make it look like labor concerns raised a year ago had been swiftly addressed.
As we already know, when there are potentially billions to be made, investors don’t always look very hard to find information they don’t want to see.
Falling for easy targets
Thanks to the speed and volume of the backlash, it looks like the PR strategy has backfired big time. Good! But directing our anger and outrage at these relatively small influencers is not going stop the Shein machine because, again, influencers are not powering the machine.
I don’t want to exempt them for taking accountability for their role – they absolutely fucked up and will suffer the natural consequences for lying so blatantly to their audiences. But influencers are easy targets for our frustration and despair. They are accessible. We feel like we can wield more power over them to force them to change, when really what we want is for the companies and corporations to change.
This is by design. Influencers are pushed to the front to absorb the blows, while Shein, its billionaire founder Chris Xu, executives and investors continue to do business away from the noise.
It’s past time that we redirect our energy towards the bigger targets who are causing more damage. I know it feels like a battle against influencers is one we can win, while a battle against a billionaire founder and uber wealthy VCs is one we cannot. But if we don’t try, we’ll lose the war.
How? The first step is boring, but it needs to be said over and over and over. Boycott Shein. Make it a bad investment. There is not a single counter argument about ‘accessible fashion’ that justifies human abuses and the destruction of our one home. When executives and investors look at revenue lines on financial statements, they’re counting our purchases. In this position, we hold a lot of power – perhaps all the power.
The second step is also boring, sorry. But investment funding is regulated. The US has a ban on products made with cotton from Xinjiang, after a BBC report found that 500,000 Uyghur Muslims were being forced to pick cotton in the region. Shein is being asked to prove it doesn’t use Xinjiang cotton, which could see some of its products banned from the US.
Investment funds do not sit outside the law, and we can lobby politicians to create more strict rules about what businesses Australian money can be used to fund. Emissions reporting, waste reporting, labour supply chain reporting can all be made mandatory, with levels set if a company wants to operate or sell their goods in Australia (or any country).
That sounds hard, I get it. But the alternative is letting men in suits kill entire industries, kill people, and kill the planet so that they can personally be rich for their time on Earth. Calling out influencers helps a little bit, but we’ve got bigger beasts to slay.
Smart people read more:
Fast, Cheap, and Out of Control: Inside Shein’s Sudden Rise
Powershop & Shell: Why Conscious Consumerism Won’t Solve the Climate Crisis
Shein Influencer Trip: Why Creators Continue to Support Controversial Brands
Comments are closed.