Helena Lyng Blak
2 weeks ago

Shein Pivots to London Listing Amid US Regulatory Challenges

As trade tensions and regulatory scrutiny intensify, fashion giant Shein shifts its IPO ambitions from New York to London.
Shein mobile icon app on a smartphone screen iPhone. Shein - Chinese e-commerce company, online store. Batumi, Georgia - April 5, 2023 — Photo by Primakov / DepositPhotos
Shein mobile icon app on a smartphone screen iPhone. Shein - Chinese e-commerce company, online store. Batumi, Georgia - April 5, 2023 — Photo by Primakov / DepositPhotos

Ultra-fast fashion behemoth Shein is moving toward a London listing, Reuters reported on Monday, May 13, 2024. 

Originally, the Chinese company was preparing for a listing on the New York Stock Exchange (NYSE). It applied to the US Securities and Exchange Commission (SEC) and approached the China Securities Regulatory Commission (CSRC) in November.

The road to an American listing has, however, been bumpy. As trade tensions rise and the 2024 election nears, Shein seems to have come under an added layer of scrutiny from US regulators. 

So, following challenges and opposition from US lawmakers and regulatory obstacles that hindered its initial attempt to go public in New York, the fast-fashion company is now rumored to have shifted its focus across the Atlantic to the struggling London Stock Exchange (LSE).

What is Shein?

Shein is one of the largest and most famous so-called “ultra-fast fashion” companies to emerge from China in recent years, particularly supported by the COVID-19 pandemic’s boost to cheap online shopping. 

In 2020 alone, the fashion brand generated $10 billion in sales, tripling the amount it made in 2019 and making it, according to Bloomberg, the largest exclusively online fashion brand in the world.

Ultra-fast fashion differentiates itself from the “regular” fast-fashion brands we know, such as H&M or Zara, by the absolutely neck-breaking speed and volume at which it produces clothes. Often catering to so-called ‘microtrends’, short-lived and particularly online trends with a somewhat niche audience, Shein lists as much as 1.3 million items simultaneously. By comparison, H&M introduces about 25,000 new items a year. 

The company is expected to achieve a valuation of somewhere between $50 billion and $66 billion. 

Why are US Regulators Resistant to the Brand? 

Despite explosive growth and strong sales, US lawmakers have been skeptical of Shein and companies like it. And there are several reasons for that. 

Ethically speaking, the company has been criticized for its practices: From its detrimental effect on the environment to claims of stealing designs and photos from other businesses and even allegations that Shein is involved in human rights abuses in the Chinese Xinjiang region. 

On a more political level, Shein is also caught up in rising tensions between the US and China. We saw this earlier this year, with US lawmakers moving to ban Chinese-owned TikTok and in 2021 where the SEC raised concerns about the risks associated with investing in Chinese companies. 

“Recent events have highlighted the risks associated with investing in companies that are based in or that have the majority of their operations in the People’s Republic of China,” the SEC’s division of corporation finance said at the time, according to Bloomberg.

In February 2024, US Senator Marco Rubio shared his concerns about Shein’s Chinese ties, in particular, claiming in a letter to SEC Commissioner Gary Gensler that, 

“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 US authorities and investors about the risks of doing business in the PRC.”

Ultimately, according to Reuters’ unnamed sources, Shein plans to keep its application with the SEC active, possibly hoping to eventually pursue a secondary listing at the NYSE.

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