Shein: How and Why Firms are Putting Workers and the Environment in Jeopardy
Shein, a fast fashion company, continuously prioritizes capital gains at the expense of the environment and human rights. Shein was named the world’s most popular fashion brand of 2022.[1] Shein gained the favor of the public for its low prices and thousands of clothing styles. However, it puts its success over the environment and humanity. Shein has abandoned environmentally friendly and sustainable production as well as healthy labor practices to make a higher profit. This method of production has been used before and is explained by the Treadmill of Production theory. Shein is not the first to use the model of externalizing environmental and social costs, but the scale at which it does it sets it apart from its competition.
The cheap production model that Shein uses was first introduced in the 1990s.1 Companies found out that they could make low quality clothes at low costs with fast production times and still have customers despite the low quality. This method of production quickly fell into the favor of the public. Once more companies realized that fast fashion was profitable, more joined. This created competition between different fast fashion companies. Competition between producers creates an incentive to make the highest profit. To make the highest profit companies try to cut production costs while simultaneously making clothes cheaper to get more customers. Companies can keep production cheap by not cleaning up their pollution and using machines that heavily pollute. The mass amounts of products combined with the cheap production creates high levels of pollution and wasted resources. Companies determine the cost of their production and profit using the capitalist model, Marginal Private Cost (MPC).2 This is how companies like Shein found out how much profit they will make using their production methods. This model shows the cost and benefit of producing a certain quantity of a product. This helps companies find the net benefit of production. Companies pick the quantity of production with the highest net benefit. A high net benefit has low costs and high benefits. Shein tries to keep production costs low with cheap materials and production methods. It keeps its benefits high with high appeal to customers. Also, to keep production costs low, Companies externalize the cost of pollution.[2] They do not take responsibility for the pollution they produce because they do not want to spend the money it takes to clean it up. They make it an externality. The more production there is the more pollution there is, but production means profit. Producers have been taught by capitalist models that profit is the priority of production, over the environment and human rights.
To prosper in a capitalist society, producers, like those of fast fashion, have resorted to short term profit maximization tactics.2 Fast fashion sparks consumer interests with low prices for clothing. These industries can keep their prices low with complete environmental and clean labor disregard in their production. Therefore, their production creates lots of air and water pollution. They use the cheapest materials that release harmful chemicals into water and the air. Specifically, polyester and other synthetic materials which take hundreds of years to decompose.[3] Fast fashion’s impact is not limited to the environment but has changed consumer and producer habits to breed an age of mass production and consumption. The industry creates microtrends in which clothes go out of style in a matter of weeks, leading to the overproduction of clothes to keep up with the microtrends set by the companies.3 This industry puts profit over environmental sustainability, and it has had disastrous effects on the environment and the people living in it.
Shein has added to the usual fast fashion marketing strategy by taking advantage of modern-day influencers and social media.1 These influencers seem to control fashion on social media by deciding what new clothes are the trend of the season, month, week, or day.1 They declare what clothes are in style with haul videos. These haul videos typically feature large volumes of clothes and the influencers urging their followers to go purchase them. The influencers receive compensation for their recommendations. This marketing strategy has worked well for Shein and is one of the reasons for its success. These modern-day trends are called microtrends for their shorter lifespan. Microtrends have created a culture of mass consumerism and mass production.3
Shein will affect multiple groups of people outside of the sphere of consumer and producer due to the negative externalities of its production process. In the realm of the consumer and producers, there are two types of consumers and two types of producers. The two consumers are low-income people who shop at Shein because it is all they can afford and the people who abuse the low prices to get huge quantities of clothing. The two producers are those who are the overseers or managers of the production and those who are the laborers. The laborers receive poor wages and work in horrible conditions. Outside of this free-market relationship are people who are not consumers nor producers but still are affected by the transaction between the two. These people are affected by the carbon emissions, water pollution, and water waste, all of which are the byproducts of Shien’s production system.
Consumers feed into or are influenced by microtrends set by the fast fashion industry. In order to look trendy or contemporary consumers wish to buy the most up to date style of clothes. However, this creates a harmful cycle of consumers buying beyond what is necessary.3 Many of these clothes are thrown away once they are no longer in style. Then the consumer proceeds to replace the clothes with new in style ones. The modern-day consumer buys beyond their needs which leads them to throw out most of the products they purchase, as this is the role capitalism has set for them.
There are other types of consumers of Shein. Some low-income families can take advantage of the low prices to buy clothing that they can afford. These families are not the issue of the Shein consumer relationship. Shien’s model of production becomes problematic once operated on a massive scale. The scale of production increases when one consumer buys clothes at a higher volume than average and when the consumer base becomes significant.
