Other BriefingsChina Ultra-Fast Fashion Sector: Growth, Challenges, and the Global Impact of the “Shein Effect”
China continues to dominate the ultra-fast fashion industry through efficient production, AI-driven trends, and cross-border e-commerce, but faces growing challenges in sustainability, labor practices, and regulatory compliance. Brands that adapt to consumer demand for personalization and eco-friendly solutions will be best positioned for future success.
Ultra-fast fashion has emerged as a disruptive force in the global apparel industry, accelerating the traditional fast fashion model by leveraging real-time consumer data, agile supply chains, and digital marketing. Unlike conventional fast fashion brands that operate on seasonal cycles, ultra-fast fashion companies release thousands of new styles weekly, responding instantly to shifting trends.
China has positioned itself at the forefront of this industry, serving as both the manufacturing powerhouse and innovation hub driving the sector’s rapid expansion. Home to global ultra-fast fashion giants such as Shein and Temu, China’s unique combination of efficient production networks, advanced e-commerce infrastructure, and digital consumer engagement has enabled its brands to dominate international markets.
The so-called “Shein Effect” exemplifies the transformation of the fashion industry, demonstrating how Chinese ultra-fast fashion brands leverage AI-driven trend forecasting, just-in-time production, and social commerce to outpace competitors. As these companies scale their operations globally, they are not only reshaping the competitive landscape but also raising critical questions about sustainability, labor practices, and regulatory scrutiny.
Understanding China’s ultra-fast fashion sector is essential for businesses, investors, and policymakers navigating the evolving dynamics of the global fashion industry.
Market structure and key players in China’s ultra-fast fashion industry
China has established itself as the global epicenter of ultra-fast fashion, with companies like Shein, Temu, and Alibaba-backed platforms revolutionizing the industry. These brands have refined fast fashion into an even more accelerated model, where design, production, and sales happen in near real-time. Their success is largely due to China’s advanced manufacturing ecosystem, digital commerce dominance, and deep integration of technology in supply chain operations.
Leading Chinese ultra-fast fashion companies
- Shein: The undisputed leader of ultra-fast fashion, Shein has mastered the art of leveraging AI-driven trend forecasting and a highly responsive supply chain. The company operates on a direct-to-consumer (DTC) model, bypassing traditional retail intermediaries and selling exclusively online, primarily targeting overseas markets.
- Temu: A subsidiary of PDD Holdings, Temu follows a marketplace model where multiple sellers can list their products, allowing it to scale rapidly without directly managing inventory. Temu has gained traction in Western markets by offering aggressive discounts and an expansive product selection, including apparel, accessories, and lifestyle goods.
- Alibaba-backed platforms (e.g., AliExpress, Tmall, Taobao): Unlike Shein and Temu, Alibaba’s platforms operate as marketplaces rather than standalone brands, allowing Chinese manufacturers and fashion retailers to reach both domestic and international consumers. These platforms provide the infrastructure for small and medium-sized fashion businesses to compete in the ultra-fast fashion space.
Business models: Data-driven design and agile supply chains
Chinese ultra-fast fashion brands prioritize speed and efficiency over traditional retail methods. Their business models rely on:
- AI-powered trend analysis: Shein and similar platforms track online fashion trends through big data and social media analytics, enabling them to predict and produce what consumers want almost instantly.
- On-demand production: Unlike traditional brands that produce large seasonal collections, ultra-fast fashion companies operate on a small-batch, test-and-repeat model. They launch new products in limited quantities, analyze real-time sales data, and then scale up production only for best-sellers.
- Cross-border e-commerce infrastructure: Most of China’s ultra-fast fashion brands target international markets, leveraging efficient cross-border logistics, low-cost shipping, and localized marketing strategies to penetrate regions like the US, Europe, and Latin America.
