There are only two public anecdotes about Xu Yangtian, also known as Chris Xu – the mysterious billionaire founder of Shein. One positive, one negative. They both – if true – hint at the determination and ruthlessness needed to build a global empire in the savagely competitive world of fast fashion.
In one, shared widely across Chinese media, an anonymous supply chain worker talks of visiting the company’s Guangdong headquarters.
“No matter when you go,” the worker says, “even if it is two or three o’clock in the morning, you can find Xu Yangtian and his team. Always in meetings, never lazy, and always trying to learn all the good things about you.”
The other anecdote is less flattering. According to two former business partners and colleagues, after having successfully built an e-commerce company together, one day they turned up and he was gone. Allegedly taking the company’s PayPal accounts with him, Xu ignored their calls and “kicked [them] out of the game”.
Alone, Xu went on the establish a company that would reach a $100bn valuation within a decade.
In a funding round earlier this year, Shein was valued at more than Zara’s owner Inditex and H&M combined. Last week it announced a new executive hire to spearhead its expansion to Europe, Jacobo Garcia Miña, whose CV includes senior roles at Inditex and Britain’s luxury Burberry label. He will oversee operations from Dublin, as Shein prepares to open pop-up stores in major European cities this summer.
Its brand recognition, particularly among young shoppers, is already enormous. Even if you have never visited its site or app, your browsers and social media platforms have more than likely fed you its ads.
Xu is among China’s richest men, but is far less well known than figures like Alibaba’s Jack Ma, or Tencent’s Pony Ma. He refuses interviews and rarely comments publicly outside the occasional press release quote.
Differing reports describe him as a Chinese-American who studied at George Washington University, or as born in Shandong in 1984, going on to study at Qingdao University of Science and Technology. Shein has told media that Xu is Chinese-born. Chinese media describes him as being an average student from a poor background, who had to work to support himself through college. He developed a skill with search engine optimisation (SEO) which would underpin his future success.
Reports on Xu’s background and rise through the industry have painted a picture of a hardworking SEO whiz, with an alleged capacity for ruthless business decisions. In 2008 he formed a cross-border e-commerce business, Nanjing Dianwei Information Technology, with two partners: Wang Xiaohu had an equal share and Li Peng was a consultant with a 10% stake.
Li told Wired in May the trio rented a small office, trying to sell anything from teapots to phones, before moving towards clothing. They began honing the model for what would later become Shein – tiny direct-to-customer orders placed with small suppliers, turned around quickly in response to demand rather than predicted sales, and using Xu’s SEO skills for trend spotting and promotion. “We were going for low margins and large quantities,” Li told the outlet.
In 2011 Xu created SheInside, a Nanjing-based online wedding dress retailer and Shein’s predecessor. Multiple reports have detailed controversy around this move, with Li claiming Xu “kicked me and [Wang] out of the game”. According to Li, Xu disappeared from the office one day with control of the company’s PayPal accounts, ignoring all calls. Li directed the Guardian towards previous interviews where he had already made the claim, but also declined to elaborate further. Wang told the Guardian Li’s version was correct, but declined to comment further.
Shein has rejected this characterisation of events in previous reports, and Xu reportedly threatened to sue when the claims were first published. A spokesperson told the Guardian that Li only worked for Nanjing Dianwei from October 2008 to mid-2009, but confirmed neither Wang or Li became partners of SheInside nor had any business ties with SheInside. Xu could not be reached for comment.
Two years after starting SheInside, in one of his only known public social media posts, Xu wrote on Facebook: “The company has grown rapidly and has more than 50 employees!” In 2015, the company became Shein, moving its headquarters to Guangzhou, and opening an office in the US.
Under Xu, Shein began to develop its own supply chain, what the tech analyst and founder of Tech Buzz China Rui Ma terms the “dirty work” that other less successful competitors neglected. It hired technical college graduates to scour the internet for popular designs. It also formed an inhouse design team, and bought competitor Romwe – an e-commerce company founded by Li and his then girlfriend. Shein’s ads and products became ubiquitous, flooding the internet and becoming a major user of advertising driven by influencers, celebrities and social media – especially TikTok.
The company earned a rare reputation among its thousands of suppliers – primarily in the Nancun neighbourhood of Guangzhou – for paying accounts on time, but also for stringent requirements that reportedly led to high attrition rates. Ma says the consistent monthly pay cycle is a contributing reason for why suppliers try to stick with Shein, despite tough commercial conditions.
“Basically, suppliers are either making no money, or often times, losing money on the initial order,” says Ma in a recent analysis. “They’re mostly hoping to make a viral item that can result in a large volume order for that item.”
Shein’s spokesperson said it was innovative practices that allowed it to cut costs and pass savings on to customers. “Our technology-driven, nimble supply chain model is able to reduce overproduction by utilising actual market demands to predict sales and control production,” they said.
The company has also been dogged by accusations and instances of plagiarism.
Industry insiders tell the Guardian there is widespread scepticism of Shein’s sustainability as a business model. That scepticism has only increased during the pandemic, as supply chain woes have slowed down or crushed the rest of the industry, but Shein has continued to grow, largely unaffected.
In recent years the focus has returned again to Xu, amid rumours and reports of expansions and international asset transfers demonstrating the CEO’s ambition that Shein grow even larger. Reports in May said Shein was angling to buy UK clothing giant Missguided before its recent collapse, after a failed attempt to buy Topshop in 2021. In December Xu reportedly visited Brazil to inspect factories and suppliers over a potential expansion.
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Shein has attracted high-profile investors, including Tiger Global Management and Sequoia Capital China, amid reports this week suggesting that a US stock market listing is planned for 2024.
In what may be a related move, Xu was reported by Reuters in February to have become a permanent resident of Singapore – a possible step towards citizenship. There are now numerous links between Shein and Singapore, with key assets including the headquarters of the legal operators of Shein’s website – Roadget Business, now shifted from China to the city-state. The shift could be helpful in bypassing China’s strict and often unpredictable regulation of offshore IPOs.
Chinese business records show Xu has been cutting some business ties with his homeland. He began dropping management and legal roles with Shein and related entities, including Guangzhou Xiyin International Import & Export, in late 2020, and his second in command, Molly Miao, took over as legal representative of Shein in China. Miao could not be reached for comment. Records show the main Chinese entity – Nanjing Lingtian Information Technology – was deregistered in 2021.
Shein did not respond to questions about changes to the business ownership and asset locations, or the plans in Singapore or New York.
While the business has continued to grow, some the shine has come off Shein’s performance. Sales grew 60% in 2021 to $16bn, Bloomberg reported, down from a 250% jump to $10bn the year before, and recent private sales of its shares are said to be at discounts from its April valuation of $100bn. Investors will be asking if Xu can maintain the momentum.
Additional reporting by Xiaoqian Zhu and Chi Hui Lin