Teaching activity

In the News Teaching Activity – why have Shein’s profits risen so much? (July 2024)

Elizabeth Veal

4th July 2024

Many students will know of the business Shein, a firm founded in China, which has grown into a veritable giant in the world of fast fashion. Its entrepreneurial founder, Xu Yangtian, is one of China’s richest men, though there are some concerns over its use of forced labour and its environmental credentials.

Set up as an online wedding dress retailer, Shein’s growth has outpaced its rivals such as Zara, Primark and H&M, with its profits doubling last year to over £1.6bn. It has been a huge success for entrepreneur Xu Yangtian. Selling cheap mass-marketed fast fashion items at a low price has kept revenue flooding in. There are a multitude of reasons why its customer base has expanded into over 150 countries. However, there are concerns about the possible exploitation of its labour in its supply chains, though the company denies this. Additionally, fast fashion is a big environmental polluter and some believe that companies like Shein should face more regulation to reduce its carbon footprint. Low price and high-sales volume boosts revenue, while using cheaper labour without much regard to climate change keep costs low, so it is not surprising the Shein business model is proving to be so profitable.

Shein: The rise and rise of a fashion giant - BBC News

1 Using the information in the article, explain the role of an entrepreneur.

2 Assess the key factors leading to Shein’s increase in profits.

3 Using a cost-revenue diagram, show how increasing demand for its goods in recent years creates more profit for Shein.

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Elizabeth Veal

Liz has taught Economics for over 25 years, including several years as Head of Economics at leading schools.

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