In Zhili Town, Wuxing District, Huzhou, Zhejiang, known as the 'Capital of Children's Clothing in China', there is such a street called Biandan Street.

In the early days of reform and opening up, the farmers in Zhili would carry large and small bundles on their shoulder poles every day, taking their homemade small commodities such as embroidered pillowcases and children's bellybands to set up stalls on the shoulder pole street.

The children's clothing industry in Zhili also originated here. Nowadays, Zhili has become a well-known children's clothing industrial belt in China. Li Juntao moved to Zhili in 2021 and began to produce children's clothing, seizing the opportunity presented by the trend of going global to sell children's clothing worldwide.

Recently, a unique 'SHEIN City Mentorship' event was held in Zhili Town, Wuxing District, Huzhou, Zhejiang, known as the 'Capital of Children's Clothing in China'.

Leveraging the advantages brought by its flexible supply chain model, the rapidly emerging global fashion brand SHEIN is gaining increasing favor among global consumers in recent years.

Meanwhile, the SHEIN brand has also brought new ideas to the transformation and upgrading of domestic manufacturing. By innovatively integrating digital technology with on-demand flexible supply chain models, it not only attracts and drives suppliers to achieve digital transformation, but also continuously promotes more specialized industrial zones in the clothing industry, such as Zhili children's wear, to achieve high-quality global expansion.

Selling children's clothing from a small town to the world, 'Black Swan' shocks businesses and ushers in a turning point in life

Li Juntao, a native of Henan, and Wang Kaige, a native of Heilongjiang, both encountered significant opportunities in their lives in Zhili Town.

After graduating from university in 2012, Li Juntao worked in sales for five years, first in automobile 4S stores and then in the real estate industry. Later, under the influence of friends, he ventured into the clothing industry. He started by joining a children's clothing brand in Fujian and opening an offline store. Within three years, he expanded to eight mall stores in Henan.

However, the good times didn't last long. Amidst the severe impact of the 'black swan' event of the COVID-19 pandemic, after the mall had been closed for approximately half a year, Li Juntao made the decisive decision to shut down all his offline stores and investigate Zhili, the upstream region for children's clothing. After spending over half a year deeply investigating and learning in the industrial belt, Li Juntao relocated to Zhili in 2021 and began applying to join SHEIN as a supplier of children's clothing.

Previously, Wang Kaige worked within the system in Northeast China. If he had continued to follow the usual path, he would have had a relatively stable job. However, in 2018, he decided to resign and start his own business. Through a friend's introduction, he moved south to Zhili and entered the garment industry. In order to gain a deeper understanding of this industry, he first spent more than a year learning the basic processes of garment production, and then began to establish a factory for brand production and processing.

The children's clothing industry in Zhili originated from small family workshops in the late 1970s. At that time, the people of Zhili relied on traditional textile and embroidery crafts and began to focus on entering the children's clothing industry.

During his entrepreneurial journey, he encountered similar challenges as Li Juntao. The pandemic had a significant impact on domestic orders, while the online shopping habits of foreign consumers were rapidly emerging. At that time, SHEIN, a fashion brand that had swiftly emerged through cross-border e-commerce online retail, was favored by global consumers for its diverse range of products and excellent value for money. On the other hand, the rapidly growing global orders also garnered attention from merchants in the industrial belt.

After 2020, Zhili successfully established a 'National-level Comprehensive Pilot Zone for Cross-border E-commerce' and a 'National-level Pilot Zone for Market Procurement Trade', accelerating the expansion of Zhili children's wear overseas. In 2022, with an annual sales revenue of 70 billion yuan, Zhili children's wear became China's largest production base for children's wear, accounting for two-thirds of the Chinese children's wear market share.

High inventory risk and difficulty in settlement have become industry challenges, while 'small orders with quick response' have created popular products

Li Juntao and Wang Kaige frequently mentioned the platform's 'low inventory and fast payment', which is backed by the 'small order, fast response' flexible supply chain model that SHEIN has built with its suppliers over the years.

'Low inventory' refers to SHEIN's practice of starting with very small orders for all SKUs. Based on market and sales trend feedback, if sales trends are good, orders are immediately replenished; however, if sales do not meet expectations, production is suspended.

'Fast payment' refers to the platform providing suppliers with competitive payment terms. The payment cycle is usually 30 days, two weeks, or even as short as one week depending on qualifications, which is far better than the industry average of 90 days, effectively helping suppliers improve their annual liquidity and profitability.

In Li Juntao's memory, after testing three to five styles in small orders, popular reorder items emerged one after another. SHEIN, which has solved the two major industry problems of high inventory risk and payment difficulties, has established a good reputation among the merchants in the Zhili children's clothing industry belt with whom it has cooperated. Many former 'foreign trade novices' have begun to set sail and 'go global with SHEIN'.

