Table.Briefing: China

Fashion brand Shein on triumphant march + United Front of the CP

  • Shein conquers world market with cheap clothing
  • CP series: the United Front – Xi Jinping’s covert army
  • Stoltenberg: China does not share ‘our values’
  • Heiko Maas wants more transatlantic cooperation
  • USA seeks free trade with Taiwan
  • Romania restricts market access for Huawei
  • Dozens of new vaccines in development
  • Heads: Matthias Claussen of C. Melchers
Dear reader,

The name Shein is probably unknown to a large part of the population, while the brand is a big hit among younger people: as a particularly low-priced fashion provider, the company is asserting itself worldwide in a market that H&M, Primark, Zara and Uniqlo had actually long since divided up among themselves. The secret lies in the digital sales model. The Chinese company simply masters the use of AI better than its competitors, as Frank Sieren reports. The working conditions under which T-shirts are made for €1.99? No one knows. Shein is known for its lack of transparency.

The Communist Party’s United Front also prefers to operate in secret. Its task is to promote Chinese positions abroad and to sow doubt about the statements of critics. Marcel Grzanna describes the work of the secretive organization in our series on the centennial of the CP. He warns that it is gaining influence in Germany and Europe.

The US is visibly backing Taiwan. Secretary of State Blinken has now announced talks on free trade with the island ahead of the G7 summit later this week, stressing that it must be able to defend itself. This debunks the fiction that the two countries have no diplomatic relations. Beijing reacted accordingly with an outcry – just as expected from the China-critical Biden administration.

Your
Finn Mayer-Kuckuk
Image of Finn  Mayer-Kuckuk

Feature

Shein, the mysterious fashion giant

Market observers are already talking about the “TikTok of e-commerce.” Yet the global triumph of the Chinese fashion platform Shein went almost unnoticed by many. Among female teenagers, however, the app has long been the first choice when it comes to buying inexpensive and trendy clothes online.

In May, Shein overtook Amazon as the most-installed shopping app in the US for the first time. According to data from app tracking companies App Annie and Sensor Tower, Shein already ranked first among the most downloaded apps in Apple’s app store in 54 countries in mid-May. On the competing Android platform, that was still the case in 13 countries.

Shein sells mainly women’s fashion, usually between $5 and $20 per piece. These prices are possible because the company benefits from the fast and inexpensive textile industry in China and Southeast Asia. And even in the world of fast fashion, the platform sets new standards of speed: While Inditex, the world’s largest fashion group from Spain and owner of Zara, brings new clothing lines from the drawing board to the shelves within three weeks, according to its suppliers, Shein can do this in just five to seven days.

And while Inditex creates around 50,000 new fashion designs for its brands each year, its Chinese rival designed more than 30,000 new garments in one week in May alone, according to a data analysis by business magazine Caixin.

Big Data and online marketing as recipe for success

The products are varied repeatedly with the help of artificial intelligence (AI) based on real-time data. In this way, they meet the trends of different regions better and better in the shortest possible time. If a design proves particularly popular, the algorithm ramps up production volume within a few days. Matthew Brennan, an expert on Chinese mobile technology and author of the book “Attention Factory: The Story of TikTok and China’s Bytedance”, calls this disruptive business model “real-time retail.” The company has created a “unified system where activity on the website is recorded globally and fed into a centralized system,” he tells Caixin. The app also offers small quantities of low-priced household products, men’s clothing, and electronic goods.

What is particularly interesting is that Shein produces almost exclusively for the overseas market. The company is hardly known in its home country of China, where it already ships regularly to 220 countries, the company reports on its website. In addition to its headquarters in Nanjing and a large office in Guangzhou, Shein has branches in the USA, Belgium, and the United Arab Emirates. In October, Reuters reported, citing data from market research firm Euromonitor, that Shein was now the largest online-only fashion company in the world in terms of private label sales. Its huge order volume allows Shein to keep shipping costs low.

The group does not maintain stores. Instead, the company invests heavily in online marketing and advertises in various languages on platforms such as Facebook, TikTok, and Instagram. Last year, Shein also enlisted international stars like Katy Perry and Rita Ora for a four-hour Covid benefit called “Shein Together.” But even more important to the retailer than its A-list celebrities is its vast network of influencers. Among them are many so-called micro-influencers who have a follower count of 1000 to 100,000 and selectively promote Shein.

Shein is also active in Germany. The website’s promotional gimmicks include flash offers that are offered with a clock running backward – and expire when the countdown is over. Among them are blouses for €2.49, T-shirts for €3.31, jeans for €10 or shoes for €25. However, shipping is only free for orders over €39. The clothing is extensively photographed, looks, at least on the website, high-quality, and has detailed information about the respective sizes. The design is contemporary, young and trendy – and thus less similar to that of Kik, but more like that of H&M. It’s not the designers who determine the direction of development, but the mostly female shoppers.

Intransparency as a strategy

However, Shein keeps a very low profile about its corporate activities. The company does not provide official details on sales or backers. According to the Chinese tech news site LatePost, Shein announced in an internal meeting that sales exceeded ¥40 billion ($5.6 billion) last year. The manager of a private equity group with ties to Shein told Caixin that sales in North America reached $10 billion in 2020, growing by more than 200 percent. According to insiders, Shein already turns over around €300 million in Germany.

As an unlisted company, Shein is also not required to disclose its finances. The e-commerce giant has so far denied plans to prepare for an IPO. Since its last e-financing round last year, the company is estimated to be worth $15 billion, which would make it one of the most valuable tech startups in the world, with backers including JAFCO Asia, Greenwoods Asset Management, IDG Capital, Sequoia Capital China or Tiger Global, according to Chinese media reports. Also on board is the venture capital fund Shunwei Capital, launched by Xiaomi founders Lei Jun and Tuck Lye Koh.

Little is known about the company’s history either. Supposedly, Shein started in 2008 as a wholesaler of wedding dresses. Chris Xu (Xu Yiangtian), an American-born Chinese graduate of Washington University, is named as the company’s founder. In 2012, Xu quit his wedding dress business to become an online retailer: He acquired the website Sheinside.com. Three years later, he renamed the company Shein.

