Common Assignment Podcast

Xin, an online fashion retailer, has gained popularity for its low prices. However, rumors and accusations of forced labor and child labor have raised concerns about the company's practices. Xin claims to follow all laws and pay fair wages, but there is a lack of transparency and evidence to support this. Critics argue that Xin's prices are too low to be sustainable without labor violations. While there is no definitive proof either way, the allegations have led many to question the ethics of buying from Xin. Social media influencers' positive reviews of Xin's facilities are dismissed by critics as biased. The lack of concrete information and conflicting claims make it difficult to determine the truth. As negative rumors spread on social media, Xin's reputation may be at risk. Hi, my name is Casey Jones, and this is my common assignment. So, as we approach the Christmas season, the general public is thinking about gift-giving, getting together with family and friends, New Year's parties, and employers are hosting holiday or end-of-year celebrations. But what most people's minds is the gift-giving. And one of the biggest names associated with gift-giving or buying clothing for yourself to wear is Sheen. Sheen is an online global fast fashion and, more recently, lifestyle retailer. And Sheen is somewhat controversial these days. It is a lifesaver to some, as they provide a decent product for a very affordable price. But their quick rise to popularity made people dig deeper and question the policies and practices of this powerhouse of this online retailer. The stakeholders in this controversy are obviously the Sheen company, the public, and in our discussion will be the U.S. public consumers of the Sheen products, the women and children who are the primary workforce for Sheen, and the general global community as the actions, policies, and practices from a company as big as Sheen will ultimately affect the economy and other companies in the online retail world. So, let's start from the beginning to ensure that we have all the facts. Sheen is a China-based company. It was founded in 2008 by an entrepreneur and search engine optimization SEO marketing specialist, Shi Xu. From the start, this was intended to be an online retailer that was able to reach far beyond China. In 2015, the business made a decision to focus primarily on fashion apparel. Then in 2020, COVID hit. People were quarantined. They were home and bored. As we all know, what do people, especially young people, do when they are stuck home and bored? They go online. When they go on social media, people spend a crazy amount of time scrolling through social media, advertisements, and websites. And COVID was devastating to a lot of people. Many brick-and-mortar stores suffered great losses, some being forced to go out of business. But this is the opposite for Sheen. 2020 was a huge growth year for Sheen. They made approximately $10 billion in 2020. Clearly, popularity soared for this company. But now back to social media side of things. Trends started, and haul videos were free advertising for the company. Again, people are home and bored. They just ordered some Sheen clothing items, and now they are going to occupy their time by doing a video trying on their super cheap new wardrobe. The low prices helped, too. COVID had some people experiencing some financial struggles, so they jumped on Sheen websites, ordered three new outfits, completed it with a pair of earrings, some hair ties, maybe a pair of shoes, and they managed to only spend $60. That's a win for everyone, right? Unfortunately, it's not that simple. As the company rose to popularity and people were talking about the rock-bottom pricing, questions started to rise. How is a company able to make a profit off of clothing that is charging $7 for something that would typically be $40 to $50? Rumors and accusations of the company using forced labor or violating child labor laws started circulating. One of the laws in the middle of this debate is the 2021 Uyghur Forced Labor Prevention Act. This law was put into place to protect a specific area of China that historically utilizes forced labor. Uyghurs is a group of Muslims that are faced with high levels of discrimination and abuse within China. These people are basically detainees and forced to work as laborers to produce textiles. They are mistreated, receive little to no pay, and have no choice in the work they do. There are also currently child labor laws in China that state you must be 16 in order to legally work. The United States has laws in place that we should only be doing business and allowing imports from countries and companies who are following laws in place and live up to the U.S. standards of basic human rights. As a company, Xin states they follow all laws in place, do not use child labor, and pay fair wages. They state they are committed to transparency and are moving in a positive direction to not only continue to care about the Chinese citizens that work in their factories but also commit to reducing their carbon footprint, have less waste, and improve their emissions. Xin states they have no suppliers in the Xinjiang region where the Uyghurs people experience forced labor. They also state there is no proof that they do not have suppliers in this area. Xin states they have zero tolerance for forced labor. They explain their business model has allowed the company to keep down prices and grow in popularity. Xin's business model includes outsourcing labor to countries and regions where wages are cheaper. The company acknowledges this fact but stands by the fact that they may use cheap labor but everyone is paid a fair wage. They use no forced labor and no child labor. Additionally, their sales plan includes direct to consumer and they do not have physical stores. This online