The simple transaction between Shein and a customer can affect the entire global population. Since Shein has externalized environmental and social costs, those fall out of the realm of their responsibility and become externalities. These externalities affect people outside of the general transaction between the producer and the consumer. The environment as an externality affects everyone on the globe from one simple transaction. Eight billion people feel the effects of the six million tons of carbon dioxide Shein produced in one year.7 Shien’s Rapid use of virgin polyester and large consumption of oil produces the same amount of carbon dioxide as about one hundred eighty coal fired plants.7 The fast fashion industry not only pollutes our air but our water as well. Shein is known to use materials such as polyester which take hundreds of years to decompose and usually end up in our oceans.3 Fast fashion is responsible for thirty five percent of micro plastics in our oceans.3 Fast fashion accounts for twenty percent of global wastewater and contributes to ten percent of global carbon emissions.3 Shein has a transparency of zero when disclosing the volume of materials it uses and its production process.[4] This once again allows Shein to evade government regulation. The fight against climate change involves the entire globe. Shein is a part of the community that is worsening the effects of climate change with its carbon dioxide production, water pollution, and harmful materials. The U.N. stated that it is necessary for fashion companies to implement carbon dioxide limits to help stop global warming.1 Shein must become more transparent about its production and limit its environmental degradation before it is too late.
Shein has grown tremendously in the past few years and its owners’ wealth is increasing with its growth. Shein went from reporting ten billion dollars in sales in 2020 to one hundred billion dollars in sales in 2022.1 The owners take most of this profit. They leave the rest to trickle down the business hierarchy to the lowest level, the laborers. The laborers, who bear most of the brunt of production, are left with basically nothing. Owners are the only ones who benefit from the set-up of fast fashion. They make the most profit from the trickle-down profit system in Shien’s power hierarchy.
Shein has a total of about six thousand clothing factories in its name.1 These factories are spread out however its main production hubs are in the Southeast part of Guangzhou, China. Shein breaks up its factories into core factories and sub tier ones. There are about three hundred to four hundred core factories and over one thousand smaller sub tier suppliers.[5] This set up allows for poor labor conditions to thrive because the more subcontractors there are, the harder it becomes to police labor conditions within supply chains. Shein uses this set up because they can get away with more poor labor conditions and it is cheaper. It allows them to make more of a profit. Shein sets up most of its sub tiered factories in the South village and Tangbu West Village of Guangzhou.4 Shein can get away with evading more regulations because of the villages local official’s adopting a laissez faire approach to regulating companies.4 They are more laid back with enforcing regulations than other areas. Shein takes advantage of these villages to quickly and cheaply produce their products.
The factories in Guangzhou have recently sparked public outrage for its production methods. These factories operate twenty-four hours a day seven days a week. In Guangzhou, the majority of Shein’s workers are from the local community while the higher up managers are foreigners. There are about 10,000 workers in total.5 These workers are forced to work eleven to twelve hours a day.[6] This adds up to seventy-five-hour weeks. With only one day off a month these laborers are severely overworked.5 Shein has presented that it gives its employees reasonable labor hours in its code of conduct. Shein’s code of conduct states that, “Supplier partners shall arrange working hours reasonably and shall comply with local laws and regulations.” Shein uses ambiguous language when describing its working hours. However, the eleven-to-twelve-hour workdays explicitly break the code of conduct in that it does not comply with local laws and regulations. The Chinese labor law states that a legal work week in China is forty hours a week and has a cap of forty-four hours a week.[7] The legal workday is an eight-hour workday.6 Shein exceeds the legal workday by up to four hours a day and thirty-one hours a week. Shein’s workers work without contracts or minimum wage requirements.1 Instead Shein usually provides its workers with a daily base salary of twenty dollars.1 If any garments had mistakes from the day of work the laborer’s pay gets docked by fourteen dollars, seventy percent.1 This amount is outrageous considering that human error is inevitable. This evades regulation because there is no concrete contract that went through the government process. Shein’s lack of transparency with its factories allows it to get away with this.
Shein’s suppliers continue to abuse its workers with unsafe working conditions. The suppliers’ workshops in Guangzhou are not up to code of a safe work environment. According to the factory workers, there are no fire emergency exits and very few windows. In case of a fire the workers have very few possible escape routes.5 In Shein’s code of conduct it claims to have its suppliers provide a “a safe, hygienic and healthy workplace environment, and take necessary measures to prevent employees from accidents and injuries arising out of or related to, work in the course of their services.” An area with no fire emergency exits is not a safe workplace environment. In case of a fire workers may receive injuries if they do not make it out in time.
Shein has been presenting to its customers that its laborers are in healthy working conditions and work reasonable hours. However, its suppliers do not abide by this code of conduct. They have the laborers work extremely long hours in dangerous working conditions. Shein can keep their clothing prices so low by taking money out of the budget of safe working environments and the workers’ wages.