Who owns the new fashion giant?

It is also impossible to say who is in charge at Shein today. Neither the app nor the website goes into more detail about the ownership. It is not even mentioned there that it is a Chinese company. This may be Shein’s way of avoiding being caught in the crosshairs of the US like other companies from China. Just this week, Joe Biden announced that he would ban trading in shares of 59 Chinese companies that allegedly cooperate with China’s military (as reported by China.Table). Shein, however, has so far escaped the suspicion of being closely tied to China’s rulers despite its large presence in the US. The situation is different in India, where the app was banned in 2020 along with 59 other apps from China due to political tensions.

There is also a lack of transparency in the production processes. The company hardly comments on complaints about the sometimes inferior quality and the long delivery times. People who order clothes for little money don’t necessarily expect the best goods. What could cause Shein problems, however, with an increasingly environmentally conscious young clientele: Almost nothing is known about the working conditions and sustainability of production. Competitor Inditex has publicly announced that all of its brands, including Zara, Pull & Bear and Bershka, will only sell sustainable clothing from 2025.

Shein also emphasizes on its website that it prohibits the use of child or forced labor in its supply chains, requires its suppliers to pay workers fairly, and minimizes waste generation and electricity consumption. However, the implementation of these promises remains murky, given the company’s secrecy strategy.

  • Big data
  • Climate
  • Culture
  • Environment
  • Fashion
  • Geopolitics
  • India
  • Society
  • Sustainability

Quiet and barely visible: the underestimated work of the United Front

After decades of rearmament, China’s military arsenal has reached a technically highly sophisticated level with considerable destructive power. However, instead of intercontinental ballistic missiles, stealth bombers, or aircraft carriers, President Xi Jinping declared the United Labor Front, as Xi put it a few years ago, as the “magic weapon” of the People’s Republic.

This department, also called the United Front and attached to the Central Committee of the Communist Party, is a weapon of a different kind. Rather than destroy or kill, it does the contrary: shaping. Namely, it shapes the perception of the political system of the People’s Republic and public opinion about the Party’s policies at home and abroad. The United Front is almost as old as the party itself and is used intensively wherever doubts arise about the legitimacy of the CP, where criticism of its policies is voiced, and where resistance to its authoritarian rule is threatened. It operates through a ramification of organizations directly or indirectly affiliated with the party-state, as well as through international contacts in influential levels of politics, business, and society.

Its structure unites 13 sub-departments dedicated to different focuses and target groups – including religion, ethnic groups, foreign policy, intellectuals, Hong Kong, and Taiwan. Since 2017, You Quan has been the director in charge of the United Front. He is a member of the CP Central Committee and has been on the US State Department’s sanctions list since January this year for his role in implementing the National Security Act for Hong Kong.

United Front to neutralize negative voices

Scholars, in particular, are often confronted with the workings of the secretive organization. “The United Front is a kind of management tool of the Chinese Communist Party to ensure that, on the one hand, non-members are brought into line with the party and, on the other, negative voices are marginalized,” says Ralph Weber, a Professor at the European Institute of the University of Basel. He himself had this experience immediately after the publication of a study at the end of last year.

In it, Weber analyzed the growing sphere of influence of the United Front and its methods in his native Switzerland: According to the paper, Chinese actors are integrating themselves into the Swiss system like a “root network” and creating dependency with economic contracts and favors. In response, the Chinese embassy in Switzerland described this as underhanded. State media in China reported on Weber and accused him of damaging relations between the two countries with the study.

The importance of the United Front as a tool of the CP has increased significantly in recent years: more money, more staff. In 2018, the Foreign Bureau for Chinese Affairs, another organ of the party-state, was placed under its control. With it came the control of the China News Service – a news agency whose size is exceeded only by the main press organ Xinhua.

Party leader Xi stressed the growing need for the United Front in response to the reshaping of the global security architecture. “Presently, our situation and our mission have undergone significant change. The larger the change, the more the United Front must be developed under the new situation, the more united front work must be carried out,” Xi said. For example, the organization should target “the responsible representatives of social media” to enable those to “allow them to struggle to purify cyberspace.” This refers to the unconditional control of content and access to the Internet.

As the People’s Republic’s geostrategic orientation grows, the United Front has long been drawn to all corners of the globe. “Abroad, the United Front wants to inspire the Chinese diaspora with enthusiasm for the motherland and present the authoritarian People’s Republic to the rest of the world as a normal and trustworthy partner,” says Weber. It is concerned, for example, with blurring the boundaries between democratic and authoritarian systems to such an extent that it is becoming increasingly difficult to find starting points for criticism of the dictatorship that does not reflect on one’s own political system. In principle, this applies to Germany just as much as to Switzerland, albeit to different degrees.

Here and there, the United Front is subtle. It does not throw around propaganda slogans or provoke confrontations with critics. Its strategy is to build close relationships with foreign figures with opinion power. It does not necessarily make its own appearance but enlists the help of Chinese organizations and associations operating in the host country. For Chinese students or business people, on the other hand, it sets up a regulatory framework and ensures the appropriate supervision through a close network of informants. If it deems it necessary, it calls in other institutions of the power apparatus.

Even high-ranking diplomats instrumentalized

Human rights lawyers warn against this invisible arm of the apparatus. “If necessary, the United Front cooperates with agents of Chinese state security, who can increase the pressure on critics. This works, for example, by reminding Chinese expatriates that they still have relatives in China,” Teng Biao, a Chinese lawyer living in exile in the United States, told China.Table. According to Teng, the United Front is very effective in its efforts. It succeeds in neutralizing dissent against the system among Chinese expatriates to a large extent and in winning over important foreign personalities for image cultivation.

This often happens without the people concerned even knowing that they are providing valuable services to the United Front. “A popular tactic is to butter up foreigners and call them true friends of China until you can use them as advocates for your own purposes,” says Teng. Many foreigners don’t realize that they are a tool of Chinese propaganda. “They are made to believe that they are among the few who really understand China’s supposedly true concerns.”

