Thursday, July 25, 2024

SHEIN to invest €250M in the UK and EU – Silicon Canals

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Singapore-based SHEIN, an online fashion and lifestyle retailer, announced on Wednesday that it has committed to invest €250M in the UK and EU over the next five years. 

The announcement comes a few weeks after Shein confidentially filed for an IPO in London. This move follows significant backlash from American lawmakers after it tried to file an IPO in the US in November due to its use of forced labour in its supply chain, reports CNBC.

The company’s investment will include the creation of a Circularity Fund, along with operational and commercial investments aimed at further enhancing SHEIN’s circularity efforts and supporting the local entrepreneurial ecosystem in the UK and Europe. 

Donald Tang, SHEIN’s Executive Chairman, says, “As a global leader in our sector, SHEIN has both a responsibility and an opportunity to accelerate innovations that can address the environmental footprint of the fashion industry.”  

“The Circularity Fund will build on our support for entrepreneurs and businesses at the forefront of innovation in circular initiatives, with a focus on supporting entrepreneurship and innovation in the UK and the EU, where some of the most exciting work in this space is taking place. Given SHEIN’s scale and reach, SHEIN can become a catalyst for the widespread adoption of these solutions across the industry,” adds Tang. 

Facing regulatory issues in Europe

The announcement comes as SHEIN is facing scrutiny by the European Union for its environmental and regulatory impact.

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The Singaporean company, preparing for an IPO in London, sources clothes from Turkish factories. However, the majority of its products are made by over 5000 suppliers in Guangzhou, China, reports Reuter.  

As part of the EU’s efforts to combat the negative effects of fast fashion, governments have proposed measures to penalise companies promoting the trend of cheap and disposable clothing.

In addition, Shein has been designated as a Very Large Online Platform (VLOP) by the EU, subjecting it to stricter requirements under the Digital Services Act.

The European Commission has also raised concerns by requesting more information from Shein and its Chinese counterpart, Temu, regarding their compliance with advertising and the protection of minors.

These actions have followed complaints from the consumer organisation BEUC.

In a move to address criticisms and controversies, the company launched €200M Circularity fund.  

Launch of Circularity Fund

SHEIN announced its flagship initiative — Circularity Fund, with an initial capitalisation of €200M from SHEIN. 

The fund will support startups and businesses in Europe and the UK to develop next-gen technologies and solutions for the fashion industry.

The company does it by:

  • Investing in early-stage startups working on textile-to-textile recycled materials innovation and related areas. 
  • Entering into offtake agreements or other commercial partnerships with more mature startups with existing production capacity in textile-to-textile recycled materials or new and emerging preferred fibres.

SHEIN will be the cornerstone investor of the Circularity Fund and is inviting businesses, financial institutions, and sovereign wealth funds globally to co-invest in the Fund.

Empowering Designers, Brands and Artisans

The remaining €50M of the initial €250M is earmarked for initiatives to support brands, designers, and artisans across the UK and the EU to grow online businesses with SHEIN’s marketplace services, as well as potential investments in R&D or pilot SHEIN production facilities in Europe or the UK.

Funds are allocated to bring more UK and European artists and designers into SHEIN’s designer incubator program.

The initiative aims to help talented designers commercialise their designs by partnering with SHEIN for manufacturing, marketing, and logistics.

Another initiative will help UK and European businesses join SHEIN’s Marketplace platform to access SHEIN’s global customer base.

Mr. Tang adds,  “All across Europe and the UK we have identified a rich and diverse pool of designers, brands, and craftspeople who we know can reach a much wider audience on our platform and who we are confident can successfully scale up their businesses with SHEIN”.

evoluSHEIN Roadmap

The launch of the Circularity Fund extends SHEIN’s existing partnerships with innovative companies working on circular solutions within the fashion industry, in line with the company’s evoluSHEIN Roadmap, a comprehensive strategy that guides SHEIN’s sustainability efforts. 

Those efforts include:

  • Partnering with Queen of Raw to source surplus or “deadstock” fabric from other brands. 
  • Increasing the adoption of cool transfer denim printing technology among SHEIN suppliers.
  • A multi-year research partnership with Academic institutions studying how to achieve commercially scalable production of recycled polyester fibres through chemical recycling.

SHEIN: online fashion and lifestyle retailer

Founded in 2012, SHEIN is a global online fashion and lifestyle retailer, offering SHEIN branded apparel and products from a global network of vendors, all at affordable prices.

The company has more than 10,000 employees operating from offices around the world and continues to expand operations globally.

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