Shein, an online fast fashion group planning to list in London, has launched a €200mn “circularity fund” that, according to its executive chair, will address fashion waste. This comes amid concerns over the sustainability of the brand.
Donald Tang, the CEO of the China-based company, said on Tuesday that the firm intends to invest the money in new businesses and established ones in the UK and Europe as soon as possible.
Tang stated that “our financial resources, scale, and leverage will allow us to be a significant test-bed or application of these technologies or processes.”
The investment planned is only a fraction of Shein’s $2bn profit for 2023. The ecommerce company, which has been gaining on fashion retailers like Zara and H&M since the pandemic boom, was valued at $66.6bn during its last funding round.
Shein may choose to invest in companies that are still at an early stage of development and work with recycled materials. Or, Shein might strike deals with mature companies who use emerging or new fabrics as part of their operations.
Shein has decided to list its shares publicly in London after abandoning a planned IPO for New York. The company was caught in the tensions between China and the US, and also faced accusations of links with forced labour within China’s Xinjiang. Shein denied the allegations, stating that it has a “zero-tolerance” policy towards forced labour.
Shein, which is based out of Singapore but retains the majority of its operations in China and has retained most supply chains in China as well, is also looking at a backup plan to list on Hong Kong.
Tang refused to comment on whether the Chinese securities regulator would approve the listing process no matter where it takes place.
When asked if the fund was in response to criticisms and concerns about its vast supply chains, Tang replied that it was “a continuation of our efforts and journey we have been on quite some time”.
Campaigners have targeted fast-fashion companies like Shein, claiming that their growth has resulted in an unprecedented amount of cheap and low-quality clothing that ends up on landfills.
According to the Ellen MacArthur Foundation – a non profit that fights against pollution and waste – more than half of fast fashion is thrown away in less than one year. Shein explained that its business model of on-demand meant it carried less stock than traditional retailers.
Tang stated that fashion waste was “not just about money” and could not be “fixed individually”.
He said that the circularity project was too large and needed collaborative efforts. He called on other parties, such as rival retailers, sovereign funds, investors, government officials, non-profit organizations, and academics to join.
Shein submitted confidential paperwork to the UK’s market regulator last month, bringing the company one step closer towards what could be an exciting listing on London’s capital markets.
Shein met with Jonathan Reynolds, the new Business Secretary, just before Labour’s landslide victory in last week’s general elections. Labour previously stated that London should be happy about a Shein floatation because it would bring higher standards of regulation to the company.
The company said that on Tuesday it would also invest an additional €50mn into UK and EU brands and designers who work with Shein. It will also make “potential investments” for research and development, or a prototype factory in Europe or UK.
Shein stated that in 2022, the company launched a resale platform in the US, which is now available in the UK, and Europe. More than 115,000 used items are listed for sale.
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