Viral TikTok fashion trends pose new threat to fast fashion’s leaders

They say imitation is the sincerest form of flattery. That is not much comfort to the luxury fashion groups that have been battling counterfeit handbags made in China for decades. But at least now they have some company.

Historically, high-end designer brands have been the ones that have had to fight off replicas from China. But the latest string of lawsuits concerning pirated products have been from a list of less obvious companies, including fast fashion groups Uniqlo and H&M.

A massively popular mini bag by Uniqlo that sells for Y1,500 ($10) in Japan is at the centre of the latest legal dispute. Uniqlo, part of Japanese fashion group Fast Retailing, last month sued Chinese fast-fashion retailer Shein in Japan. Uniqlo accused Shein of copying a Round Mini Shoulder bag last month, heralding a new phase in the battle against Chinese counterfeits.

Shein, known for its $10 dresses and $5 tops, is hardly a new entrant. It has been around since 2008. Its clothes and bags were not seen as a threat to the world’s fast fashion groups for most of that time. Shein was after a different customer: its quality and designs were seen to lag behind Zara and H&M. 

But the popularity of short-video app TikTok changed everything. The speed at which viral trends can be brought to market has become the deciding factor in how much revenue a fast fashion group can capture from the younger generation. Shein, which can get designs to production within days, projects sales will more than double to nearly $60bn by 2025.

For now, Uniqlo’s lead remains intact. The $85bn market value of its parent Fast Retailing is well above Shein’s. The Chinese company was valued at $66bn in its last private fundraising and at an industry multiple would be worth about $70bn. Uniqlo’s growth is strong, with overseas sales rising nearly a quarter in the three months to November. Its simple designs have a solid fan base.

Longer term, Uniqlo should brace for a new wave of competition as Shein seeks to grab yet more global market share. Shein has gone from near zero to holding nearly a fifth of the global fast-fashion market, including the largest share in the US in less than four years. It has also overtaken H&M’s $19bn market value.

The rise of lawsuits against China’s online fast-fashion groups is, in part, about the rise of counterfeit products. But the legal attacks owe as much to the unexpected speed at which the Chinese industry can capitalise on the latest TikTok trends.

Lex is the FT’s concise daily investment column. Expert writers in four global financial centres provide informed, timely opinions on capital trends and big businesses. Click to explore