The controversial Chinese online retailer Shein plans to invest a total of €250m in the EU and UK over the next five years to advance its goal of "creating a future ready fashion industry". The flagship initiative of the investment program is a "Circularity Fund", for which Shein is providing launch capitalisation of €200m, the Singapore-based company announced on Wednesday.
The fund builds on the online apparel retailer's existing initiatives to promote R&D and innovation in circularity for the fashion industry, and will support European companies developing next-generation technologies and solutions. Shein planned to invest in early-stage start-ups working on textile-to-textile recycled materials innovation but also to enter off-take agreements or other commercial partnerships with more mature start-ups with existing production capacity in textile-to-textile recycled materials or new and emerging preferred fibres, the group explained.
"As a global leader in our sector, Shein has both the responsibility and the opportunity to accelerate innovation that can reduce the fashion industry's environmental footprint," the group's executive chairman, Donald Tang, said.
A further €50m is earmarked for initiatives that are to help European brands, designers and artisans expand their online businesses using Shein's marketplace services. Investments in R&D or pilot Shein production facilities in Europe or the UK were also possible.
The group is aiming to go public, but encountered resistance to its plans for an IPO in New York from US regulators and lawmakers amidst mounting tensions between the US and China. According to recent reports by Reuters and the Financial Times, Shein is now seeking to be listed at the London Stock Exchange.
"Ultra-fast fashion" raises environmental and consumer protection concerns
The online retailer has come in for criticism for its business model, based largely on the sale of clothing produced cheaply in China. Despite concerns over the environmental impact of the short-lived apparel and allegations of forced-labour use, the low-cost of Shein clothing and the brand's presence on social media platforms such as Instagram, Tiktok or YouTube have made it popular particularly with young consumers.
However, EU regulators are responding to consumer protection concerns. Along with its competitor Temu, Shein is the subjects of a recent EU enforcement action. In response to a complaint submitted by consumer organisations, the European Commission sent a formal request in late June for information about the companies' compliance with the EU Digital Services Act, and specifically about their compliance with provisions such as those barring manipulative online interface design and mandating the protection of minors and the traceability of traders.
