The Secret of SHEIN's Rise: Independent Brands and its ‘Magic’ Supply Chain
From the SHEIN headquarters in Panyu District, Guangzhou, head southeast for 70 kilometers to reach the Qingmeng Apparel Industrial Park.
This factory, which began operation in the summer of 2021, quickly became a landmark enterprise in the entire Humen Township. The new factory spans 3,000 square meters, nearly double the size of the previous traditional factory, with three floors divided by various white and yellow lines.
Different workstations are assigned between these lines. At its peak, over 300 workers would work simultaneously, but the use of machinery at every step has led to a nearly 20% annual increase in production efficiency.
A typical day of production here proceeds as follows:
In the morning, rolls of fabric are delivered to the first floor, where they undergo inspection, warehousing, spreading, and cutting... Once cut, the fabric is sent to the third floor, placed in suspended baskets similar to those found at Hema stores, and transferred to the clearly defined workstations. The baskets rotate, and various clothing styles are completed. The computers in the workshop track every order’s quantity, materials, sizes, processes, production standards, quality requirements, and progress.
Once the clothing is finished, it moves from the third floor to the second floor, where workers conduct quality inspections according to the standards on the computer. After completing the final tasks, the clothes are folded neatly and packed in SHEIN-branded bags before being sent to its warehouse in Zhaoqing, Guangdong. Typically, within one or two weeks, the clothes reach consumers around the world.
The factory, run by Liu Liang, has evolved from sporadic processing to foreign trade exports, to private label production for domestic brands, and now stands as one of SHEIN’s core suppliers. Its transformation reflects the broader changes SHEIN has made to the apparel supply chain over recent years.
Founded in 2012, SHEIN has rapidly grown from a fashion brand to a platform hosting third-party brands and merchants. According to media reports, its revenue exceeded $23 billion last year, marking a tenfold increase in sales over nine years. Its $66 billion valuation places it among the top Chinese unicorns, second only to ByteDance and Ant Group.
"SHEIN has made many innovations from its own perspective in the foreign trade field," said Tang Min, a counselor to the State Council and director of the Global (Zhengzhou) Cross-Border E-commerce Research Institute. "When people think of innovation, they often think of major breakthroughs like chips, but many ‘micro-innovations’ can also create profit for businesses. SHEIN has innovated in areas like branding, design, and production, proactively meeting the demands of overseas customers and enhancing the customer experience, which quickly won the favor of local consumers."
But behind the glamour, SHEIN has been doing the hardest work. It connects with thousands of suppliers across the country and uses a model of small orders and quick response flexible manufacturing to ensure that supply and demand match accurately, reducing industry waste. This system means SHEIN and its suppliers manage fragmented orders across the entire chain, from fabric procurement and dyeing to finished clothing and logistics.
The key to SHEIN's success lies in transforming fragmented orders into highly standardized and efficient processes, which has enabled its broad-reaching operations today.
The Power of In-House Brands
28-year-old Lindsay Firko, a former regular shopper at large retailers like Target, has changed her shopping habits since downloading the SHEIN app.
Now, living in Pittsburgh, Firko no longer visits local retail stores but spends hours browsing on SHEIN. Every few months, her shopping cart fills with a variety of affordable products, like $6 pants, skirts, and tops, $2 bath mats, and $5 automatic soap dispensers.
Firko’s view of SHEIN mirrors that of many others. On social media abroad, searching for "SHEIN" often brings up results praising the brand for its affordability, trendy items, youthfulness, and frequent new releases.
In a survey by the American financial firm Piper Sandler, 8% of Generation Z selected SHEIN, with Nike (6%) and Lululemon (4%) trailing behind.
Although SHEIN offers dozens of major product categories, most users focus on its clothing, which has led the brand to be compared with top-tier brands like Nike and Lululemon in overseas markets.
A businesswoman who has been working with SHEIN for over two years described how she frequently sees the phrase "SHEIN always brings me surprises" on social media. In her view, SHEIN’s ability to consistently surprise customers comes from its early decision to shift from just “picking up money” to building a supply chain and transforming into a brand.
Indeed, SHEIN’s website features not only various third-party brands but also its own in-house brand. This was a goal set by founder Xu Yangtian from the start—he wanted to create an in-house brand, and in 2014, he moved to Guangzhou to focus on building the supply chain. The self-brand + platform model is what sets SHEIN apart from other platforms.