Targets are psychologically influenced by getting them involved in Chinese affairs, making them feel that they, in particular, are creating a win-win solution through their involvement. Even high-ranking diplomats are persuaded “that their unique understanding of China is evidenced by their ability to keep things calm and untroubled. They do this because it works – for China,” former Canadian Ambassador to China David Mulroney said of his successor John McCallum’s case. McCallum had undermined the Canadian government’s position when he publicly called the then arrest of Huawei executive Meng Wanzhou in Canada “politically motivated.” Meng had been arrested on behalf of the US on espionage charges and has been under house arrest ever since.

The United Front also uses close, personal business relationships of foreigners to China in its favor. In practice, this looks like the case of the Chinese-Swedish publisher’s daughter Angela Gui. Her father is in prison in China, even though he is a Swedish citizen – because he published books critical of the party in Hong Kong. After a few interviews with Swedish media about her father’s disappearance, Angela Gui was warned by a Sri Lankan businessman who lives in Scandinavia and has close business ties to China not to talk to any more media. She would never see her father again, was the supposedly well-intentioned “advice.” Gui, however, took it as a threat.

Also present at that conversation in a Stockholm hotel were the Sri Lankan man’s Chinese business partner and the former Swedish ambassador to Beijing, Anna Lindstedt. Lindstedt had arranged the meeting and advised Angela Gui to agree. For this, the diplomat had to stand trial in a Swedish court last year – but was acquitted of exceeding her jurisdiction as ambassador. It was accepted that she had acted with the best of intentions to help a Swedish citizen out of Chinese custody. The fact that she was also representing the interests of the People’s Republic did not play a role in the trial.

Researchers recommend more analysis by governments

Government agencies are also taking notice now. “It is precisely the nature of United Front work to seek influence through connections that are difficult to publically prove judges a 2018 report by the US-China Commission. “Making those who seek to identify the negative effects of such influence vulnerable to accusations of prejudice.”

The Australian Strategic Policy Institute (ASPI) speaks of a “divisive effect of the Labor Front” and recommends that governments look more closely at the means of interference by Chinese actors. They should better understand the strategy behind it and deal with it accordingly. “Countermeasures should involve law enforcement, legislative reform, deterrence, and capacity building across relevant areas of government,” ASPI suggests.

For years, the governments have undoubtedly been far too naive in neglecting the analysis of the Chinese apparatus with all its ramifications. But dealing with the United Front is by no means their business alone. The United Front touches too much on the relations of ordinary people with one another. This development was kicked off by the Communist Party itself. Xi Jinping, for example, declared Chinese foreign students to be a valuable resource for united front work. That all Chinese students thus represent the interests of the party is simply wrong, according to researcher Ralph Weber. “The tragedy is that the influence of the United Front puts quite a lot of Chinese abroad under general suspicion. That is perfidious and wrong.” For the United Front, however, this is a thoroughly desirable outcome. Because where people trust each other less, there is great scope for manipulation.

  • 100 Years of the Chinese Communist Party
  • Chinese Communist Party
  • Civil Society
  • Domestic policy of the CP China
  • Geopolitics
  • Society

News

NATO Secretary General Stoltenberg: China does not ‘share our values’

Shortly before the NATO summit, Secretary General Jens Stoltenberg and US President Joe Biden agreed on their stance toward China. The leadership in Beijing does not “share our values,” Stoltenberg said after a meeting with Biden in Washington, according to media reports. This is demonstrated in the way China is putting down democratic protests in Hong Kong and its treatment of minorities or how it is pressuring its neighbors, the NATO Secretary-General said. China is also threatening Taiwan, Stoltenberg said.

The NATO summit is scheduled for next Monday (June 14) in Brussels. At the event, the defense alliance plans to consult with member states on its strategy through 2030, in which China will play a prominent role. “We will take decisions on our substantive and forward-looking NATO Agenda 2030 to deal with the challenges of today and tomorrow,” NATO had said in mid-April announcing the summit. These include Russia, the threat of terrorism and cyber attacks, as well as the “rise of China.” Among other things, a special NATO body is being discussed that would deal only with China. ari

  • Geopolitics
  • Joe Biden

Heiko Maas calls for solidarity with Washington

Shortly before US President Joe Biden’s trip to Europe, Foreign Minister Heiko Maas called for stronger transatlantic cooperation: “Now is the time for close economic and trade policy ties with the US. We should quickly put open disputes behind us for this.” With Biden, it would be possible to “finally take on multilateral responsibility together again,” Maas said, according to a report by the AFP news agency. Among other things, he referred to the need for a “transatlantically coordinated policy” vis -à-vis Russia, China and Belarus (China.Table reported on the merger of Russia and China). For ideas for transatlantic projects, Maas mentioned to the heads of the German missions abroad cooperation on export controls and investment audits or the EU-US Trade and Technology Council proposed by the EU, in which both sides could jointly develop standards for technology companies.

Maas also criticized the situation for companies in China. He said it was unacceptable when “German companies that comply with their human rights due diligence obligations are put under pressure to boycott in China. Those who want to prevent such things in time must not look the other way when civil society is suppressed, international law is broken, and human rights are violated,” he said. “And I am grateful for the willingness of German business to follow this path out of conviction.”

Biden is traveling to Europe for a marathon summit that begins on Friday with the G7 summit in Cornwall, UK. The Nato summit in Brussels is scheduled for Monday, followed by the EU-US summit on Tuesday. After that, Biden will meet Russia’s President Vladimir Putin in Geneva. In Europe, Biden also wants to talk about how the allies can work together to reduce vulnerabilities in global supply chains – and thus become less dependent on rivals like China. ck

  • Geopolitics
  • Heiko Maas
  • Joe Biden
  • Russia

USA seeks trade agreement with Taiwan

The USA has announced talks on a trade agreement with Taiwan. Negotiations on a framework agreement would begin soon, US Secretary of State Antony Blinken said at a congressional hearing in Washington on Monday. US Trade Representative Katherine Tai will explain details of the possible negotiations in the future, Blinken said. Washington does not maintain diplomatic relations with Taipei. Still, the US is Taiwan’s most important international ally. The US also supports the country with arms exports. Taiwan must be able to defend itself, Blinken stressed. He expressed concern about China’s “increasing aggressiveness” towards Taipei.

