The Road to 100 Million: Building a Premium Brand on China Production

The first years with the company were challenging. In an interview with Di Weekend Hanna Schönberg talks about the pressure after the initial launch and thoughts of shutting down. The turning point came when Eric Saade stepped in as a co-owner, brand manager and CEO.

With the couple at the helm, the business has scaled up rapidly. Revenue increased from 1.1 million Swedish krona in 2022 to 57 million Swedish krona in 2025. The forecast for the current year is 100 million Swedish krona.

This rapid growth is based on an assortment strategy in the premium segment. Simpler swimwear sells for 900 Swedish krona per piece, and other garments reach price points of up to 19,000 Swedish krona. From an industry perspective, this raises questions about how pricing and margins correlate with the company's communication regarding the environment and manufacturing.

Marketing vs. Supply Chain

Arakiis communication regarding its production countries is formulated in a specific order: "We produce our garments in Portugal, Italy, Turkey and China". Placing the European countries first is a common tactic in the fashion industry to benefit from associations with European craftsmanship and nearshoring.

Yesterday, Camilla Gervide highlighted this formulation in an article on Bloggbevakning. She questioned how the brand presents its production countries and argued that the communication gives a misleading picture of where the manufacturing actually takes place.

When Ehandel.se compiles the data from all 146 available products in the "see all" category on the site, the company's actual supply chain becomes clear. China is not just one of several complementary production countries; it is the primary base for the business.

Premium Positioning and Synthetic Purchases

Sustainability profiling in today's e-commerce often revolves around traceability and conscious material use. Arakii emphasizes on its website that they carefully select materials to achieve the lowest possible environmental impact.

However, the review shows that the majority of the brand's collection is based on newly produced synthetic fibers such as polyester, polyamide, acrylic and nylon, materials that are cost-effective in the purchasing stage and thus enable higher gross margins, especially at the brand's price points.

A clear example of this margin strategy is "The Levant Dress". The dress costs 19,000 Swedish krona. The material description states 90.3 percent polyester and 9.7 percent spandex. Furthermore, a leather jacket is sold for 18,900 Swedish krona, produced in Turkey with a lining of viscose.

Independent reviews of the textile industry put these purchasing choices into a broader context.

Reports from Ellen MacArthur Foundation and UN Environment Programme (UNEP) state that the production of new polyester is directly dependent on fossil extraction. The studies also show that synthetic clothing is the primary source of microplastics in marine environments.

To visualize the purchasing strategy, Ehandel.se has categorized all 146 garments. As many garments consist of material blends, the table is based on the garments' main material (the material listed first in the content list and thus constitutes the largest part of the product). The result confirms that synthetics and conventional viscose dominate the assortment.

(The figures are rounded to the nearest whole number and are based on the stated main material of the garments).

Oil-based synthetic fibers and conventional viscose together account for over half (54 percent) of the range. Natural materials such as organic cotton and the cellulose fiber lyocell – which are often highlighted as more responsible choices in the fashion industry – account for only one tenth of the assortment.

Complex Blends Complicate Circularity

In addition to the high proportion of pure polyester, viscose is a frequent feature in the collections.

Viscose is often presented as a natural alternative as it is extracted from wood pulp, but according to Changing Markets Foundation's report "Dirty Fashion", it requires environmentally harmful chemicals for production, which are often poorly managed in Asian production countries. Without certifications for traceability and closed production systems, conventional viscose remains a supplier risk from a sustainability perspective.

From a circular industry perspective, the company's frequent use of material blends appears as a further obstacle.

An example is the brand's "Sculpted Blazer Dress" for 3,950 Swedish krona, whose composition includes polyester, lyocell, wool and elastane. Authorities such as The Swedish Chemicals Agency and The Swedish Environmental Protection Agency highlight the problem that there is currently no commercially scalable technology to separate and materially recycle this type of blend. The lack of an "end-of-life" strategy means that the garments are predetermined for incineration.

New EU Requirements Force "End-of-life" Strategies

The industry's ability to relinquish responsibility for this final stage is about to change.

Through the EU's updated Ecodesign Regulation (ESPR) and the introduction of the Digital Product Passport, fashion retailers are being steered towards requirements for transparency. Clothes on the European market will need a declared "end-of-life" strategy. Both authorities and customers will be able to read how a product is intended to be materially recycled via the passport. For garments based on unblendable compositions of synthetics and wool, such a report will be a challenge.

In addition, the extended producer responsibility (EPR) for textiles is being rolled out in the EU. The directive means that the companies behind the clothes will bear the financial burden of collecting and managing textile waste in the countries they sell to.

E-commerce companies will have to pay for the end-of-life of their products. Businesses that rely on difficult-to-recycle synthetic blends and lack a circular plan in the purchasing stage risk direct fees that affect the company's margins.

EU's Green Claims Directive Hits Environmental Promises

This contrast between the assortment structure and the company's stated environmental ambitions constitutes not only an operational challenge, but also a legal risk. In addition to the requirements for traceability, the industry is facing stricter regulation of the marketing itself.

Through the EU's Green Claims Directive, sweeping and unsubstantiated environmental claims are prohibited. Formulations on Arakii's website, such as that the company works with factories that have a "sustainable mindset" or that materials are chosen to achieve "lowest impact possible", are exactly the type of communication that the directive addresses.

According to the new rules, e-commerce companies must be able to back up every claim of environmental benefits with independent, scientifically verified data before communicating it to customers. Companies that cannot substantiate their sustainability promises risk sanctions, which can amount to four percent of the company's annual turnover.

Packaging as a Hygiene Factor

The company communicates several efforts to minimize its footprint. The website states that hangtags are produced from certified paper, that the shipping bags are recycled and that the leather is vegetable tanned and a by-product of the meat industry.

In today's e-commerce, however, the transition to recycled packaging should be seen as an industry standard and hygiene factor. When 84 percent of a brand's range is mass-produced in China – primarily from newly produced oil-based plastic and uncertified viscose – recycled cardboard is more of a detail on the margin than a factor that changes the company's overall environmental footprint.