The Shein Effect: Redefining ultra-fast fashion
Shein’s meteoric rise in the global fashion industry has reshaped traditional retail models, making it a dominant force in ultra-fast fashion. Founded in Nanjing, China, in 2008, Shein initially operated as a small-scale e-commerce retailer before leveraging its data-driven supply chain and agile production model to disrupt the industry. Unlike traditional retailers that rely on seasonal collections, Shein’s approach is based on real-time consumer demand, allowing it to introduce thousands of new designs weekly at extremely low prices.
The company’s online-first strategy proved particularly effective during the pandemic when global consumers shifted to digital shopping. Shein’s online net sales soared from US$2.5 billion in 2019 to US$8.4 billion in 2020, reflecting a growing appetite for affordable, trend-driven apparel. Its expansion continued in the following years, with estimated online revenues reaching US$48 billion in 2024—a staggering 3,300 percent increase from 2018, when sales stood at US$1.4 billion.
This growth positioned Shein as a serious competitor to legacy brands like Zara and H&M, both of which have struggled to match its speed and pricing strategy.
However, Shein’s rapid success has also attracted regulatory scrutiny. The company has benefited from the “de minimis” exemption, a trade loophole that allows goods valued under US$800 to enter the US duty-free. This has helped Shein maintain its competitive edge against traditional retailers, which must pay import tariffs on bulk shipments. However, recent tariff changes under the Trump administration have signaled a potential disruption to this model, raising questions about how Shein—and other Chinese e-commerce giants like Temu and AliExpress—will adapt to a shifting regulatory landscape.
Competitive Landscape: local challengers and global competition
While Shein currently leads the market, domestic challengers are emerging, aiming to capture a share of China’s ultra-fast fashion dominance. Brands like UR (Urban Revivo), Cider, and domestic digital-native labels are gaining popularity, offering a mix of affordability and trendy designs while refining supply chain strategies similar to Shein’s.
On the global stage, Western fast fashion giants like Zara, H&M, and Uniqlo are struggling to match the speed and pricing of Chinese ultra-fast fashion brands. While they still hold strong brand recognition, their slower production cycles and higher costs pose a challenge in the face of China’s cost-efficient, tech-driven approach.
Export-driven growth: Key markets, cross-border logistics, and Localization Strategies
Chinese ultra-fast fashion retailers such as Shein and Temu have expanded aggressively into international markets, leveraging efficient cross-border logistics and localization strategies.
For instance, during the 2024 holiday season, both Shein and Temu experienced significant growth, with Salesforce predicting substantial sales from these platforms. However, this rapid expansion has attracted regulatory attention. In 2023, the US received over 1 billion small parcels, a significant increase from 140 million a decade earlier, largely due to platforms like AliExpress, Shein, and Temu. This surge has prompted discussions about revising import thresholds, potentially impacting the cost advantages these companies currently enjoy.
Role of live-streaming, influencers, and short-video platforms in driving sales
One of the most significant factors behind the success of China’s ultra-fast fashion industry is the rise of e-commerce live-streaming, which has transformed how brands interact with consumers. By offering real-time product demonstrations, interactive Q&A sessions, and instant purchasing options, live-streaming has become a powerful tool for driving impulse buying and increasing customer engagement.
The numbers highlight its impact: in 2020, China’s e-commerce live-streaming market was valued at RMB 1.2 trillion (approximately US$170 billion), nearly tripling from 2019, with a projected compound annual growth rate (CAGR) of 58 percent in the coming years. By that year, 10.6 percent of all online retail sales in China were generated through live-streaming, and this share has only grown as consumers embrace the habit of shopping while watching live content.
Platforms such as Douyin, Kuaishou, and Taobao Live have been instrumental in this shift, creating specialized ecosystems where influencers and brands can directly market their products. Ultra-fast fashion brands in particular have benefited from this model, using live-streaming to showcase new styles, push flash sales, and capitalize on limited-time discounts. For standardized fashion items, price reductions and urgency-driven marketing are especially effective, while for unique or luxury items like jewelry, live-streaming serves as a platform for educating consumers and accelerating purchase decisions.