Much like its cooperation with the Qingmeng factory, SHEIN’s collaboration with apparel manufacturers involves producing SHEIN-branded products. Essentially, the in-house brand model requires full inventory control, and every step of production must meet SHEIN's specifications and standards. This allows the brand to better control its identity, ensuring consistency in quality and service across the board.
The Secret to Flexible Supply Chains
At SHEIN’s Apparel Manufacturing Innovation Research Center in Guangzhou, Luo Yun has just finished a large-scale training session on "detecting defects in finished garments," attended by over a hundred suppliers from across the country.
Similar training sessions cover management, planning, production scheduling, inventory, and quality control. Over the past two years, Luo has repeated these sessions countless times (SHEIN has hosted over 240 specialized training sessions this year alone). However, as an instructor, he feels a sense of achievement. Inside, people often refer to this place as a "dojo," where they hope suppliers will "understand the way" and create products that meet international brand standards.
Besides regular training, this 60,000-square-meter innovation center is also responsible for "technological innovation." From pattern development and cutting to checking usage and crafting sizes, SHEIN has developed an entire digital system for apparel production, which suppliers can use.
This is where the secret to SHEIN’s supply chain transformation over the past decade lies. It demonstrates how SHEIN has standardized the complex apparel production chain and shared its solutions with hundreds of suppliers.
Standardization helps solve the problem of matching supply with market demand, which the industry has struggled with for years. Finding the best way to adapt supply to demand is a precise, interconnected process.
The first step is to identify trends early. SHEIN developed a system that helps it track current popular colors, prices, patterns, and user sales feedback, allowing designers and buyers to define the brand’s positioning and new product lines.
After the product planning phase, factories typically receive orders from SHEIN between 4-6 PM, with production standards and details for each order.
By the next morning, fabric is delivered to the factory, samples are created, and sent to SHEIN for confirmation. The entire sampling process is completed within two days, and production begins, taking only seven days.
Before launching a product, no one can predict its success, so initial production batches typically do not exceed 100 pieces. Only after successful trial production do factories receive larger orders. If the market stops ordering, production halts immediately.
After quality checks, the new products go live on the website, and within a day, factories can view sales data for each item. When sales surge, factories know business is booming.
The "small orders with quick response" model reduces inventory risks, which has been a major problem in the industry. While other brands often face inventory rates of 40%-50%, one supplier revealed that SHEIN keeps it in the single digits, which is why its prices are lower.
As suppliers improve their capabilities under SHEIN’s model, they become key players in the industry. “SHEIN has never restricted us from collaborating with others, only advising not to supply third-party brands with SHEIN products. Just like other international brands, they protect intellectual property, which also protects us,” said Liu Liang, the factory owner from Humen. “The overseas market is complicated, with various risks—quality, safety, infringement, inventory. SHEIN shoulders these risks for us. Without their help, we wouldn’t have the ability to manage these challenges, and we would probably suffer losses.”
However, it hasn’t all been smooth sailing. Over the past two years, SHEIN has invested heavily in the digital transformation of its supply chain, upgrading tools to optimize every step of production. Through display screens in workshops, factory owners can monitor real-time production details, identify issues, and make corrections on the spot.
By relying on full-chain digital traceability and continuous project improvements, SHEIN has gradually enhanced quality control and efficiency, reducing waste and enabling more attractive pricing.
To keep the “small orders with quick response” model running, SHEIN has also increased investments in its suppliers.
According to official data, from March last year to June this year, SHEIN has supported the construction of 92 supplier factories covering 238,000 square meters, and plans to expand support for 100 factories in 2023.
More Than Just Supply Chains
SHEIN has not only transformed itself but also its partner factories. Its improvements go beyond just the supply chain. In terms of energy-saving, emissions reduction, and sustainability (ESG), SHEIN is constantly striving to meet higher standards.
Fashion companies, long criticized for waste and pollution in fabric dyeing, digital printing, and cutting processes, are now under increasing pressure from consumers and regulators. Research by Kantar showed that 78% of consumers would be more inclined to purchase eco-friendly products, with Gen Z—the “new generation” of consumers raised on consumerism—being particularly
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