Bipartisan agreement on any topic is rare, and it’s even more rare to see political legislators take an interest in supply chain issues. But, when these two phenomena converge, it often has to do with China. Over the last few weeks, as Shein’s public offering draws near, an increasing number of legislators are pushing for a closer look at this burgeoning mega-retailer, which has become a dominant online player in the U.S. and several other countries.
Shein can sell / promote clothes at a premium in Democratic countries based on freedom of speech and the wealth of customers who are not restricted on movement within their own countries. Micro CM model keeps costs low thanks to a lack of basic human rights - freedom of speech/ internal movement -in China's military dictatorship. This gives a competitive advatage in the double Gross Margin / CM game. Rural workers have to accept lower wages/ higher risk as they are prohibited from A) moving themselves or families within China to high earning areas B) complaining about it. Micro CMs are too small to bribe local officials to do anthing about it which international companies have to do via JVCs/ hiring larger CMs/ buying suicide nets etc.. Shien on you crazy diamond !
Thank you for another insightful piece. I think it's widely accepted that fast fashion poses significant sustainability issues. As an incoming college student, I've been a fan of Uniqlo's affordable prices and appealing styles, yet I'm now becoming more conscious of the potential ethical implications of supporting the brand.
Have you had the chance to delve into Uniqlo's practices? Given the durability and basic/timeless nature of their clothing, could this potentially offset their questionable manufacturing practices? I would love to hear your perspective on this!
Thank you Gad, I really enjoy reading your newsletter.
I wonder if the tax benefits of shipping products directly to the U.S. in small-value packages are greater than the logistics savings of bulk imports of companies like Zara (shipping costs). What do you think?
Outside of the US, the parliament members in the EU seem to be quite united too:
“On Thursday, Parliament adopted recommendations for the EU strategy for sustainable and circular textiles, with 600 votes in favour, 17 against and 16 abstentions.
The text calls for textile products sold in the EU to be more durable, easier to reuse, repair and recycle. Their production should respect human, social and labour rights, the environment and animal welfare throughout the supply chain. MEPs also want EU and national measures to put an end to “fast fashion”.”
Shein can sell / promote clothes at a premium in Democratic countries based on freedom of speech and the wealth of customers who are not restricted on movement within their own countries. Micro CM model keeps costs low thanks to a lack of basic human rights - freedom of speech/ internal movement -in China's military dictatorship. This gives a competitive advatage in the double Gross Margin / CM game. Rural workers have to accept lower wages/ higher risk as they are prohibited from A) moving themselves or families within China to high earning areas B) complaining about it. Micro CMs are too small to bribe local officials to do anthing about it which international companies have to do via JVCs/ hiring larger CMs/ buying suicide nets etc.. Shien on you crazy diamond !
Thank you for another insightful piece. I think it's widely accepted that fast fashion poses significant sustainability issues. As an incoming college student, I've been a fan of Uniqlo's affordable prices and appealing styles, yet I'm now becoming more conscious of the potential ethical implications of supporting the brand.
Have you had the chance to delve into Uniqlo's practices? Given the durability and basic/timeless nature of their clothing, could this potentially offset their questionable manufacturing practices? I would love to hear your perspective on this!
Thank you Gad, I really enjoy reading your newsletter.
I wonder if the tax benefits of shipping products directly to the U.S. in small-value packages are greater than the logistics savings of bulk imports of companies like Zara (shipping costs). What do you think?
Thank you for another interesting post!
Outside of the US, the parliament members in the EU seem to be quite united too:
“On Thursday, Parliament adopted recommendations for the EU strategy for sustainable and circular textiles, with 600 votes in favour, 17 against and 16 abstentions.
The text calls for textile products sold in the EU to be more durable, easier to reuse, repair and recycle. Their production should respect human, social and labour rights, the environment and animal welfare throughout the supply chain. MEPs also want EU and national measures to put an end to “fast fashion”.”
https://www.europarl.europa.eu/news/en/press-room/20230524IPR91913/parliament-wants-to-make-eu-textiles-and-clothing-industry-greener
Great piece! Now that Shein is entering Mexico, the economics completely changes because the de minimis threshold is now $50 not US'$800.