In the first half of 2024, the export value of children's clothing from Zhili Town reached approximately 1.5 billion yuan, marking a year-on-year increase of 12.6%. According to the analysis of SHEIN's professional buyers, the demand for children's clothing has been continuously growing globally in recent years. With the increasing penetration of the internet and e-commerce, overseas parents are increasingly inclined to purchase children's clothing products made in China through cross-border e-commerce platforms.

Grasping fashion trends and consumer feedback in real-time from the front end, conducting small-order quick-response testing for 'blockbuster products'... In Li Juntao's view, the digital 'chain transformation' innovated by cross-border e-commerce platforms is changing the entire production process of suppliers. That is, leading enterprises play a leading role and drive upstream and downstream enterprises and merchants in the industrial and supply chains to transform together. A leading enterprise can drive the rapid transformation and upgrading of an industrial chain, enhancing the efficiency of 'intelligent transformation and digital transformation'.

Flexible production mode transforms industrial belts, and merchants in industrial belts accelerate high-quality overseas expansion

'SHEIN staff will provide us with one-on-one explanations and empowerment, and we will also engage in various learning activities on SHEIN's online learning platform for empowerment training, which has been of great help to us,' said Wang Kaige. After becoming a supplier, SHEIN will provide comprehensive training in various aspects such as management, planning and development, production scheduling, operational inventory preparation, and quality management, both on a daily basis and in special sessions.

Data shows that in 2023 alone, SHEIN conducted over 620 training sessions, and in the first half of 2024, an additional 230 training sessions were held. At the same time, a training base for on-the-job skills for garment industry workers was established, providing skilled workers for rural revitalization in the central and western regions.

SHEIN stated that becoming a supplier to SHEIN will firstly provide access to free digital tools provided by SHEIN at the technical level. Li Juntao said that starting from the training of digital tools, SHEIN is also responsible for guiding the entire process, enabling suppliers to master the full-process digital working method, thereby achieving online collaboration across all chains and links.

Based on the widespread adoption of digital tools, SHEIN has successfully digitized the entire process across the upstream and downstream of the industry chain, thereby establishing a robust industrial internet. Leveraging the industrial internet, SHEIN can make precise predictions to guide the style, positioning, and planning of subsequent products and product lines. Once production begins, the requirements and standards for each style's production and quality management are synchronized in real-time to each supplier through online digital tools. Suppliers can utilize these online digital management tools for production scheduling, production management, timely issue identification, and necessary adjustments.

The 'City Mentorship' event held in Zhili is part of SHEIN's initiative to empower suppliers. In recent years, SHEIN has focused on building a comprehensive empowerment system for suppliers, encompassing technological innovation, training support, factory expansion, and community services, enabling many previously extensively managed factories to embark on the transformation path towards digital and lean management. In the first half of 2023, SHEIN announced a five-year investment of 500 million to further deepen supplier empowerment efforts.

In the field of technological innovation, SHEIN has established its first garment manufacturing innovation research center. It is worth mentioning that for the process or quality control issues that rank high in terms of product chargeback rates, SHEIN's garment manufacturing innovation research center will assign dedicated personnel to research and develop standard solutions, which will then be provided to suppliers along with training support.

SHEIN has also invested hundreds of millions of yuan to assist in the expansion and upgrading of factories. As of June 2024, SHEIN has helped nearly 200 partner supplier factories upgrade and renovate 500,000 square meters of factory buildings, benefiting nearly 33,000 people. In addition to direct financial subsidies, SHEIN provides guidance and assistance throughout the entire process, from early factory site selection planning to environmental layout and production processes. This will further enhance the environment and supporting facilities of its supplier clothing manufacturing factories, improving production efficiency.

Recently, according to foreign media reports, SHEIN has become the second largest clothing and fashion brand in France, almost on par with ZARA. According to the ranking by LSA, a French professional consumer journal, SHEIN's sales in France in 2023 surpassed those of H&M, Primark, and even Kiabi, and were slightly lower than those of ZARA, a brand under the Spanish Inditex Group. Based on SHEIN's sustained high annual growth rate, institutions predict that SHEIN's sales in France will surpass ZARA in 2024.

In China, SHEIN's supply chain is radiating outwards from the Pearl River Delta centered around Guangzhou.

Driven by SHEIN, an increasing number of children's clothing manufacturing enterprises are beginning to experiment with digital transformation and flexible production models, thereby promoting the transformation and upgrading of the entire industry. Reporters have learned that this model is driving more businesses in the clothing industry's sub-sectors across the country to achieve high-quality expansion overseas.

Meanwhile, as SHEIN's platform model beyond its own brand expands, more brands and merchants from other industries are joining SHEIN.

The SHEIN platform currently covers over 300 industrial zones in more than 20 provinces across the country. These industrial zones not only sell their products worldwide through SHEIN, but also benefit from the methodological fission of SHEIN's digital on-demand flexible supply chain model, continuously enhancing their core competitiveness in the global market competition.

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