SHEIN’s Commitment to Sustainability and Fair Practices: A Response to Recent Media Reports

On May 13, the Swiss NGO Public Eye published a report about the working conditions at the factories of some of SHEIN’s third-party suppliers.

While we do not recognise many of the allegations in this report, the discussion on working hours and wages raised by Public Eye is important to us, and we have made significant progress on enhancing conditions across our ecosystem.

The Public Eye Report is based on a sample of 13 interviewees and, while all voices in our supply chain are important, this small sample size should be seen in the context of our comprehensive ongoing process to continually improve our supply chain, which involves engaging with thousands of suppliers and workers within the supply chain.

SHEIN is investing tens of millions of dollars in strengthening governance and compliance across our supply chain, as well as in empowering our suppliers to build more successful and responsible businesses, and we will continue to make substantial investments in these areas. These efforts are already delivering results, with our regular supplier audits showing a consistent improvement in performance and compliance by our supplier partners.

We are actively working to improve our suppliers’ practices, including ensuring that hours worked are voluntary and that workers are compensated fairly for what they do, and also recognize the importance of industry collaboration to ensure continuous improvement and progress in this area.

This includes improvements in ensuring that workers are compensated fairly for what they do. As a result of our efforts, research conducted by our third-party auditors across more than 4000 workers at SHEIN supplier facilities in China has found that they earn basic salaries (before overtime) that are on average, two times higher than the local minimum wage, and more than 50% higher than the Global Living Wage Coalition’s 2022 living wage for Shenzhen.

The report does not convey the reality of SHEIN as an organization. We are committed to being a responsible global company and we work closely with governments and authorities around the world to ensure we comply with the laws and regulations in the markets we operate in.

Our Approach to Supply Chain Governance

SHEIN works with a network of third-party contract manufacturers globally, including China, Brazil and Türkiye.

We recognize that our responsibilities extend throughout the supply chain, including our third-party manufacturing suppliers. We are a signatory to the UN Global Compact (UNGC), and support the Ten Principles focused on human rights, labour, environment, and anti-corruption. We expect our supplier partners to share our commitment to human rights.

SHEIN has developed and implemented robust supply chain governance policies and mechanisms that we call the SHEIN Responsible Sourcing (SRS) Program. The policy that governs our third-party suppliers is the Supplier Code of Conduct (CoC). This was developed by drawing from industry best practices, guidance from regulators, and aligned to international standards, such as the core conventions of the International Labour Organization. Through the SRS, we enforce stringent requirements on our suppliers to comply with health and safety, labour and social welfare, and environmental standards, as well as applicable laws and regulations.

Our strategy pairs enforcement with empowerment, ensuring that our manufacturing suppliers A) have a clear understanding of SHEIN’s expectations and standards, B) have the infrastructure, knowledge and ability to meet said standards, C) consistently comply with SHEIN’s Code of Conduct (CoC), including fair wages and working conditions.

A) SHEIN’s Expectations and Standards

To work with SHEIN, all our suppliers must sign and agree to abide by our Supplier Code of Conduct (CoC) which prohibits the use of forced labour and child labour, wages and working hours abuses, and employee discrimination and harassment, among other issues.

SHEIN regularly conducts introductory and refresher training sessions that detail and explain the standards within the CoC, providing clear examples, outlining steps for remediation and penalties in cases of non-compliance. In 2023, we organized 133 group workshops and 276 one-on-one training sessions for suppliers, with participant numbers totalling over 5,200.

B) Infrastructure, Knowledge and Ability

We firmly believe that to improve standards across our supply chain, we need to invest in uplifting our supplier partners and empowering them to operate effectively and responsibly.

SHEIN has earmarked a total of US$70million investment for supply chain empowerment and support till 2028. This investment is split across various initiatives that continuously transform traditional production models with technology advancements, provide upskilling initiatives for workers, facilities enhancements, as well as services for the communities within the supplier ecosystem.

Factory Upgrading & Enhancements: US$15 million

Centre of Innovation for Garment Manufacturing (CIGM): US$40 million

Services for the Community: US$15 million

SHEIN’s Supplier Community Empowerment Program was first announced in 2022, with an initial investment of US$15million till 2026 going towards physical enhancements at suppliers’ factories, ensuring that our supplier partners are able to meet SHEIN’s standards for model factory layouts, safety requirements, as well as staff facilities.

