The BrandZ Top 50 Chinese Global Brand Builders 2021 was published in May 2021 by WPP in collaboration with Google. This industry report highlights leading Chinese companies that have most successfully established a presence in overseas markets. Alibaba, ByteDance and Huawei ranked in the top 3, followed by other famous brands such as Lenovo and Hisense. Creeping in in 11th place was SHEIN, a brand that few Chinese people have heard of. Tencent, China's multinational technology conglomerate, is behind SHEIN (pronounced She In). Compared with other brands on the list, SHEIN is unique. Although it is a China-based Chinese company, it sells abroad and has targeted overseas market such as Europe, America, Australia and the Middle East since its inception. In February 2021, SHEIN was ranked second only to Amazon for shopping apps in the US. Its website was no.1 in the world for web traffic in the fashion and apparel category, ahead of household names Nike, Zara, Macys, Lululemon and Adidas. SHEIN is an international B2C fast fashion e-commerce platform established in Nanjing, Jiangsu Province in 2008. The company mainly focuses on women's wear, but also sells other fashion items. By 2020, its sales network covered more than 220 countries and regions around the world. Although the coronavirus pandemic has threatened most retail businesses - even Zara's parent company Inditex planned to close 1,000 to 1,200 offline stores - SHEIN grasped the opportunity to grow its business. It earned almost $10 billion in revenue in 2020 and has grown over 100% for each of the past eight years. (See Figure 1 for annual revenue growth comparison.) Figure 1: Annual revenue growth 35 30 25 20 15 10 S SHEIN: ANOTHER AMAZON OR TERMINATOR OF ZARA? 0 2014 Annual Revenue (Billion USD) 2015 Zara (Inditex) 2016 2017 2018 2019 UNIQLO- Luluemon -Shein 2020 Source: Compiled by authors using data from Forbes, late post and other public sources Beyond fast fashion Traditional garment manufacturers designed several styles a year. Then fast fashion appeared. Zara, the no.1 fast fashion brand, is much more efficient, taking only two to three weeks from design to production. SHEIN, however, is Fast Fashion 2.0, making Zara a legacy player. SHEIN is faster. It further shortened the time from design to production from 2-3 weeks to 5-7 days. It uses Google Trend Finder as well as competitors' websites to do real- time data analysis and understand what's "in fashion." Then an in-house team focuses on design and prototyping, and suppliers start to produce quickly. SHEIN's price is lower. On their online platforms, for similar styles of jeans, Zara's price is $49.90; SHEIN's is only $17. In terms of quality, according to bloggers' and influencers' try-on experience, there is indeed not much difference between SHEIN and Zara.4 SHEIN has more products. SHEIN can test hundreds of new products every day, and release over 1,000 new products a day, faster than Zara. For two consecutive days (17 and 18 May 2021), SHEIN added 4,859 new products and 5,834 new products respectively5 - almost the same as Zara's new items for a whole year! SHEIN's comprehensive marketing strategy combines social media, influencers, user- generated content (UGC), search engine optimization (SEO), short videos and livestreaming. SHEIN is one of Google's major China-based clients, and pays aggressively on Facebook, Instagram and Pinterest. It also invites key opinion leaders (KOLS) to endorse the company, although it uses more lower cost KOCs (key opinion customers) than KOLs. These KOCS post pictures and short videos on Instagram, YouTube or TikTok and get free product delivery every month. They can also earn 10% to 20% commission from recommended sales. SHEIN was the most talked about brand on TikTok in 2020. With no physical stores, SHEIN uses pop-up stores in cities like Paris and London to create a unique sense of the brand. You name a marketing practice, SHEIN is using it to the ea ur people were stuck at home UMUUNG TAUNG with time on their hands, they came across these bloggers posts on fashion and dressing on Facebook, Twitter and TikTok. Attracted by SHEIN's stylish design and low prices, consumers became addicted to the company, which many had likely not heard of before. SHEIN uses a revolutionary supply chain management system. It pays its suppliers on time - unheard of in China's apparel industry. It even pays them fast - within 30-45 days, rather than the industry norm of 90 days. It offers suppliers loans to help them expand quickly and grow together with SHEIN. Most importantly, it has built a supply chain management (SCM) system and requires every supplier use the software, which allows SHEIN to automate every aspect of its day-to-day dealings with suppliers. The system can obtain big data on consumer behavior from its own website; suppliers receive updates in real time and adjust their production plans. SHEIN now has more than 300 loyal suppliers, who are even willing to accept an order for 30 items, which gives SHEIN the