Of the investment, €50m is earmarked for potential R&D facilities or pilot production plants. Credit: Wirestock Creators via Shutterstock.

Fast-fashion giant Shein is making a major play for the European market, pledging €250m ($270.5m) in investments over five years, Reuters reported.

This move comes amid the company’s preparations for a potential initial public offering in London, UK, and ongoing criticism surrounding its sourcing practices and environmental impact.

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According to Reuters, €50m of the investment is earmarked for potential research and development (R&D) facilities or pilot production plants in Europe or the UK.

This suggests a potential shift in Shein’s sourcing strategy, which currently relies heavily on suppliers in China.

While details on specific locations remain undisclosed, Shein chair Donald Tang reportedly emphasised the facilities will likely be partnerships with existing suppliers rather than wholly owned operations.

Shein is also aiming to cultivate closer ties with European businesses by allocating funds to initiatives that support regional brands and designers.

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This could involve promoting them through Shein’s significant online marketplace, potentially positioning the company as a platform for European fashion talent.

Sustainability is another key focus of Shein’s European investment.

Reuters noted the company is launching a €200m ‘circularity fund’ to support startups and businesses developing innovative textile recycling technologies. 

Shein hopes to leverage its reach to drive widespread adoption of these solutions across the industry.

The fund is reportedly open to co-investment from businesses, financial institutions, and sovereign wealth funds.

This strategic investment signals Shein’s commitment to addressing criticism and adapting to the European market. 

In June this year, human rights organisation Stop Uyghur Genocide initiated a legal campaign to prevent the fast-fashion retailer from listing on the London Stock Exchange.

The potential shift in sourcing locations and focus on sustainability could be seen as attempts to mitigate concerns about the environmental footprint and ethical practices associated with its current model.

Additionally, fostering relationships with European businesses suggests Shein is looking to integrate more seamlessly into the regional fashion ecosystem.

Whether Shein’s European expansion strategy will appease critics and regulators remains to be seen.

However, this significant investment demonstrates the company’s recognition of the importance of the European market and its willingness to adapt to changing consumer preferences and regulatory landscapes.