Bloomberg reports How Trump’s Trade War Built Shein, China’s First Global Fashion Giant.
On May 17, Shein ended Amazon’s 152-day streak as the most downloaded shopping app in the U.S., a remarkable feat for any seven-year-old clothing brand, let alone one most Americans over 30 still haven’t heard of.
One recent Thursday, the app debuted 6,239 new items, including a floral backless halter top ($5), purple dinosaur-print PJs ($10), and a prom-perfect fitted butterfly-sleeve dress with pearl trim ($22).
In 2018, as trade relations between the world’s two biggest economies were deteriorating, China responded to a new round of U.S. tariffs by effectively waiving export taxes for direct-to-consumer companies. Because Shein ships most orders from its warehouses in China, it was already in a good position in the U.S., where packages worth less than $800 have been able to enter the country duty-free since 2016. When the Trump administration later imposed tariffs to make Chinese products more expensive, the small-value shipments remained exempt.
Today, Shein pays neither export taxes on most of its products nor, in the case of the U.S., import taxes, an advantage that tilts the playing field heavily against its rivals, particularly as consumers shift to and stay online.
Shein requires the manufacturers contracted to make its clothes to be located no more than a five-hour drive from its sourcing hub in the southern Chinese city of Guangzhou, according to company documents seen by Bloomberg. Suppliers must also be able to complete the design and production process in around 10 days, faster than Zara’s famous three-week turnarounds and significantly quicker than the three-to-six months lead time typically needed by traditional apparel makers.
I confess. I had never heard of Shein but I now have an opinion. If it's good for the consumer I am generally in favor of the idea.
This is undoubtedly excellent for the consumer. And who am I to argue with fashion, especially purple dinosaur-print PJs for only $10. Let those who wish to burn money pay $88 for fashion jeans with holes in the knees.
Maybe Shein will try my idea for bedsheets with cute bull images, a genuine "bull sheet", perhaps interspersed with the words "no" or "sheet" also printed all over the sheet.
More seriously, design to production is a mere 10 days. One can come up with a design, order a couple hundred items, and if they don't sell, well, so what?
That is a model I appreciate, and clearly so do consumers.
This is progress. I have no idea of the quality, but if Zoomers like the clothes, who am I to object?
Improved Standards of Living
More goods for less cost represents improved standards of living. This is what the Fed is fighting. The Fed wants people to pay more and get less.
For discussion please see Fed Will Foolishly Continue QE Purchases in Search of Higher Inflation
For a comparison of the Fed to the Bank of China, please see The Fed and the Bank of China Both Act to Punish Savers
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