Our target was to complete upgrading and expansion works at 100 factories by the end of 2023, and we have exceeded this target. In 2023, over 407,000 sq metres (over 4.4 million sq ft) of workspace across 132 factories have been successfully upgraded. As of April 2024, we have already disbursed more than US$7million for factory upgrading and expansion works in Southern China.

SHEIN also built its first Centre of Innovation for Garment Manufacturing (CIGM) to empower its global manufacturing supplier community and create a more sustainable production ecosystem using lean production methodology, and agile processes and applications, based on SHEIN’s industry-leading on-demand production business model.

Through the CIGM, we impart our key learnings to SHEIN’s manufacturing suppliers to drive organizational and process transformation for our suppliers. In 2023, SHEIN conducted 620 training sessions for workers in the supply chain, covering topics including business and operational processes, the latest technologies in garment production, certification courses focusing on quality inspections and assurance, and national vocational skill level certifications.

SHEIN has also extended its avenues of support to include family members of the workers within supplier communities. The US$15million investment that has been earmarked for services for the community goes towards initiatives to improve the wellbeing of workers and their families. For example, SHEIN has already invested over US$200,000 for the construction or upgrading of canteens for workers, and over US$400,000 for the construction or enhancements of free accommodation options for migrant workers.

C) Compliance

Working Hours and Wages

SHEIN has established clear and transparent requirements as part of our supply chain governance policies. Per SHEIN’s Supplier Code of Conduct (CoC) that all supplier partners agree to adhere to, SHEIN requires that employment and any hours worked must be voluntary.

The CoC further states that supplier partners must pay their employee salaries on time, and that salaries cannot be lower than the minimum wage required by the laws of the country / region where the supplier is located. Supplier partners must also comply with the legal requirements for overtime compensation.

SHEIN also does not condone disciplinary deduction from wage payment.

Enforcement and Systematic Management

SHEIN enforces supplier compliance through our SHEIN Responsible Sourcing (SRS) Policy, which establishes clear definitions and penalties for violations of SHEIN’s CoC, and provides for comprehensive supplier audits by third-party verification agencies (i.e. Bureau Veritas, Intertek, Openview, SGS, TÜV Rheinland and QIMA) and SHEIN’s internal auditors.

All prospective suppliers must undergo an SRS assessment before they can work with SHEIN; those who receive the lowest audit grade are not allowed to work with SHEIN.

After onboarding to SHEIN’s network, suppliers undergo regular unannounced on-site SRS assessment, and failure to cooperate with these assessments will result in termination of the business relationship. Where violations are found, we not only take action to penalise suppliers in line with our SRS Policy, but also follow up with suppliers to validate remediation and corrective action.

We require suppliers to establish and maintain employees’ payslips and attendance records. During SRS audits, our third party and internal auditors collect samples of workers’ payslips and timesheets, and interview workers to examine compliance with our policies. Where violations are found, we take firm action. Our SRS policy framework lays out clear penalties and remediation requirements for violations, differentiated by severity.

We also have dedicated training and education programs to improve suppliers’ wages and working hours practices. During such training sessions, we reinforce requirements under local laws and SHEIN’s policies, teach suppliers how to properly calculate wages and working hours, help them establish more effective data management, and share other best practices.

From fewer than 700 audits conducted in 2021, we conducted 3,990 on-site audits on suppliers in China in 2023, covering contract manufacturers that represent approximately 95% of SHEIN-branded products by procurement value.

As part of our efforts to ensure that workers are compensated fairly for the work that they do, and that they earn a decent wage, we regularly engage third-party agencies including Bureau Veritas, Intertek, Openview, SGS and TÜV Rheinland to conduct salary audits on our suppliers. Research conducted by our third-party auditors across more than 4000 workers at SHEIN supplier facilities in China has found that they earn basic salaries (before overtime) that are on average, two times higher than the local minimum wage, and more than 50% higher than the Global Living Wage Coalition’s 2022 living wage for Shenzhen.

SHEIN has also set up anonymous grievance channels where workers at any of SHEIN’s supplier partner facilities can report issues, including those concerning their wages and working hours. SHEIN takes all reports seriously and investigates each case to address complaints and concerns. SHEIN is committed to set high standards in our governance of our supply chain. We take firm actions to ensure that our suppliers comply with our standards and requirements, while also investing significantly in supplier empowerment efforts and we are continuing to make sustained and important progress in ensuring that workers our supply chain are treated with dignity and fairness.