Shein may pursue an initial public offering (IPO) in London rather than in the United States, Bloomberg reported Feb. 26.
The online retailer of low-cost goods is in the early stages of considering the move, according to the report. It determined that the U.S. is unlikely to approve its IPO, pushing it to seek alternatives, per the report.
Shein did not respond to a request for comment.
Shein is No. 2 in Digital Commerce 360’s database ranking ecommerce retailers in Asia by online sales. The online apparel retailer was valued at $66 billion in May when it closed its latest funding round. Shein reportedly reached $2.5 billion in income in 2023, according to Bloomberg.
What obstacles does a Shein IPO face in the US?
Lawmakers have expressed concerns over the retailer’s business and labor practices that could pose a problem to IPO plans.
On Feb. 15, Sen. Marco Rubio wrote a letter to the Securities and Exchanges Commission (SEC) asking it to require additional disclosures from Shein and possibly block the IPO.
“Shein’s collaboration with Chinese regulators raises serious doubts that its IPO filings are complete and accurate. As I have written to you in the past, those very regulators order Chinese companies to deceive U.S. authorities and investors about the risks of doing business in the PRC,” he wrote.
In November 2023, U.S. Representative Jennifer Wexton released a statement questioning the presence of forced labor at Shein’s contract manufacturers.
“If the fast-fashion giant Shein wants to go public in the U.S., they should have to prove to American consumers that their products are not sourced from forced labor,” the Virginia senator said.
The retailer has faced criticisms for labor practices since a 2022 Bloomberg report linked cotton in some Shein products to China’s Xinjiang region. Human rights groups have accused China of using forced labor from the Uyghur ethnic minority in the region, which the government in Beijing denies.
Shein has said it has a “zero-tolerance policy for forced labor.”
As of November, Shein said 1.7% of its cotton tested positive for cotton from the region.
“According to global supply chain tracing firm Oritain, these amounts are much lower than the industry average of 14%,” a spokesperson wrote at the time.
China’s investigation into Shein’s IPO
The U.S. isn’t the only government with the ability to derail Shein’s plans.
Shein is subject to certain Chinese regulations because of its origins. The fast-fashion retailer was founded in China in 2012 but moved its headquarters to Singapore in 2022. It does not sell products in China, but it does rely on contract manufacturers in the country. The U.S. is Shein’s biggest market of the 150 countries it sells in.
Chinese companies planning an IPO outside the country must abide by recent listing rules, Reuters previously reported. The rules apply to a company if more than half of revenue, profit, or assets are generated in China, and either its main business is conducted in China, or senior management is mostly made up of Chinese citizens.
The Chinese regulations are in part to ensure that data on Shein’s suppliers, partners, and staff in China are protected from leaks outside the country. China can also review what information Shein will share with regulators if it does go through an IPO.
Shein’s potential path forward
The U.S. remains Shein’s preferred site for an IPO, according to the Bloomberg report. The retailer is still working on its U.S. application.
However, if that doesn’t go according to plan, Shein could also consider Singapore or Hong Kong.
Do you rank in our database?
Submit your data and we’ll see where you fit in our next ranking update.
Sign up
Stay on top of the latest developments in the ecommerce industry. Sign up for a complimentary subscription to Digital Commerce 360 Retail News. Follow us on LinkedIn, Twitter and Facebook. Be the first to know when Digital Commerce 360 publishes news content.
Favorite