What charges does Shein face and why?
The world’s largest online fashion retailer has been sued over alleged copyright and racketeering claims.
China-based Shein markets thousands of garments a day to compete with its competitors, but its methods may have violated US federal law, a court has learned.
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What is Shein?
Shein is the world’s largest fashion retailer.
It is a Chinese-owned budget online clothing store based in Singapore.
It was founded in Nanjing, China, a busy city about 620 miles south of Beijing.
The company has been likened to a drop shipping company as it does not design or manufacture its own products.
Rather, the retail giant sources its products from a clothing wholesale store in Guangzhou.
Shein reportedly moved its headquarters from China to Singapore in 2022 for regulatory, expansion and financial reasons.
The fast fashion outlet sells its products in more than 150 countries and generates substantial annual profits.
In 2022, the company was reportedly valued at $100 billion.
Shein was founded by entrepreneur Chris Xu.
Accordingly forbesAs of July 2023, Xu’s net worth was $10.5 billion.
The 39-year-old is one of the richest men in China and has grown into a notable e-commerce giant.
What charges does Shein face?
On July 11, 2023, a lawsuit was filed against Shein in a California federal court.
As a result, the fashion retailer is facing multiple allegations of copyright infringement.
Accordingly CBS NewsThe complaint was filed on behalf of three designers who said they were “surprised” and “disgusted” that their products were faithfully copied and sold by Shein.
The reproduced products sold by Shein were “truly exact copies of copyrighted graphic designs,” the lawsuit states.
The clothing company is said to be infringing copyright law in its effort to produce 6,000 new items a day.
The lawsuit alleged that Shein’s actions violated the Racketeer Influenced and Corrupt Organizations Act.
The claims went on to say, “Shein has grown rich by committing individual infractions over and over again, as part of a long and ongoing pattern of extortion that shows no sign of abating.”
The alleged allegations came about when Krista Perry, one of the designers involved, spotted copies of a graphic poster that read “Make It Fun” for sale on Shein and one of its sister sites.
The Worcester woman then complained about the alleged copy via a contact form on Shein’s website.
She described it as “incredibly discouraging, offensive, and downright nasty to profit from artists without their knowledge or permission.”
Shein reportedly responded to Perry’s claims and offered her $500.
The other two designers, Jay Baron and Larissa Blintz, also claimed that Shein copied their designs exactly.