The world's largest fast fashion retailer Shein has announced a $15m overhaul of its supply chain following allegations of worker abuse at supplier factories.
Shein, which was valued at $100bn by Bloomberg, said the money would be used to upgrade hundreds of factories in China. It is aiming to complete 30 projects by the end of 2022, 100 by the end of 2023 and up to 300 within four years.
A documentary by Channel 4 alleged Shein's supplier factories were forcing garment makers to work 18-hour days, paying them as little as 3p per item, and permitting them just one day off a month.
The company's business model relies on small batches and forecasting trends to cut inventory to “a single digit”.
Adam Whinston, global head of ESG for Shein, said the company was “committed to our suppliers and their employees and will significantly improve the working lives of thousands of garment workers over the next three to four years”.
Shein said it was implementing a “multi-channel feedback system” for workers at its contracted factories to enable workers to anonymously submit complaints, feedback and suggestions.
It said as part of its responsible sourcing programme all suppliers must comply with its code of conduct, which is aligned to International Labour Organization (ILO) standards. Any supplier found to be in breach of these could see its contracts terminated if they fail to rectify “serious infringements” within a set timeframe.
A spokesperson from the Clean Clothes Campaign told Supply Management: "For a company worth $100 billion, spending $15 million over a four year period exemplifies how little Shein really cares about their garment workers.
"Shein has stated the $15m will go towards 'making physical enhancements to its suppliers' factories' under their 'Supplier Community Empowerment Programme,' but this does not address the urgent cases of abuse in their supply chain, nor does it look like worker empowerment".
Anna Bryher, advocacy lead at Labour Behind the Label, told SM Shein “are stuck in the 90s on social responsibility”, and said the fast fashion brand must follow in the steps of high street retailers and publish a supplier list, and said “a worker hotline is no replacement” for adequate working conditions.
“The root cause of the abuses uncovered by Channel 4 is Shein’s business model that drives excessive working hours in intense pressure production environments, on tiny margins. Sure, anyone can earn minimum wage through piece rate if you work 18 hour days. Shein must address the core issues if it wants to shed the bad publicity of being a labour rights abuser,” Bryer said.
An audit conducted by Shein found one of its factories was requiring staff to work 13-and-a-half-hour days with only two to three days off a month, while another was found to be forcing workers to undertake 12-and-a-half hour days, with no fixed structure for days off.
“While these are significantly less than claimed in the documentary, they are still higher than local regulations permit,” it said.
Suppliers will have until the end of December to “rectify the situation”, and the company said it has reduced orders from the suppliers by three-quarters until these suppliers have improved standards.
Shein states in its sustainability report that “many” of its suppliers need to improve to meet international standards.
Audits of almost 700 of its suppliers found that action was needed at 83% of its suppliers to improve standards, with 12% of these needing “immediate action”.”
Whinston continued: “We take our responsibility to safeguard the welfare of workers at all our suppliers very seriously. Through the SRS programme we have been working diligently with our contracted partners to improve welfare and working conditions. We are now looking to double our investment in the SRS programme to improve supplier management further.”
“While the audit did reveal an issue with working hours, this has been raised with both manufacturers and we have significantly scaled back our orders from them until they take effective action. Shein prizes its reputation as a responsible fashion group and will not hesitate to take action like this where necessary.”
Shein denied workers were being underpaid, saying “wages are in accordance with local labour laws and regulations”.
On its website Shein says its business model is “built on the premise of reduced production waste and on-demand manufacturing” with a system that can “identify trends and anticipate consumer demands with greater accuracy than traditional forecasting models”.
“We start by producing an ultra-small batch of each style (100-200 pieces) and gauge market response in real-time,” said the company.
“We respond only with larger-scale production to meet demand if it’s warranted. This results in significantly less waste and excess inventory.
“The average unsold inventory level in the industry is between 25-40%; at Shein we have reduced this to a single digit. If adopted by the rest of the industry, we believe global textile production could drop by more than 20%.”
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