This direct, interactive sales approach has allowed ultra-fast fashion companies to quickly identify and respond to trends, bypassing traditional retail cycles. As a result, brands leveraging live-streaming have gained a major advantage, helping to cement China’s leadership in the global ultra-fast fashion market.
Regulatory and sustainability challenges
Environmental concerns: Textile waste, emissions, and recycling initiatives
The ultra-fast fashion model contributes significantly to environmental challenges, including textile waste and emissions. In 2020, China generated approximately 22 million tonnes of textile waste, with a recycling rate of about 20 percent, resulting in 1.5 million tonnes of recycled fiber produced. By 2023, the recycling volume of textiles in China increased to 4.8 million metric tons, valued at around RMB 2 billion (US$275.89 million), marking a 16 percent increase compared to the previous year.
The Chinese government aims to recycle 25 percent of all textile waste and produce 2 million tonnes of recycled fiber annually by 2025, as part of its broader climate goals.
Also Read: China’s Circular Economy: Understanding the New Five Year Plan
Labor and ethical sourcing
Labor practices within China’s ultra-fast fashion industry have attracted international scrutiny. Companies like Shein have faced criticism over supply chain practices and environmental impact.
In response, Shein’s executives, including founder Sky Xu, have engaged with potential US investors ahead of a planned London IPO, signaling efforts to address these concerns and improve transparency.
Government interventions and industry self-regulation efforts
The Chinese government actively promotes sustainability in the fashion industry through policies outlined in the 14th Five-Year Plan for Ecological and Environmental Protection. Initiatives focus on green manufacturing, circular economy goals, and the use of sustainable materials. The Circular Economy Promotion Law of 2022 enforces the Extended Producer Responsibility (EPR) principle, holding fashion brands accountable for their products’ entire lifecycle. Industry self-regulation also plays a crucial role.
Companies are increasingly adopting eco-friendly standards and certifications, such as the Green Product Evaluation Technical Guidelines and the China Environmental Label, to monitor and report their environmental and social impacts. Financial subsidies and support programs from the government encourage businesses to adopt green technologies, reflecting a strong commitment to environmental protection and green development.
All in all, while China’s ultra-fast fashion industry continues to thrive, it faces significant challenges related to environmental sustainability and ethical labor practices. Addressing these issues requires a collaborative effort between the government, industry stakeholders, and consumers to promote sustainable and ethical practices within the sector.
The future of ultra-fast fashion in China
As of 2025, China continues to lead in the ultra-fast fashion sector, but the question remains: can this dominance be sustained? The industry faces the ongoing challenge of balancing profitability with sustainability and regulatory compliance. While the demand for ultra-fast fashion remains high, the growing need for environmental responsibility and government regulations are pushing brands to rethink their approaches. Key factors driving this shift include the growing consumer demand for personalization and sustainability.
Young consumers, particularly Gen Z and millennials, are now making fashion choices that prioritize individuality and environmental impact. In response, brands like Bosive have capitalized on the trend by offering gender-neutral clothing that caters to diverse styles, while others, such as JAC, are focusing on eco-friendly materials like organic cotton and recycled fabrics.
Businesses and investors should closely monitor China’s evolving fashion landscape. Companies that can adapt by blending speed with environmental responsibility will be best positioned to thrive in this rapidly changing market.
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Dezan Shira & Associates assists foreign investors into China and has done so since 1992 through offices in Beijing, Tianjin, Dalian, Qingdao, Shanghai, Hangzhou, Ningbo, Suzhou, Guangzhou, Haikou, Zhongshan, Shenzhen, and Hong Kong. We also have offices in Vietnam, Indonesia, Singapore, United States, Germany, Italy, India, and Dubai (UAE) and partner firms assisting foreign investors in The Philippines, Malaysia, Thailand, Bangladesh, and Australia. For assistance in China, please contact the firm at china@dezshira.com or visit our website at www.dezshira.com.
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