SHEIN, a Chinese cross-border e-commerce company that has risen rapidly during the COVID pandemic and has a valuation of 300 billion yuan, has recently fallen into infringement allegations.
AirWair International, the manufacturer of “Dr. Martens” footwear products, recently took SHEIN to court for the existence of more than 20 counterfeit “Martin boots” on the SHEIN platform. SHEIN denies the allegations. Before AirWave, clothing brand Levi Strauss also accused SHEIN of copying the “Arcuate” stitching style commonly used in the back pockets of Levi jeans.
Maybe it’s because the incident happened outside of China, or maybe it has something to do with the company’s traditionally low-key style. Or, as fast fashion has long been associated with intellectual property infringement, fast fashion giant ZARA has repeatedly been caught in plagiarism, anyhow, when we, as Chinese, analyze the shortcomings of Chinese fashion brands going abroad, we always mention the brand culture and innovation ability, but never regard them as “real problems”.
Purely from the perspective of business model and operational capabilities, SHEIN is hard-core and successful enough. SHEIN is hard-core and successful enough. Relying on the complete domestic clothing supply chain in China and its own strong integrated control capabilities, with the help of European and American social media platforms, and driven by low prices, discounts, Internet celebrity recommendations, and rapid new innovations, it has become the second most popular e-commerce website for teenagers in the United States in 2020, surpassing Nike and PacSun and second only to Amazon. In the eyes of investors, founder Xu Yangtian is also a low-key, hands-on businessman.
SHEIN has the potential to be a “good company” in the eyes of capital: the market is large enough, there are certain competition barriers and high development space, and the company is very pragmatic. The reason why this ‘infringement gate’ deserves attention is not only that it has once again exposed the shortcomings of China’s fashion industry, but also that this shortcoming will cause “good companies” to fall into a dilemma.
What is the core of fashion? Taking the clothing industry as an example, China’s flexible manufacturing production can be described as leading the world, and the competitive advantage it builds is the advantage of the industrial chain. But as for the key link, fashion culture and the ability to lead fashion, China is not ahead.
Pei Yang, a product partner of SHEIN, also said that China is only exporting products, with very little brand output and zero value output. Therefore, SHEIN is taking the road of strong brand marketing. In his words, “SHEIN’s goal is to kill ZARA.”
However, there are often paradoxes and conflicts between quick response and originality. The new volume of hundreds of thousands a year is undoubtedly a huge test for the ability of SHEIN’s original design. At the same time, despite the emphasis on big data forecasting, rapid re-orders, and such an amount of new volume, whether technological breakthroughs can really help the industry to get rid of the label of “waste” and whether the sustainability exploration in the business model is established are not knowable.
In addition, despite the beautiful vision, SHEIN is strictly examined as a fast fashion brand in global market competition. Even with ZARA, which is known for copying high-end fashion trends, there is a gap in fashion influence between SHEIN and it.
In fact, unlike many emerging overseas fashion brands that have a brand first and then DTC (direct-to-consumer), Chinese brands and platforms often have an efficient model first and then engage in a somewhat more difficult brand-building process. The rewards of the latter are not as immediate as the effects of supply chain building and traffic distribution. Following this development logic, SHEIN is also far from being a fashion brand.
But no matter how low-key it is, when the company develops into the head of the industry, every move will be repeatedly scrutinized under the spotlight. This is an inevitable fate. If Xu Yangtian just wants to make a fortune through overseas traffic dividends and China’s capacity gap, SHEIN, which has entered the market with a powerful and functional role, may become a very successful company in the commercial sense, but it is not destined to become a great company.
However, SHEIN’s development logic and current problems are worthy of reflection by latecomers in the Chinese fashion industry: Do you want to be a fashion leader or follower? Are you the definer or the disruptor of the rule? Are you a shaper of the industry or a pure profit grabber? These problems seem remote and ethereal, but they may also be fatal for those who are growing rapidly.
Source: Economic Observer