A response from Beijing to Washington’s plans was prompt: Chinese Foreign Ministry spokesman Zhao Lijian called on the US to “stop any form of official interactions with Taiwan.” He warned Washington to be “careful” in dealing with the Taiwan issue and not to send “wrong signals” to “Taiwanese independence aspirations,” according to several media reports. A US delegation had visited Taiwan earlier in the week and pledged a donation of some 750,000 doses of Covid vaccine to the island nation. ari

  • Health
  • Katherine Tai
  • Pharma

Romanian senate passes bill against Huawei

Romania’s parliament has passed a law regulating telecom networks and infrastructure that could bar Huawei from accessing its future 5G mobile networks. Telecom companies need “clearance” from the country’s Supreme Defense Council (CSAT) to provide technologies, equipment, or software for critical infrastructure and the 5G networks, a bill passed by the Senate on Monday reportedly states. If Huawei does not receive the CSAT’s approval, Romanian telecom companies would have to remove all Huawei products from their networks within five to seven years, Romanian news platform Economedia reported.

According to the reports, Romania’s President Klaus Iohannis, also Chairman of the Defense Council, has yet to sign the law. Once it becomes law, Romania could launch 5G spectrum auctions. The government reportedly estimates it could earn €500 million from the sale of 5G licenses. ari

  • Mobile communications
  • Telecommunications

Sinovac vaccine licensed for children under twelve

China has approved Sinovac’s vaccine for children as young as three. This is reported by the news agency AFP. It is the first time globally that an active ingredient has been approved for use in children under twelve. It is an emergency approval. Sinovac intends to report on the initial results of ongoing studies in children and adolescents in the renowned journal “The Lancet” shortly.

Meanwhile, the authorities have not commented on when the vaccinations of the youngest population groups can actually begin. This will be decided by the National Health Commission “according to China’s current requirements for epidemic control and vaccine supply,” Sinovac said.

China is also giving vaccine research a big boost in other areas. Most recently, 21 more compounds have entered clinical trials, an official from China’s National Health Commission told Xinhua news agency. So far, four vaccines have conditional marketing approval in China. In addition, clinical trials of nasal sprays are underway: In the future, vaccines should be inhaled without complication. fin

  • Health
  • Pharma

Heads

Matthias Claussen – trader with a recipe for success

Matthias Claussen, partner of the trading company C. Melchers from Bremen

It was just under 32 years ago. Matthias Claussen was standing on a rooftop terrace with the vice mayor of Shanghai, and the men were looking across the Huangpu River toward Pudong. “What we saw,” Claussen recalls, was like a “swamp of croaking frogs.” And the German business people smiled mildly when the Shanghai official predicted that Pudong would be home to one of the world’s most modern residential and business centers. “I lacked the imagination for it at the time,” Claussen says today and does not conceal his high regard for the building achievements of the Chinese over the past three decades. “They have managed to turn a bitterly poor country into a world power.”

The Melchers trading house, where Matthias Claussen was managing partner until his retirement, has experienced this process like hardly any other German company. Initially based in Hong Kong, Melchers opened its first office in Beijing in 1980, a year after China was opened up by Deng Xiaoping. Only Mannesmann got there before Melchers. And business was humming from day one. “The Chinese were busting our chops, wanting machines, equipment, spare parts,” Claussen once admitted publicly. With around 1,300 employees in Asia, Melchers now makes about half of its sales in China, around €300 million. The business consists of imports, exports, own brands, and the accompaniment of mainly medium-sized companies of all kinds to the People’s Republic and the entire Asian region.

The recipe for the success of the company, which was founded in 1806 and is still owner-managed today: permanent adaptation to changing market conditions and intensive cultivation of networks. While Melchers initially traded major brands such as Sony in China and managed direct exports from the country, today, more and more services around the globe complete the business.

150 years of ups and downs in China

How do you do business with communists? Experienced trader Matthias Claussen, now 68, takes a predictably pragmatic view. He has come to know the Chinese as reliable business people, that’s what counts for him. And someone like him stays out of politics. However, he is not indifferent to it. For a long time, Claussen, a market economist, thought it was unthinkable that a socialist regime could set out in the 1980s to industrialize such a vast country – and quite obviously succeed in doing so. For him, the market and democracy were mutually dependent.

Today Matthias Claussen is skeptical about the increasing centralization of power in Xi Jinping’s “one-man dictatorship.” He also criticizes the regime’s treatment of the Uyghur minority. Meanwhile, Claussen does not think much of a withdrawal of Western companies for political and moral reasons or of sanctions against Beijing. Would a policy that leads to ever further alienation benefit the people on the ground, Claussen asks, and answered for himself: “It benefits no one.”

The Bremen businessman is thus relaxed about the current tensions in Europe’s relationship with China. His company has been in China since 1866, survived two world wars and the isolation under Mao Zedong. “We have experienced all the ups and downs,” Claussen says. Antje Sirleschtov

  • Geopolitics
  • Trade

Executive Moves

Translation missing.

Dessert

The herd of wild Asian elephants, which is currently on the move in the southwestern Chinese province of Yunnan, has taken a break just outside the metropolis of Kunming and allowed itself a nap in the grass. According to authorities, of the 15 elephants, one male is currently away from the herd. The animals have destroyed numerous fields on their more than 500-kilometer route and have repeatedly terrified people. It is unclear when and why exactly the animals left their habitat in the Mengyangzi Nature Reserve in Xishuangbanna. Asian elephants are under state protection in China. Hundreds of security forces are trying to divert the herd.

