In one, widely shared in Chinese media, an unnamed supply chain worker talks about visiting the company’s headquarters in Guangdong. “No matter when you go,” the worker says, “even if it’s two or three in the morning, you can find Xu Yangtian and his team. Always in meetings, never lazy and always trying to find out all the good things about you.” The other anecdote is less flattering. According to two former business partners and colleagues, after successfully building an e-commerce company together, one day they showed up and he left. Taking the company’s PayPal accounts with him, Xu ignored their calls and “kicked [them] out of the game.” Single-handedly, Xu went on to build a company that would reach $100 billion within a decade. Blue DeTiger performs during Shein X Rock the Runway in Simi Valley, California. Photo: Stefanie Keenan/Getty Images In a funding round earlier this year, Shein was valued at more than Zara owner Inditex and H&M combined. Last week it announced a new executive hire to lead its European expansion, Jacobo Garcia Miña, whose resume includes senior roles at Inditex and Britain’s luxury label Burberry. He will oversee operations from Dublin as Shein prepares to open pop-up stores in major European cities this summer. Its brand awareness, especially among new buyers, is already huge. Even if you’ve never visited its website or app, your browsers and social media platforms have probably been fed its ads. Xu is among China’s richest men, but he is far less well-known than figures such as Alibaba’s Jack Ma or Tencent’s Pony Ma. He declines interviews and rarely comments publicly outside of the occasional press release excerpt. Different accounts 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 told the media that Xu is of Chinese descent. Chinese media have described him as an average student from a poor background who had to work to support himself in college. He developed a skill with search engine optimization (SEO) that will underpin his future success. Reports about Xu’s background and rise in the industry have painted a picture of a hard-working SEO whiz with an alleged knack for ruthless business decisions. In 2008, he set up 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% share. Li told Wired in May that the trio rented a small office, trying to sell everything from teapots to phones, before moving on to clothing. They began to hone 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 projected sales, and using Xu’s SEO skills to identify and promote trends. “We were going for low margins and high volumes,” Lee told the store. In 2011 Xu founded SheInside, a Nanjing-based online bridal retailer and the predecessor of Shein. Multiple reports have detailed controversy surrounding this move, with Li claiming that Xu “kicked me and [Wang] out of the game.” According to Li, Xu disappeared from the office one day in control of the company’s PayPal accounts, ignoring all calls. Lee referred the Guardian to previous interviews where he had already made the claim, but also declined to elaborate. Wang told Guardian Li that Guardian Li’s version was correct, but declined to comment further. A satin dress by Shein. Photo: Shein Shein has rejected this characterization of the facts in previous reports, and Xu reportedly threatened to sue when the allegations were first published. A spokesman told the Guardian that Li only worked for Nanjing Dianwei from October 2008 to mid-2009, but confirmed that neither Wang nor Li became SheInside partners or had 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 developing its own supply chain, what technology analyst and founder of Tech Buzz China Rui Ma calls the “dirty work” that other less successful competitors neglected. He recruited technical school graduates to scour the internet for popular designs. It also formed an in-house 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 influencer, celebrity and social media driven advertising – especially TikTok. The company earned a rare reputation among its thousands of suppliers – mostly in Guangzhou’s Nancun neighborhood – for paying bills on time, but also for strict requirements that reportedly led to high attrition rates. Ma says that the stable monthly fee cycle is one reason why suppliers try to stay with Shein, despite the difficult trading conditions. “Basically, suppliers either don’t make money, or often lose money on the initial order,” Ma says in a recent analysis. “They mostly hope to make a viral item that can lead to a large order for that item.” A Shein spokesman said it was innovative practices that allowed it to cut costs and pass the savings on to customers. “Our flexible technology-driven supply chain model is able to reduce overproduction by using actual market demands to forecast sales and control production,” they said. The company has also suffered accusations and cases of plagiarism. Industry insiders tell the Guardian there is widespread skepticism about Shein’s viability as a business model. That skepticism has only grown during the pandemic, as supply chain woes have slowed or crushed the rest of the industry, but Shein has continued to grow, largely unaffected. In recent years the focus has returned to Xu again, amid rumors and reports of expansions and international asset transfers that demonstrate the CEO’s ambition to grow Shein even further. Reports in May said Shein was trying to buy British clothing giant Missguided before its recent collapse, following a failed bid to buy Topshop in 2021. In December, Xu reportedly visited Brazil to inspect factories and suppliers on with a possible extension. Subscribe to the Business Today daily email or follow Guardian Business on Twitter @BusinessDesk Shein has attracted high-profile investors, including Tiger Global Management and Sequoia Capital China, amid reports this week suggesting a US IPO is planned for 2024. In 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 transferred from China to the city-state. The change could be useful in circumventing China’s strict and often unpredictable regulation of offshore IPOs. Chinese business records show Xu has cut some business ties with his home country. He began to step down from 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 Shein’s legal representative in China. Miao could not be reached for comment. The records show that the main Chinese entity – Nanjing Lingtian Information Technology – was delisted in 2021. Shein did not respond to questions about changes in business ownership and asset locations or plans in Singapore or New York. While the business continued to grow, some of the shine came from Shein’s performance. Sales rose 60% in 2021 to $16 billion, Bloomberg reported, from a 250% jump to $10 billion a year earlier, and recent private sales of its stock are said to be at a discount from its April valuation of 100 billions of dollars. Investors will ask whether Xu can sustain the momentum. Additional reports by Xiaoqian Zhu and Chi Hui Lin
