Shein’s job cuts in Singapore underscore challenges facing fast-fashion giant

The job cuts by Shein in Singapore reflect how the Chinese-founded fast fashion company is grappling with a series of challenges

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Ann Caoin Shanghai

Published: 6:00pm, 27 Sep 2024

The job cuts by online fast-fashion retailer Shein at its Singapore headquarters reflect how the Chinese-founded company is grappling with a series of challenges in the cross-border e-commerce business.

Shein has laid off 17 employees as a result of restructuring of its global information technology research and development centre, the company said on Thursday. It said in an earlier statement that more than 20 employees were affected.

While the number of employees affected is only a small percentage of the company’s total headcount, it is the first time that Shein has confirmed job losses since it relocated its headquarters to Singapore from China in 2021. Shein has over 16,000 employees worldwide, according to its 2023 Sustainability and Social Impact Report.

People walk past an advertisement for Shein in London, March 8, 2024. Photo: Reuters

The lay-offs come as the 15-year-old company, founded in 2008 by the publicity-shy entrepreneur Xu Yangtian, is facing challenges on multiple fronts, including a pending initial public offering (IPO) in London, as well as threats of increased US customs scrutiny that could put its business model at risk.

Ivy Yang, founder of Wavelet Strategy, said the job cuts “could be the beginning of more lay-offs” at Shein, but likely would not have much impact on its operations “at this current scale”.

The White House said this month it would cut the range of low-value imports eligible for duty and tax exemptions, a move that targets Chinese cross-border e-commerce platforms like Shein and PDD Holdings’ Temu.

The announcement came as the US moved to close the so-called import-tax loophole enjoyed by Chinese companies, which exempts shipments valued under US$800 from import duties, taxes and rigorous screening under a de minimis rule. Temu and Shein alone were likely to be responsible “for more than 30 per cent of all packages shipped to the US daily under the de minimis provision”, according to an estimation by the US House Select Committee last year.