Shein’s production methods are strongly connected to the Treadmill of Production theory. The treadmill of production theory first starts off with the relationship between firms, state, and citizens. In this case the firm is the company Shein, the state in the Chinese government (the place of production), and the citizens are still the citizens. The theory shows the relationship between these three spheres in a connective triangle.[8] For example, the citizens provide the roles of laborers and buyers to capital and in return the capital provides compensation for labor and products. Governments or the state gets legitimacy from its citizens and revenue from firms, firms expect policy in return and citizens expect protections and services.8 In this relationship, the government puts policy supporting private growth first and policy involving environmental protections second.8 The locals of the neighborhoods of South Village and Tanbu West Village in the Guangzhou community provide Shein with labor and Shein gives very low compensation in return. The consumers of Shein provide Shein with money and Shein gives them clothes in return. However, this relationship begins to fall apart with the role of government and firms. The government is meant to regulate firms with policy. The Chinese government has attempted to do this with Chinese Labor Laws however Shein is not abiding by government policy. The government has attempted to regulate firms’ environmental impact as well, but the way Shein’s market is set up is hard to regulate and police. Shein is breaking the traditional firm and government relationship and the environment, and its workers are suffering because of it.
Shein’s production has high efficiency and low production costs which allows them to sell clothes at a low price. Consumer demand increases because of the low price and then Shein must increase its resource use and production to keep up with demand. Shein’s production speed and intensity increases as consumerism increases. Shein will try to keep up with the mass consumerism that is bred through microtrends and mass produce, but then more consumerism will act in response. The speed and intensity get faster and higher. As its speed and intensity increases as does environmental degradation. Shein relies on its workers to keep its treadmill running. It overworks them, strips them of their rights, and their safety. The workers such as the ones in Guangzhou endure extremely long hours in unsafe conditions just so Shein can continue its production. This treadmill of production is extremely fragile and only benefits the owners of production. Shein understands the fragility of this situation yet continues to run the treadmill because it is overrun by greed.[9]Industries like this will continue to come about as long as Capitalism is around. Companies in capitalist societies will always center profit around production. Treadmill theorists argue that if capitalism is around these industries will continue to be around and so it will be very hard to restrain environmental damage.9
While one could try to fix Shein individually however this problem will keep arising with just different firms. The real problem is the setup of the treadmill. The solution to this issue is to weed out the very center of capitalism, profit, and provide equity to the areas that are disproportionately affected by the issue. Environmental and social costs should not be externalized rather included in firm profit models as costs of production. Models like private marginal cost (MPC) will need to be adjusted as well as models used for global success like Gross Domestic Product (GDP). There are alternatives to these models out there that accommodate for environmental degradation and social inequality. Genuine Process Indicator (GPI) is an alternative to GDP that is arguably more efficient than GPD for its comprehensive view of success that includes environmental degradation and social problems. Marginal Social Cost is an alternative to Marginal Private Cost in that it internalizes environmental and social costs to make it the companies responsibility. Justice must be served to areas like those of Guangzhou, China. Environmental and labor laws must be enforced. Companies need to stop taking advantage of these areas and produce things domestically. In order to make our economic system more environmentally sustainable we must make it unrecognizable, arguably we must abandon capitalism.
[1] Astha Rajvanshi, Shein’s Massive Popularity Comes at as Huge Cost to Us All, January 17, 2023.
[2] CFI. “Marginal Social Cost (MSC).” Corporate Finance Institute, December 27, 2022. https://corporatefinanceinstitute.com/resources/economics/marginal-social-cost-msc/.
[3] Chris Waugh, “Is Capitalism Causing Climate Change?,” Global Social Challenges (University of Manchester, July 7, 2022), https://sites.manchester.ac.uk/global-social-challenges/2022/07/07/is-capitalism-causing-climate-change/.
[4] “Changingmarkets.org,” Synthetics Anonymous 2.0 (Changing Markets Foundation, December 2022), http://changingmarkets.org/wp-content/uploads/2022/12/Synthetics-Anonymous-2.0-Report-final-web.pdf.
[5] Wu Peiyue, “The Shady Labor Practices Underpinning Shein’s Global Fashion Empire,” Sixth Tone (Sixth Tone, February 8, 2022), https://www.sixthtone.com/news/1008472.
[6] Lausanne Zürich, “75-Hour Weeks for Shein: Public Eye Looks behind the Chinese Onli…,” Public Eye (Public Eye, November 12, 2021), https://www.publiceye.ch/en/media-corner/press-releases/detail/75-hour-weeks-for-shein-public-eye-looks-behind-the-chinese-online-fashion-giants-glitzy-front.
[7] Safeguard Global, “China Labor Laws: An Overview for Global Employers,” China Labor Laws | Safeguard Global (Safeguard Global, October 13, 2022), https://www.safeguardglobal.com/resources/blog/china-labor-laws.
[8] Kenneth A. Gould, Tammy L. Lewis, and Justin Sean Myers, “Theories in Environmental Sociology ,” in Twenty Lessons in Environmental Sociology, 3rd ed. (New York: Oxford University Press, 2021), pp. 34–40.
[9] William R Freundenberg, “Addictive Economies: Extractive Industries and Vulnerable Localities in a Changing World Economy.,” in Rural Sociology, 3rd ed., vol. 57 (Wiley, 1992), pp. 305–413.
