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Labor Groups Pick Apart Shein’s $15 Million Factory Plan

Shein has promised to shell out millions of dollars to upgrade hundreds of its factories in an effort to “significantly” improve the working lives of thousands of garment workers.

The fast-fashion Goliath said Monday that it will be spending $15 million over the next three to four years on improvements such as a multi-channel feedback system that allows workers to submit complaints and suggestions via email, phone or WeChat, though it did not elaborate further. The world’s most Googled brand will also double the $2 million it currently invests in its Shein Responsible Sourcing (SRS) program, increasing the frequency of independent factory audits, including unannounced spot-checks, and training on its code of conduct.

Shein said that all contracted factories must comply with its ethical standards, which are aligned with International Labour Organization conventions and local regulations. Failing to rectify “serious” infringements within a certain timeframe can result in the termination of business. (The Guangzhou- and Singapore-based company doesn’t own its own facilities.)

But TikTok’s buzziest retailer, which was once valued at $100 billion, is also facing mounting scrutiny—and criticism—over its business practices, which reportedly include copyright infringement, data privacy mismanagement, tax evasion, toxic chemical use and worker exploitation.

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Indeed its recent moves, which are part of a new Supplier Community Empowerment Programme (SCEP), arrive in the wake of allegations by a British broadcaster that employees at two factories in China were working 18-hour days, with only one day off per month, for as little as 3 cents per hour.

Shein said that an independent review conducted by Intertek and TÜV Rheinland “refute” most of the claims, including ones that the factories withheld salaries or deducted wages if mistakes were made or targets unmet. Workers at both factories, the former Rolling Stones collaborator said, are being paid “significantly higher” than the local minimum wage in Guangzhou and more than the average wage of workers in the region’s textile and garment production industry.

Allegations that workers only earn “mere pence” per completed garment are also “not factual and misrepresents the wage structures used by these suppliers,” Shein said, noting that the figures cited refer to a per-step-per-piece commission and not per completed garment. A basic T-shirt, it said by way of example, undergoes a minimum of 11 steps of “varying complexity,” including cutting off excess threads. Each worker in the production line is assigned just one of those steps, for which they earn a fee.

What the audit did reveal, however, was an issue with working hours. Employees at the first factory depicted in the Channel 4 documentary worked a maximum of 13.5 hours per day and received “at least” two to three days off every month. At the second factory, workers toiled up to 12.5 hours each day without a set framework for days off.

“While these are significantly less than claimed in the documentary, they are still higher than local regulations permit,” the Gen Z fave said. “Shein has therefore given both suppliers until the end of December to rectify the situation and reserves the right to take action against them if they fail to do so by then.”

While Shein is framing both the SCEP and the Channel 4 claims as separate issues, labor campaigners are not convinced.

“Rights abuses have been well documented, so this ‘financial commitment’ is simply an admission of failure to resource human rights compliance,” Thulsi Narayanasamy, director of international advocacy at the Worker Rights Consortium, told Sourcing Journal. “Companies must guarantee all workers in their supply chain have their basic rights respected or they shouldn’t be doing business. Ensuring fair wages and safe factories isn’t charity, it’s a basic operating cost.”

Additional inspections, she said, are not the answer. “If audits have failed to pick up on rights abuses, the solution isn’t more audits, it’s to examine, then address how a company’s own business practices impact on worker rights, and a signal that independent unions and genuine worker engagement is missing,” Narayanasamy said.

Like Shein itself, audits have come under the microscope of late for numerous failings that critics say are more about mitigating risk for brands than genuine impact for workers. Social audits in particular, according to Elizabeth Cline, director of advocacy and policy at Remake, are “notoriously ineffectual and easy to falsify.” The fact that its own investigation found evidence of illegally long hours throws this into relief as well, she said.

“What is news here? Are they trying to get kudos that their working conditions aren’t quite as horrible as the media portrayed?” Cline asked. “The company needs to publish the audits and names and locations of factories so that worker rights advocates can investigate further, as there is nothing in Shein’s latest publicity stunt to assure us that the situation for their workers isn’t grim.”

Ilana Winterstein, urgent appeals campaigner for the Clean Clothes Campaign, agreed, adding that the social auditing industry has “spectacularly failed” workers time and again.

“Social audits lack transparency and accountability and, crucially, they fail to prevent labor rights abuses,” she told Sourcing Journal. “Shein’s business model is built solidly on the exploitation of workers and there are many documented violations and cases of abuse in their supply chain. Shein is using these audits purely to protect brand reputation rather than protect workers’ rights. They are simply not worth the paper they are written on.”

What workers need, she said, is for their rights to be respected. This includes the right to freedom of association, which is severely restricted in China. Until Shein takes “real steps” toward protecting workers, social auditing is “nothing more than a smokescreen” to distract from the “ongoing exploitation” underpinning its “extreme” profits, she said.

Shein says, however, that it takes its responsibility to safeguard the welfare of workers at all its suppliers “very seriously.” Overall, Shein has commissioned more than 2,600 independent audits over the past 12 months, it said, declining to comment on whether it will be bolstering these with deeper worker engagement. Until the two factories it investigated “fully comply” with its code of conduct, it will be slashing orders by three-quarters.

“Shein prizes its reputation as a responsible fashion group and will not hesitate to take action like this where necessary,” it added.