China.Table Editors

CHINA.TABLE EDITORIAL OFFICE

Licenses:
    • Shein conquers world market with cheap clothing
    • CP series: the United Front – Xi Jinping’s covert army
    • Stoltenberg: China does not share ‘our values’
    • Heiko Maas wants more transatlantic cooperation
    • USA seeks free trade with Taiwan
    • Romania restricts market access for Huawei
    • Dozens of new vaccines in development
    • Heads: Matthias Claussen of C. Melchers
    Dear reader,

    The name Shein is probably unknown to a large part of the population, while the brand is a big hit among younger people: as a particularly low-priced fashion provider, the company is asserting itself worldwide in a market that H&M, Primark, Zara and Uniqlo had actually long since divided up among themselves. The secret lies in the digital sales model. The Chinese company simply masters the use of AI better than its competitors, as Frank Sieren reports. The working conditions under which T-shirts are made for €1.99? No one knows. Shein is known for its lack of transparency.

    The Communist Party’s United Front also prefers to operate in secret. Its task is to promote Chinese positions abroad and to sow doubt about the statements of critics. Marcel Grzanna describes the work of the secretive organization in our series on the centennial of the CP. He warns that it is gaining influence in Germany and Europe.

    The US is visibly backing Taiwan. Secretary of State Blinken has now announced talks on free trade with the island ahead of the G7 summit later this week, stressing that it must be able to defend itself. This debunks the fiction that the two countries have no diplomatic relations. Beijing reacted accordingly with an outcry – just as expected from the China-critical Biden administration.

    Your
    Finn Mayer-Kuckuk
    Image of Finn  Mayer-Kuckuk

    Feature

    Shein, the mysterious fashion giant

    Market observers are already talking about the “TikTok of e-commerce.” Yet the global triumph of the Chinese fashion platform Shein went almost unnoticed by many. Among female teenagers, however, the app has long been the first choice when it comes to buying inexpensive and trendy clothes online.

    In May, Shein overtook Amazon as the most-installed shopping app in the US for the first time. According to data from app tracking companies App Annie and Sensor Tower, Shein already ranked first among the most downloaded apps in Apple’s app store in 54 countries in mid-May. On the competing Android platform, that was still the case in 13 countries.

    Shein sells mainly women’s fashion, usually between $5 and $20 per piece. These prices are possible because the company benefits from the fast and inexpensive textile industry in China and Southeast Asia. And even in the world of fast fashion, the platform sets new standards of speed: While Inditex, the world’s largest fashion group from Spain and owner of Zara, brings new clothing lines from the drawing board to the shelves within three weeks, according to its suppliers, Shein can do this in just five to seven days.

    And while Inditex creates around 50,000 new fashion designs for its brands each year, its Chinese rival designed more than 30,000 new garments in one week in May alone, according to a data analysis by business magazine Caixin.

    Big Data and online marketing as recipe for success

    The products are varied repeatedly with the help of artificial intelligence (AI) based on real-time data. In this way, they meet the trends of different regions better and better in the shortest possible time. If a design proves particularly popular, the algorithm ramps up production volume within a few days. Matthew Brennan, an expert on Chinese mobile technology and author of the book “Attention Factory: The Story of TikTok and China’s Bytedance”, calls this disruptive business model “real-time retail.” The company has created a “unified system where activity on the website is recorded globally and fed into a centralized system,” he tells Caixin. The app also offers small quantities of low-priced household products, men’s clothing, and electronic goods.

    What is particularly interesting is that Shein produces almost exclusively for the overseas market. The company is hardly known in its home country of China, where it already ships regularly to 220 countries, the company reports on its website. In addition to its headquarters in Nanjing and a large office in Guangzhou, Shein has branches in the USA, Belgium, and the United Arab Emirates. In October, Reuters reported, citing data from market research firm Euromonitor, that Shein was now the largest online-only fashion company in the world in terms of private label sales. Its huge order volume allows Shein to keep shipping costs low.

    The group does not maintain stores. Instead, the company invests heavily in online marketing and advertises in various languages on platforms such as Facebook, TikTok, and Instagram. Last year, Shein also enlisted international stars like Katy Perry and Rita Ora for a four-hour Covid benefit called “Shein Together.” But even more important to the retailer than its A-list celebrities is its vast network of influencers. Among them are many so-called micro-influencers who have a follower count of 1000 to 100,000 and selectively promote Shein.

    Shein is also active in Germany. The website’s promotional gimmicks include flash offers that are offered with a clock running backward – and expire when the countdown is over. Among them are blouses for €2.49, T-shirts for €3.31, jeans for €10 or shoes for €25. However, shipping is only free for orders over €39. The clothing is extensively photographed, looks, at least on the website, high-quality, and has detailed information about the respective sizes. The design is contemporary, young and trendy – and thus less similar to that of Kik, but more like that of H&M. It’s not the designers who determine the direction of development, but the mostly female shoppers.

    Intransparency as a strategy

    However, Shein keeps a very low profile about its corporate activities. The company does not provide official details on sales or backers. According to the Chinese tech news site LatePost, Shein announced in an internal meeting that sales exceeded ¥40 billion ($5.6 billion) last year. The manager of a private equity group with ties to Shein told Caixin that sales in North America reached $10 billion in 2020, growing by more than 200 percent. According to insiders, Shein already turns over around €300 million in Germany.

    As an unlisted company, Shein is also not required to disclose its finances. The e-commerce giant has so far denied plans to prepare for an IPO. Since its last e-financing round last year, the company is estimated to be worth $15 billion, which would make it one of the most valuable tech startups in the world, with backers including JAFCO Asia, Greenwoods Asset Management, IDG Capital, Sequoia Capital China or Tiger Global, according to Chinese media reports. Also on board is the venture capital fund Shunwei Capital, launched by Xiaomi founders Lei Jun and Tuck Lye Koh.

    Little is known about the company’s history either. Supposedly, Shein started in 2008 as a wholesaler of wedding dresses. Chris Xu (Xu Yiangtian), an American-born Chinese graduate of Washington University, is named as the company’s founder. In 2012, Xu quit his wedding dress business to become an online retailer: He acquired the website Sheinside.com. Three years later, he renamed the company Shein.

