Entrepreneur Stories

July 25, 2023

5 mins

The Silent Architect Behind the Fast Fashion Revolution

In the world of quick and trendy clothing, there is a remarkable man whose company became worth $100 billion in less than ten years. But what makes him stand out even more is his mysterious personality. This is the story of how Shein, a fashion service, became incredibly influential by constantly understanding consumer trends and leveraging technology.

Born and raised in the Chinese province of Shandong, Chris Xu’s interest in technology led him to pursue a degree at Qingdao University of Science and Technology. After graduating, he worked for a marketing consulting firm, Nanjing Aodao Information Technology Co, where he specialized in search engine optimization (SEO). While working in Nanjing, Xu learned everything possible about SEO, becoming an expert, while also engaging in commercial activities.

The Birth of Shein: A Controversial Genesis

This valuable experience helped Xu realize the commercial value of selling Chinese goods to international markets at a markup. In 2008, Xu left Nanjing and began working on building an online retail store for cheap items with two co-founders, Wang Xiaohu and Li Peng. During this time, Xu discovered that wedding dresses were one of the most sought-after products in international markets. The next part of this story is unclear and has different renditions depending on the source. According to QQ news and Li Peng, once Xu realized that the only thing stopping international customers from buying his dresses was currency conversion, he “vanished” with all the business’ PayPal accounts and ignored all of Li and Wang’s calls. Li stated that Xu had kicked him and Wang out of the game and left to work on the business alone. However, Shein and Xu himself rejected this characterization and threatened to sue Li and Wang. 

Sheinside to Shein: The Evolution of a Fashion Giant

Whichever story is true, Xu ultimately ended up starting SheInside in 2012. SheInside initially operated as a drop-shipping company and sourced its clothing items from wholesale markets. Two years after starting SheInside, Xu wrote on Facebook: “The company has grown rapidly and has more than 50 employees!” In 2015, Sheinside officially rebranded as Shein.

Shein's Unique Business Model

Under Xu’s leadership, Shein began to develop its own supply chain and hired technical college graduates to scour the internet for popular designs. Additionally, it formed an in-house design team and bought competitor Romwe. These improvements combined with Shein’s business model of “real-time retail” and “fast fashion” model was a game changer. New designs could take as little as three days to produce and there are thousands of items listed on the site at any given time. Shein then used an algorithm to identify and track fashion trends based on the items sold on their website. Shein was not concerned about the quality, but rather the quantity it was able to produce in order to gain unique insights into consumer interests. This rapid product cycle was a key factor in Shein’s rise.

The Power of Digital Influence

Another crucial element of Shein’s success was its marketing strategy. The company became a major user of advertising driven by influencers and social media, especially TikTok. This approach allowed Shein to reach a vast audience and build a strong online presence. The allure of Shein eventually found a global stage on TikTok, where the #Sheinhaul hashtag blew up. Videos with the hashtag were digital showcases often featuring enthusiastic shoppers in their bedrooms, surrounded by the latest trends in decor, as they revealed their latest Shein purchases from oversized cardboard boxes. This digital engagement catapulted Shein to impressive heights. As per data from UBS Evidence Lab, Shein is now the second most downloaded shopping app in the US. The brand's influence extends to its TikTok presence, where it has amassed more followers than any other retail apparel brand. Furthermore, Shein has become the most searched-for apparel retailer in the US on Google, highlighting the brand's widespread recognition and influence.

Shein's Global Impact and Controversies

While Shein is very secretive about essentially everything, private investors valued the company $100 billion during a funding round in 2022. Currently, the valuation is stated to be approximately $64 billion as they seek $3 billion in a recent funding round. However, Shein denies the accuracy of this information. In addition, Shein’s revenue continues to increase despite its profits slowing down with it bringing in an estimated revenue of $30 billion in 2022. Shein is hopeful about growth in both profits and revenue for the near future.

Shein is obviously very successful with it being the biggest fashion retailer in the world. However, Shein’s rise to success has not been without controversy. The brand has faced accusations of design theft from small artists, leading to public outcry. In 2020, it sparked outrage for selling a "metal swastika pendant necklace”, prompting an apology and a pledge to cease sales of religious items. Labor conditions have also been a point of concern, with a 2021 report revealing violations of local Chinese labor laws. Furthermore, Shein's fast-fashion model has raised environmental concerns, from contributing to a throwaway culture to the discovery of toxic chemicals in its clothes. Despite these controversies, Shein's influence in the fast-fashion industry continues to grow.

Shein's Potential IPO and Xu's Vision for the Future

As Shein continues to dominate the fast fashion industry, it is reportedly in discussions with major investment banks and stock exchanges about a potential U.S. initial public offering (IPO). However, the timing remains uncertain due to scrutiny over its labor practices. If it proceeds, Shein, valued at over $60 billion, could become the most valuable China-founded company to go public in the U.S. since Didi Global. This potential move marks another milestone in Shein's remarkable journey in the fast-fashion industry.

Similar to his company, Shein, Chris Xu remains mysterious and rarely makes public appearances or comments. However, it is clear that he is constantly evolving and innovating to meet the changing needs of his customers. From its beginnings as SheInside to its standing as a global powerhouse, Shein’s journey has been founded on Xu’s innovative processes, smart strategies, and a fair share of controversial decisions. 


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