ability to test with least cost. SHEIN's suppliers deliver in 7-8 days - some can even achieve 3-5 days - while the industry average lead time is 15-20 days." Next: Another Amazon? Although it started with women's wear, SHEIN has expanded to offer men's apparel, children's clothes, beauty, home furnishings, accessories, shoes, bags and other fashion items. This is the classic route many e-commerce giants have followed. Amazon from books to everything, JD.com from 3C to everything, Meituan from food delivery to all kinds of location-based services. However, will SHEIN open to other third-party merchants, like Amazon, Alibaba and JD.com, and become a marketplace? It is said to be experimenting in this direction and has conducted a small range of tests for accessories. If SHEIN changes its model from online Zara to compete with the likes of Amazon, eBay and Alibaba, its weaknesses will become obvious - either in traffic or in logistics ability. If SHEIN keeps its current model, it will soon reach the limit of category expansion, and then of customer acquisition. Standing at a crossroads, what will SHEIN choose? Learning from SHEIN Although SHEIN offers fast fashion, it is unique. If it had simply followed a traditional e- commerce path, it would have found it difficult to break into the fast-fashion space dominated by Western companies. Taking China's advantages and applying them to the global market. Although OEM companies had been worried about excess capacity due to shrinking overseas markets (among other reasons), this had now become a silver lining for Chinese cross-border e- commerce. Whereas in the past, "made in China" was considered low price and poor quality, with the gap in quality closed, the low price was now an advantage. This advantage has made SHEIN and will also allow more Chinese companies to be truly global. Using big data and algorithms to replace local knowledge and achieve agility. SHEIN sells into almost every major market in the world, and each market has different tastes and trends. But SHEIN does not need to have local knowledge of all these markets. It collects data from competitors and its own website to design new items for each market. Once the new items go live, it records consumer behaviors - clicking, adding to shopping cart, placing order - and the algorithm predicts demand and inventory and updates production quotas, and suppliers order extra materials automatically. The algorithm also recommends particular items to other users with similar profiles. The process happens in real time and with almost no human intervention. SHEIN hired world- class big data developers and machine learning talents to set up the whole system. Encouraging Gen Z to participate in the production and sales process. SHEIN targets Gen Z, a consumer group that want to express themselves and be seen. The company provides them not only with clothes but also with a sense of participation and a pleasant experience. SHEIN encourages consumers wearing its clothes to upload their pictures and videos to all kinds of social media platforms. If you target Gen Z, you cannot ignore their demand and desire to be part of product creation. For them, it is no longer what the product can do for me but what I do with this product. The center is on the "1," not the product. In 2021 news broke that SHEIN was planning its IPO, opening people's imaginations to SHEIN's future. What will it be? * 3C = computer, communication, and consumer electronics 1 https://www.ebrun.com/ebrungo/zb/433240.shtml 2 McCormick, Packy. "Shein: The TikTok of Ecommerce." Not Boring blog, 17 May 2021. https://www.notboring.co/p/shein-the-tiktok-of- ecommerce?token-eyJ1c2VyX2lkljozNDA1MTcxMCwicG9zdF9pZCI6MzY0ODM2OTMslI8iOiJ FNXJOaylslmlhdCI6MTYyMTI1NzQ5MCwiZXhwljoxNjIxMjYxMDkwLCJpc3MiOiJwdWItMTAwMj UiLCJzdWliOiJwb3N0LXJIYWN0aW9uln0.VODD_yZdws 1 lm3ufQT_leJQ06G7_qvSR9ZMeoGkd hwY * 3C = computer, communication, and consumer electronics 1 https://www.ebrun.com/ebrungo/zb/433240.shtml 2 McCormick, Packy. "Shein: The TikTok of Ecommerce." Not Boring blog, 17 May 2021. https://www.notboring.co/p/shein-the-tiktok-of- ecommerce?token=eyJ1c2VyX2lkljozNDA1MTcxMCwicG9zdF9pZCI6MzY0ODM2OTMsl|8iOiJ FNXJOaylsimlhdCI6MTYyMTI1NzQ5MCwiZXhwljoxNjIxMjYxMDkwLCJpc3MiOiJwdWItMTAwMj UiLCJzdWliOiJwb3N0LXJIYWN0aW9uln0.VODD_yZdws1lm3ufQT_leJQ06G7_qvSR9ZMeoGkd hwY 3 lbid 4 https://www.163.com/dy/article/G3GU1EDH0531UMBC.html 5 SHEIN website 6 McCormick, Packy. "Shein: The TikTok of Ecommerce." Not Boring blog, 17 May 2021. 7 https://www.sohu.com/a/411709455_120119540 8 https://www.ebrun.com/20210105/417589.shtml 9 "Chinese fashion retailer Shein values at $46.8bn as it prepares for IPO." Dao Insights, 25 May 2021. https://daoinsights.com/news/fashion-retailer-shein-values-at-46-8bn-as-it-prepares-for-ipo/ Source: Institute for Management Development (www.omd.org) Questions: 1) How online activities strengthen SHEIN's competitiveness? (/50% - 300 words +/- 15%) 2) Would you advise SHEIN to become a new Amazon? Why? (/50% - 300 words +/- 15%)