    Who owns the new fashion giant?

    It is also impossible to say who is in charge at Shein today. Neither the app nor the website goes into more detail about the ownership. It is not even mentioned there that it is a Chinese company. This may be Shein’s way of avoiding being caught in the crosshairs of the US like other companies from China. Just this week, Joe Biden announced that he would ban trading in shares of 59 Chinese companies that allegedly cooperate with China’s military (as reported by China.Table). Shein, however, has so far escaped the suspicion of being closely tied to China’s rulers despite its large presence in the US. The situation is different in India, where the app was banned in 2020 along with 59 other apps from China due to political tensions.

    There is also a lack of transparency in the production processes. The company hardly comments on complaints about the sometimes inferior quality and the long delivery times. People who order clothes for little money don’t necessarily expect the best goods. What could cause Shein problems, however, with an increasingly environmentally conscious young clientele: Almost nothing is known about the working conditions and sustainability of production. Competitor Inditex has publicly announced that all of its brands, including Zara, Pull & Bear and Bershka, will only sell sustainable clothing from 2025.

    Shein also emphasizes on its website that it prohibits the use of child or forced labor in its supply chains, requires its suppliers to pay workers fairly, and minimizes waste generation and electricity consumption. However, the implementation of these promises remains murky, given the company’s secrecy strategy.

    • Big data
    • Climate
    • Culture
    • Environment
    • Fashion
    • Geopolitics
    • India
    • Society
    • Sustainability

    Quiet and barely visible: the underestimated work of the United Front

    After decades of rearmament, China’s military arsenal has reached a technically highly sophisticated level with considerable destructive power. However, instead of intercontinental ballistic missiles, stealth bombers, or aircraft carriers, President Xi Jinping declared the United Labor Front, as Xi put it a few years ago, as the “magic weapon” of the People’s Republic.

    This department, also called the United Front and attached to the Central Committee of the Communist Party, is a weapon of a different kind. Rather than destroy or kill, it does the contrary: shaping. Namely, it shapes the perception of the political system of the People’s Republic and public opinion about the Party’s policies at home and abroad. The United Front is almost as old as the party itself and is used intensively wherever doubts arise about the legitimacy of the CP, where criticism of its policies is voiced, and where resistance to its authoritarian rule is threatened. It operates through a ramification of organizations directly or indirectly affiliated with the party-state, as well as through international contacts in influential levels of politics, business, and society.

    Its structure unites 13 sub-departments dedicated to different focuses and target groups – including religion, ethnic groups, foreign policy, intellectuals, Hong Kong, and Taiwan. Since 2017, You Quan has been the director in charge of the United Front. He is a member of the CP Central Committee and has been on the US State Department’s sanctions list since January this year for his role in implementing the National Security Act for Hong Kong.

    United Front to neutralize negative voices

    Scholars, in particular, are often confronted with the workings of the secretive organization. “The United Front is a kind of management tool of the Chinese Communist Party to ensure that, on the one hand, non-members are brought into line with the party and, on the other, negative voices are marginalized,” says Ralph Weber, a Professor at the European Institute of the University of Basel. He himself had this experience immediately after the publication of a study at the end of last year.

    In it, Weber analyzed the growing sphere of influence of the United Front and its methods in his native Switzerland: According to the paper, Chinese actors are integrating themselves into the Swiss system like a “root network” and creating dependency with economic contracts and favors. In response, the Chinese embassy in Switzerland described this as underhanded. State media in China reported on Weber and accused him of damaging relations between the two countries with the study.

    The importance of the United Front as a tool of the CP has increased significantly in recent years: more money, more staff. In 2018, the Foreign Bureau for Chinese Affairs, another organ of the party-state, was placed under its control. With it came the control of the China News Service – a news agency whose size is exceeded only by the main press organ Xinhua.

    Party leader Xi stressed the growing need for the United Front in response to the reshaping of the global security architecture. “Presently, our situation and our mission have undergone significant change. The larger the change, the more the United Front must be developed under the new situation, the more united front work must be carried out,” Xi said. For example, the organization should target “the responsible representatives of social media” to enable those to “allow them to struggle to purify cyberspace.” This refers to the unconditional control of content and access to the Internet.

    As the People’s Republic’s geostrategic orientation grows, the United Front has long been drawn to all corners of the globe. “Abroad, the United Front wants to inspire the Chinese diaspora with enthusiasm for the motherland and present the authoritarian People’s Republic to the rest of the world as a normal and trustworthy partner,” says Weber. It is concerned, for example, with blurring the boundaries between democratic and authoritarian systems to such an extent that it is becoming increasingly difficult to find starting points for criticism of the dictatorship that does not reflect on one’s own political system. In principle, this applies to Germany just as much as to Switzerland, albeit to different degrees.

    Here and there, the United Front is subtle. It does not throw around propaganda slogans or provoke confrontations with critics. Its strategy is to build close relationships with foreign figures with opinion power. It does not necessarily make its own appearance but enlists the help of Chinese organizations and associations operating in the host country. For Chinese students or business people, on the other hand, it sets up a regulatory framework and ensures the appropriate supervision through a close network of informants. If it deems it necessary, it calls in other institutions of the power apparatus.

    Even high-ranking diplomats instrumentalized

    Human rights lawyers warn against this invisible arm of the apparatus. “If necessary, the United Front cooperates with agents of Chinese state security, who can increase the pressure on critics. This works, for example, by reminding Chinese expatriates that they still have relatives in China,” Teng Biao, a Chinese lawyer living in exile in the United States, told China.Table. According to Teng, the United Front is very effective in its efforts. It succeeds in neutralizing dissent against the system among Chinese expatriates to a large extent and in winning over important foreign personalities for image cultivation.

    This often happens without the people concerned even knowing that they are providing valuable services to the United Front. “A popular tactic is to butter up foreigners and call them true friends of China until you can use them as advocates for your own purposes,” says Teng. Many foreigners don’t realize that they are a tool of Chinese propaganda. “They are made to believe that they are among the few who really understand China’s supposedly true concerns.”

