Shein’s London IPO just got a big boost. The UK’s Financial Conduct Authority (FCA) has given the green light to the fast-fashion giant’s initial public offering plans. Two sources close to the matter confirmed this to Reuters. This approval is a major step forward for Shein, a China-founded company now based in Singapore, as it looks to make its international debut on public markets.
Regulatory Hurdles Ahead
Shein submitted its documents to the FCA confidentially last June. Now, it needs to clear several regulatory and geopolitical hurdles before going public. The China Securities Regulatory Commission (CSRC) still needs to approve Shein’s IPO plans. Shein has notified the CSRC about the UK approval but is yet to receive the final nod. All companies with significant operations in China must get CSRC approval to list abroad.
Shein’s operational structure is still closely tied to China, even though it moved its legal headquarters to Singapore in 2022. The company doesn’t own manufacturing plants; instead, it outsources production to around 5,800 contractors, mostly in China. Under Chinese regulations, this means Shein is subject to scrutiny based on the “substance over form” principle. This principle lets the CSRC determine the extent of its oversight based on the actual nature of Shein’s operations.
More Than Just CSRC Approval
Shein faces potential interference from other Chinese authorities, including the National Development and Reform Commission and the cybersecurity regulator. These bodies oversee foreign investment and national security risks. The current geopolitical climate adds to the complexity. Shein must navigate the recent tariffs imposed by former US President Donald Trump on Chinese products. Stricter rules for duty-free direct shipments from China to the US, one of Shein’s key markets, also pose a challenge.
The FCA and Shein haven’t commented on the matter. Shein’s path to a London IPO remains fraught with challenges, but the FCA’s approval is a significant step forward.