Inside Shein: ITV News visits the workshops in China producing clothes at rapid rates | ITV News

Summary

The report investigates how fast fashion retailers like Shein and Temu avoid paying millions in UK taxes by sending clothes directly from Chinese factories to customers, circumventing import duties. Despite their success, driven by influencers and a unique on-demand business model, these companies face scrutiny over labor practices, environmental impact, and tax avoidance. The UK government is urged to close this loophole, which allows billion-pound businesses to exploit exemptions meant for small enterprises.

Takeaways

• 📈 Fast fashion retailers like Shein and Temu are booming, achieving record profits with unique business models.
• 🏭 Many of these retailers' clothes are manufactured in Chinese factories, especially in the garment-making capital of Guangzhou.
• 💷 Shein may have illegally avoided £150 million in UK import taxes by sending items directly to customers, exploiting a tax loophole.
• 📱 The popularity of Shein is driven by social media influencers and aggressive marketing strategies, outpacing traditional fast fashion brands like Zara and H&M.
• 🚚 By shipping individual items directly to customers, these companies avoid the threshold for import taxes, keeping costs low.
• 🧵 On-demand manufacturing allows retailers like Shein to minimize inventory and warehouse costs, producing items based on real-time sales data.
• ❌ Both Shein and Temu have faced scrutiny over labor rights, allegations of forced labor, and other controversial practices.
• 🌍 The fast fashion business model raises concerns about environmental sustainability, promoting overconsumption and a disposable culture.
• 🏆 Despite controversies, Shein's business model has made it the 11th most successful fashion retailer in the UK, with rapid growth projected.
• 🔍 There are calls to close the tax loophole that allows billion-pound companies like Shein to avoid paying substantial import duties in the UK.

Q & A

What is the main focus of the ITV News report?

The ITV News report focuses on the boom in fast fashion retailers like Shein and Temu, particularly how they avoid paying millions of pounds in UK taxes through their business models.

How do Shein and Temu achieve record profits according to the report?

Shein and Temu achieve record profits by utilizing business models that send clothes directly to customers, allowing them to avoid import taxes and minimize inventory and warehouse costs.

What loophole are Shein and Temu exploiting to avoid paying taxes?

Shein and Temu exploit a loophole by shipping individual items directly from factories in China to customers in the UK, which allows them to avoid the threshold for import taxes.

What did ITV News discover regarding Shein’s tax practices?

ITV News discovered that Shein may have illegally avoided paying £150 million in import taxes in the UK by exploiting the loophole in their business model.

What role do social media influencers play in Shein’s marketing strategy?

Social media influencers, particularly in the UK, play a significant role in Shein’s marketing strategy by promoting Shein Hauls on platforms like Instagram, helping the company gain market share from established brands like Zara and H&M.

What impact has Shein’s and Temu’s business models had on traditional fast fashion players?

Shein’s and Temu’s business models have significantly impacted traditional fast fashion players, with companies like ASOS losing market share due to the rise in monthly active users on Shein’s app.

How do Shein and Temu manage their production process?

Shein and Temu use on-demand manufacturing, where they communicate with factory bosses to produce specific quantities of items based on what is selling well, allowing them to keep inventory costs low.

What concerns have been raised regarding labor rights in Chinese factories producing for Shein and Temu?

Concerns have been raised about labor rights in the larger Chinese factories that produce goods for Shein and Temu. However, both companies have denied accusations of forced labor and other charges.

How has the fast fashion business model been criticized in terms of sustainability?

The fast fashion business model has been criticized for being incompatible with sustainability, as it promotes overproduction, overconsumption, and a disposable culture where items are quickly bought and discarded.

What is the UK government’s stance on the tax practices of companies like Shein?

The UK government has not yet indicated whether it will close the loophole that allows companies like Shein to avoid paying import taxes, even though there are calls for it to do so.