    Targets are psychologically influenced by getting them involved in Chinese affairs, making them feel that they, in particular, are creating a win-win solution through their involvement. Even high-ranking diplomats are persuaded “that their unique understanding of China is evidenced by their ability to keep things calm and untroubled. They do this because it works – for China,” former Canadian Ambassador to China David Mulroney said of his successor John McCallum’s case. McCallum had undermined the Canadian government’s position when he publicly called the then arrest of Huawei executive Meng Wanzhou in Canada “politically motivated.” Meng had been arrested on behalf of the US on espionage charges and has been under house arrest ever since.

    The United Front also uses close, personal business relationships of foreigners to China in its favor. In practice, this looks like the case of the Chinese-Swedish publisher’s daughter Angela Gui. Her father is in prison in China, even though he is a Swedish citizen – because he published books critical of the party in Hong Kong. After a few interviews with Swedish media about her father’s disappearance, Angela Gui was warned by a Sri Lankan businessman who lives in Scandinavia and has close business ties to China not to talk to any more media. She would never see her father again, was the supposedly well-intentioned “advice.” Gui, however, took it as a threat.

    Also present at that conversation in a Stockholm hotel were the Sri Lankan man’s Chinese business partner and the former Swedish ambassador to Beijing, Anna Lindstedt. Lindstedt had arranged the meeting and advised Angela Gui to agree. For this, the diplomat had to stand trial in a Swedish court last year – but was acquitted of exceeding her jurisdiction as ambassador. It was accepted that she had acted with the best of intentions to help a Swedish citizen out of Chinese custody. The fact that she was also representing the interests of the People’s Republic did not play a role in the trial.

    Researchers recommend more analysis by governments

    Government agencies are also taking notice now. “It is precisely the nature of United Front work to seek influence through connections that are difficult to publically prove judges a 2018 report by the US-China Commission. “Making those who seek to identify the negative effects of such influence vulnerable to accusations of prejudice.”

    The Australian Strategic Policy Institute (ASPI) speaks of a “divisive effect of the Labor Front” and recommends that governments look more closely at the means of interference by Chinese actors. They should better understand the strategy behind it and deal with it accordingly. “Countermeasures should involve law enforcement, legislative reform, deterrence, and capacity building across relevant areas of government,” ASPI suggests.

    For years, the governments have undoubtedly been far too naive in neglecting the analysis of the Chinese apparatus with all its ramifications. But dealing with the United Front is by no means their business alone. The United Front touches too much on the relations of ordinary people with one another. This development was kicked off by the Communist Party itself. Xi Jinping, for example, declared Chinese foreign students to be a valuable resource for united front work. That all Chinese students thus represent the interests of the party is simply wrong, according to researcher Ralph Weber. “The tragedy is that the influence of the United Front puts quite a lot of Chinese abroad under general suspicion. That is perfidious and wrong.” For the United Front, however, this is a thoroughly desirable outcome. Because where people trust each other less, there is great scope for manipulation.

    • 100 Years of the Chinese Communist Party
    • Chinese Communist Party
    • Civil Society
    • Domestic policy of the CP China
    • Geopolitics
    • Society

    News

    NATO Secretary General Stoltenberg: China does not ‘share our values’

    Shortly before the NATO summit, Secretary General Jens Stoltenberg and US President Joe Biden agreed on their stance toward China. The leadership in Beijing does not “share our values,” Stoltenberg said after a meeting with Biden in Washington, according to media reports. This is demonstrated in the way China is putting down democratic protests in Hong Kong and its treatment of minorities or how it is pressuring its neighbors, the NATO Secretary-General said. China is also threatening Taiwan, Stoltenberg said.

    The NATO summit is scheduled for next Monday (June 14) in Brussels. At the event, the defense alliance plans to consult with member states on its strategy through 2030, in which China will play a prominent role. “We will take decisions on our substantive and forward-looking NATO Agenda 2030 to deal with the challenges of today and tomorrow,” NATO had said in mid-April announcing the summit. These include Russia, the threat of terrorism and cyber attacks, as well as the “rise of China.” Among other things, a special NATO body is being discussed that would deal only with China. ari

    • Geopolitics
    • Joe Biden

    Heiko Maas calls for solidarity with Washington

    Shortly before US President Joe Biden’s trip to Europe, Foreign Minister Heiko Maas called for stronger transatlantic cooperation: “Now is the time for close economic and trade policy ties with the US. We should quickly put open disputes behind us for this.” With Biden, it would be possible to “finally take on multilateral responsibility together again,” Maas said, according to a report by the AFP news agency. Among other things, he referred to the need for a “transatlantically coordinated policy” vis -à-vis Russia, China and Belarus (China.Table reported on the merger of Russia and China). For ideas for transatlantic projects, Maas mentioned to the heads of the German missions abroad cooperation on export controls and investment audits or the EU-US Trade and Technology Council proposed by the EU, in which both sides could jointly develop standards for technology companies.

    Maas also criticized the situation for companies in China. He said it was unacceptable when “German companies that comply with their human rights due diligence obligations are put under pressure to boycott in China. Those who want to prevent such things in time must not look the other way when civil society is suppressed, international law is broken, and human rights are violated,” he said. “And I am grateful for the willingness of German business to follow this path out of conviction.”

    Biden is traveling to Europe for a marathon summit that begins on Friday with the G7 summit in Cornwall, UK. The Nato summit in Brussels is scheduled for Monday, followed by the EU-US summit on Tuesday. After that, Biden will meet Russia’s President Vladimir Putin in Geneva. In Europe, Biden also wants to talk about how the allies can work together to reduce vulnerabilities in global supply chains – and thus become less dependent on rivals like China. ck

    • Geopolitics
    • Heiko Maas
    • Joe Biden
    • Russia

    USA seeks trade agreement with Taiwan

    The USA has announced talks on a trade agreement with Taiwan. Negotiations on a framework agreement would begin soon, US Secretary of State Antony Blinken said at a congressional hearing in Washington on Monday. US Trade Representative Katherine Tai will explain details of the possible negotiations in the future, Blinken said. Washington does not maintain diplomatic relations with Taipei. Still, the US is Taiwan’s most important international ally. The US also supports the country with arms exports. Taiwan must be able to defend itself, Blinken stressed. He expressed concern about China’s “increasing aggressiveness” towards Taipei.

