How Shein came crashing down The Chinese e-retailer is listing for a quarter of the $100bn at which it was once valued Aug 27th 2026 Only a few years ago Shein looked unstoppable. Its novel business model— using oodles of data and clever algorithms to spot fashion trends and generate new designs, which its network of Chinese suppliers stitch for a pittance—proved a hit in Western markets. Americans in particular spent endless hours scrolling through the $3 blouses and $5 khakis available on its app. In 2022, shortly after it moved its headquarters from Nanjing to Singapore, the company was valued by private investors, including America’s General Atlantic, at $100bn. On September 1st Shein plans to list on the Hong Kong stock exchange— reportedly at a valuation of just $27bn. Its business has deteriorated
dramatically. In 2024 it generated $39bn in revenue, up by 21% from the year before. In 2025 sales grew by only 8%, to $42bn, and in the first quarter of 2026 they increased by a mere 1%, year on year. In 2024 the company’s net profit reached $3.4bn. It is now operating at a loss. What went wrong? Shein’s business model was undoubtedly inventive. The prospectus for its listing says that it offers more than 2m distinct items of clothing, with 4,700 new ones added every day. Its 280m customers worldwide—excluding China, where it does not sell its wares—put in four orders a year, on average, suggesting many are not perturbed by the occasionally shoddy quality of its products. The success of the model encouraged copycats—one reason for the company’s mounting troubles. In 2022 PDD, a Chinese e-commerce company, set up Temu, a Shein-like business, in America. Then in 2024 Amazon, the world’s biggest online marketplace, launched Haul, its own ultra-cheap offering. Meanwhile TikTok, a short-video platform beloved of youngsters, has also been expanding into e-commerce with TikTok Shop, which has overtaken Shein in sales in America. Perhaps an even bigger reason for Shein’s slowing sales and deteriorating profitability is the closing last year of a tax loophole in America and the European Union known as the de minimis rule, which had allowed packages below a certain value to be imported free of duties. That change, in combination with the higher tariffs on Chinese goods levied by the second Trump administration, has hit Shein’s business in America especially hard. The percentage of global revenue it generates from the country fell from nearly 30% in 2023 to around 23% in the first three months of this year. Shein has responded by diversifying its manufacturing base. Last year, for example, it established a partnership with the retail arm of Reliance, an Indian conglomerate, to produce clothing in the country, which Shein reportedly plans to sell both locally and abroad. Shein’s prospectus, however, is conspicuously quiet on the topic of supply-chain diversification. That may in part reflect its desire to avoid antagonising Chinese officials, who are keeping a close eye on the share of its digital operations that are run from outside the country. They may be unhappy to see manufacturing jobs also leave China.
Shein has spent years sounding out various potential stock markets. Its original plan, to list in New York, was abandoned amid pushback from American lawmakers over the alleged use of forced labour in the firm’s supply chain (which Shein denies). It then flirted with a London listing, for which it obtained approval from Britain’s regulator in April last year. The switch to Hong Kong came after China’s government failed to bless the London option. The collapse in Shein’s valuation since it began efforts to go public has forced it to pay settlements to investors who have experienced precipitous losses. It is hardly the debut for which the once-mighty company would have hoped. ■ This article was downloaded by zlibrary from https://www.economist.com/business/2026/08/24/how-shein-came-crashing-down
The quality you should most wish for your children The benefits of having an internal locus of control Aug 27th 2026 If you could bestow any quality on your children, which one would you pick? Great intelligence? Empathy for humanity? Much greater respect for their parents? The ability to pass a fridge without opening it? Deborah Cobb-Clark, an economist at the University of Sydney, has a different answer: an internal locus of control. The concept of a locus of control was developed in the 1960s by a psychologist with the tremendous name of Julian Rotter. It is closely linked to the idea of agency. People with an internal locus of control believe that they are able to shape the world around them; those with an external locus of control tend to think that luck, destiny or other people determine their fate.
It turns out that being an internal is pretty useful. It motivates effort: one study by Ms Cobb-Clark and her co-authors looked at a cohort of newly unemployed people in Germany, and found that people with a more external locus of control searched less intensively for work than internals. Why spend time hunting for jobs, after all, if outcomes are disconnected from actions? Externals also had lower reservation wages, the minimum pay they were prepared to accept for a job. An internal locus is linked to self-control: another paper concluded that households with a greater sense of agency save more of their wealth. It helps turn intention into action, too, seeming to prompt people with entrepreneurial aspirations to actually take the leap and become a founder. Being an internal also seems to help your descendants. A paper by Warn Lekfuangfu of Universidad Carlos III de Madrid and her co-authors found that, other things being equal, the locus of control of expectant mothers is correlated with the effort they put into active parenting. Internals are more likely to think that time spent developing the skills of their sprogs will pay off. Externals are more likely to think: “Little Rodney is just a helpless plaything of the gods.” The locus of control exists on a spectrum. Ms Cobb-Clark worries most about the small minority of people who never really develop a sense of their own agency at all. But many more routinely underestimate their power to exert control over their circumstances. In her pointedly titled book, “You Can Just Do Things”, Cate Hall cites research by Francis Flynn and Vanessa Lake, then of Columbia University, showing that people misjudge how likely others are to respond to requests for help. In a series of experiments, the researchers asked participants how many strangers they would have to approach to complete a range of tasks, from filling out questionnaires to borrowing a mobile phone to make a call. The actual numbers were much lower than the estimates, not because people are unbelievably nice, but because it is awkward to reject a direct request for help. In another experiment, Steven Levitt of the University of Chicago got people who were dithering over a big decision to toss a virtual coin to help them
make their choice. A toss in favour of change made it much more likely that someone would go ahead and break with the status quo. Those who did reported being much happier than those who did not. That suggests many people who would benefit from change lack the sense of agency to seize control of their own destiny without a nudge. If an external locus of control is holding back individuals, it could be hindering organisations, too. A new paper, co-written by Feng Xu of the Harbin Institute of Technology, looks at adoption of artificial intelligence by manufacturing firms in Shenzhen. The researchers find that internals, who are more likely to see AI as a skill to master, are happier to share knowledge about their experiences of it. Externals, who are more likely to see the technology as a threat to their job security, are more prone to hiding information. What should managers do about this? They could test for locus of control in hiring processes: Andrej Karpathy, a quotable AI researcher, has said that as a trait, agency is both more powerful and scarcer than intelligence. Compensation and promotion systems should reward achievement as a matter of course, but that link can be made more explicit. Cultural norms can also be set to prompt people towards taking action. “Ask forgiveness, not permission” is a mantra that can have some pretty ugly consequences if you have lots of high-agency people and no guardrails. But the idea behind it is sound. ■ Step inside the world of work with our Bartleby newsletter. Each week our white-collar oracle muses on the agonies of office life. This article was downloaded by zlibrary from https://www.economist.com/business/2026/08/27/the-quality-you-should-most-wish-for- your-children
New research shows large firms are vital for prosperity Aug 27th 2026 Chief executives are unlikely to be feeling enthusiastic about the rise of the Democratic Socialists of America (DSA), whose members have recently won a slate of nominations to represent the Democratic Party in November’s midterm elections. Last month the left-wing political group published a manifesto, titled “Workers Deserve More”, that decried the power of big business and called for “public ownership of the largest corporations”. Most Americans do not share the DSA’s enthusiasm for widespread nationalisation, but many do feel a great deal of antipathy towards large companies. In a survey published in April, just 15% told Gallup, a pollster, that they had confidence in big business, a hair above the all-time low. It is