environment allows the company to keep operating at low expenses. Xin is also considered a fast fashion brand. This means they produce a large number of new items and only produce a small quantity. Then they only mass produce the items that are selling. As we stated before, Xin relies heavily on social media for advertising. A sign of their commitment to transparency was inviting several social media influencers to tour some Xin facilities. The initial reporting from the social media influencers was positive. Facilities were clean and the workers were happy. Xin stands by the fact that these rumors are unfounded and they are being targeted purely because they are profitable. On the other side of this debate in the U.S. is U.S. officials and U.S. consumers. The critics of Xin claim it is impossible to offer products at the prices that Xin is charging without breaking the existing labor laws in place by using forced labor, paying unfair wages, using child labor, violating other human rights, stealing other designers' works, and using potentially hazardous materials. China has a history of utilizing child labor, forced labor, and unfair labor practices. Critics also cite that the lack of transparency from Xin, despite their commitment to transparency statement, there is no official evaluation of the company available. Xin claims they treat their workers fair, pay a fair wage, and provide benefits above the industry average, but this just remains a claim. There is no specific information to support or deny this claim. There have been reports that were made public that we can refer to. As of August of 2021, sustainability and social impact reports show two-thirds of Xin suppliers' facilities have a mediocre performance. This means there are one to three major risks in the workplace, some of which are so severe they fall under the needs immediate action category. Some of the top violations include safety issues related to fire and emergency procedure, working hours and recruitment compliance. Although not all information is available, this information leads people to put more value on the labor violation rumors. We talked earlier about the social media influencers' visit to Xin factories. This was planned by, paid for, and scheduled by Xin. The influencers were shown a small portion of the factories. In this case, this isn't exactly the equivalent of an audit or surprise examination of the facilities. These influencers were shown what Xin wanted them to see. The U.S. critics of Xin completely discount any findings that came out of that visit. So there, we have some of the facts. Do you want my opinion? Of course. There is a saying of, where there is smoke, there is fire. To me, it seems highly unlikely that Xin is operating as they say they are. The price differential is really hard to ignore. I'm not even talking about comparing a designer shirt from Gucci to a shirt from Xin. But let's compare a store like Old Navy. Old Navy has a similar mindset to Xin. It tries to copy the higher end style and do it at a discount price. But even Old Navy's prices are double Xin or more. And we aren't even considering the fact that Xin has to ship the clothes to the U.S. with the lack of concrete information available. No one can say exactly what's going on. But there has to be a reason for these prices. I will not say I never ordered from Xin. I have. I love bargains just as the next person. But when these rumors surfaced, I think a lot of people started to question how much is this bargain actually costing someone else? Are there children working in sweatshops? Is there women being forced to work 18 hours a day and being paid pennies? If you search the Xin website, there are so many items to choose from and they are delivered to the other side of the world within days. When you stop to think about it, how is it even possible? The lack of information available is concerning. Xin just wants to say, oh no, we don't do that or we have zero tolerance for forced labor. But there's nothing proving anything either way. I guess you could say I'm being negative by saying I think Xin is utilizing some questionable practices to gain a large market share and maximize their profit. Xin profited from social media platforms in the beginning, but now social media may be negatively affecting the company. There are several TikTok influencers and news sources that discuss the alleged forced labor. This causes consumers to think deeper and question the company, and consumers in general tend to demand answers. As quick as Xin gained popularity from social media, the negative rumors and allegations are spreading just as quickly. But this all goes back to the fact that they are just allegations and Xin just states they are not true. In real life, he said, she said scenario. There are ways to independently obtain more information regarding this topic. There's testing that can be done to the clothing products to see where they're originating from. This would be a start to confirming or denying the claims of forced labor, forced or child labor from the Xinjiang area of China. Xin has directly stated they use no labor from the area that uses the Muslim slaves. This testing could confirm or deny this claim. The United States should demand actual reports conducted independent agencies of financial and physical inspections of all Xin factories and facilities, not just the ones hand-selected by Xin. Xin has plans to expand to the U.S. and the initial public offering in the United States is being discussed. Answers to these human rights questions should be definitely answered prior to the company being permitted to expand further into the United States. Xin should be held accountable to prove their practices are in line with current laws in place. They should not be able to profit from stripping someone's basic human rights.