    A response from Beijing to Washington’s plans was prompt: Chinese Foreign Ministry spokesman Zhao Lijian called on the US to “stop any form of official interactions with Taiwan.” He warned Washington to be “careful” in dealing with the Taiwan issue and not to send “wrong signals” to “Taiwanese independence aspirations,” according to several media reports. A US delegation had visited Taiwan earlier in the week and pledged a donation of some 750,000 doses of Covid vaccine to the island nation. ari

    • Health
    • Katherine Tai
    • Pharma

    Romanian senate passes bill against Huawei

    Romania’s parliament has passed a law regulating telecom networks and infrastructure that could bar Huawei from accessing its future 5G mobile networks. Telecom companies need “clearance” from the country’s Supreme Defense Council (CSAT) to provide technologies, equipment, or software for critical infrastructure and the 5G networks, a bill passed by the Senate on Monday reportedly states. If Huawei does not receive the CSAT’s approval, Romanian telecom companies would have to remove all Huawei products from their networks within five to seven years, Romanian news platform Economedia reported.

    According to the reports, Romania’s President Klaus Iohannis, also Chairman of the Defense Council, has yet to sign the law. Once it becomes law, Romania could launch 5G spectrum auctions. The government reportedly estimates it could earn €500 million from the sale of 5G licenses. ari

    • Mobile communications
    • Telecommunications

    Sinovac vaccine licensed for children under twelve

    China has approved Sinovac’s vaccine for children as young as three. This is reported by the news agency AFP. It is the first time globally that an active ingredient has been approved for use in children under twelve. It is an emergency approval. Sinovac intends to report on the initial results of ongoing studies in children and adolescents in the renowned journal “The Lancet” shortly.

    Meanwhile, the authorities have not commented on when the vaccinations of the youngest population groups can actually begin. This will be decided by the National Health Commission “according to China’s current requirements for epidemic control and vaccine supply,” Sinovac said.

    China is also giving vaccine research a big boost in other areas. Most recently, 21 more compounds have entered clinical trials, an official from China’s National Health Commission told Xinhua news agency. So far, four vaccines have conditional marketing approval in China. In addition, clinical trials of nasal sprays are underway: In the future, vaccines should be inhaled without complication. fin

    • Health
    • Pharma

    Heads

    Matthias Claussen – trader with a recipe for success

    Matthias Claussen, partner of the trading company C. Melchers from Bremen

    It was just under 32 years ago. Matthias Claussen was standing on a rooftop terrace with the vice mayor of Shanghai, and the men were looking across the Huangpu River toward Pudong. “What we saw,” Claussen recalls, was like a “swamp of croaking frogs.” And the German business people smiled mildly when the Shanghai official predicted that Pudong would be home to one of the world’s most modern residential and business centers. “I lacked the imagination for it at the time,” Claussen says today and does not conceal his high regard for the building achievements of the Chinese over the past three decades. “They have managed to turn a bitterly poor country into a world power.”

    The Melchers trading house, where Matthias Claussen was managing partner until his retirement, has experienced this process like hardly any other German company. Initially based in Hong Kong, Melchers opened its first office in Beijing in 1980, a year after China was opened up by Deng Xiaoping. Only Mannesmann got there before Melchers. And business was humming from day one. “The Chinese were busting our chops, wanting machines, equipment, spare parts,” Claussen once admitted publicly. With around 1,300 employees in Asia, Melchers now makes about half of its sales in China, around €300 million. The business consists of imports, exports, own brands, and the accompaniment of mainly medium-sized companies of all kinds to the People’s Republic and the entire Asian region.

    The recipe for the success of the company, which was founded in 1806 and is still owner-managed today: permanent adaptation to changing market conditions and intensive cultivation of networks. While Melchers initially traded major brands such as Sony in China and managed direct exports from the country, today, more and more services around the globe complete the business.

    150 years of ups and downs in China

    How do you do business with communists? Experienced trader Matthias Claussen, now 68, takes a predictably pragmatic view. He has come to know the Chinese as reliable business people, that’s what counts for him. And someone like him stays out of politics. However, he is not indifferent to it. For a long time, Claussen, a market economist, thought it was unthinkable that a socialist regime could set out in the 1980s to industrialize such a vast country – and quite obviously succeed in doing so. For him, the market and democracy were mutually dependent.

    Today Matthias Claussen is skeptical about the increasing centralization of power in Xi Jinping’s “one-man dictatorship.” He also criticizes the regime’s treatment of the Uyghur minority. Meanwhile, Claussen does not think much of a withdrawal of Western companies for political and moral reasons or of sanctions against Beijing. Would a policy that leads to ever further alienation benefit the people on the ground, Claussen asks, and answered for himself: “It benefits no one.”

    The Bremen businessman is thus relaxed about the current tensions in Europe’s relationship with China. His company has been in China since 1866, survived two world wars and the isolation under Mao Zedong. “We have experienced all the ups and downs,” Claussen says. Antje Sirleschtov

    • Geopolitics
    • Trade

    Executive Moves

    Translation missing.

    Dessert

    The herd of wild Asian elephants, which is currently on the move in the southwestern Chinese province of Yunnan, has taken a break just outside the metropolis of Kunming and allowed itself a nap in the grass. According to authorities, of the 15 elephants, one male is currently away from the herd. The animals have destroyed numerous fields on their more than 500-kilometer route and have repeatedly terrified people. It is unclear when and why exactly the animals left their habitat in the Mengyangzi Nature Reserve in Xishuangbanna. Asian elephants are under state protection in China. Hundreds of security forces are trying to divert the herd.

    China.Table Editors

    CHINA.TABLE EDITORIAL OFFICE

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