Shein, the fast-fashion giant, is changing its plans to go public. The company was trying to list in London, but Chinese regulators didn’t approve. This is Shein’s third attempt to become a publicly traded company, after facing hurdles in the US and UK.
Shein first tried to enter the New York stock market in 2022. But it faced opposition due to concerns about its labor practices and ties to the Xinjiang region. Then, it turned to London, where it got initial approval from the UK’s Financial Conduct Authority (FCA). However, the China Securities Regulatory Commission (CSRC) didn’t give its permission, which is necessary because Shein still has a large network of suppliers in China.
Now, Shein is shifting its focus to Hong Kong. The company is preparing for an initial public offering (IPO) in the city. It’s expected to release a preliminary announcement soon, with the goal of listing on the stock market before the end of the year. This comes as trade tensions are rising, including a 145% tariff on Chinese imports by the US, which affects Shein significantly since much of its production is based in China.
Shein is also dealing with criticism over its labor practices, including allegations of forced labor in Xinjiang and child labor in its supply chain. These concerns have led to increased scrutiny from regulators and human rights advocates worldwide.
Financially, the company has faced challenges too. In 2024, Shein reported a 40% drop in net profit to 920 million euros, despite a 19% increase in revenue. This decline is partly due to growing competition from platforms like Temu and changes in US and European import policies that impact its low-price business model.
Shein’s decision to pursue a listing in Hong Kong shows its ability to adapt to a complex regulatory and commercial environment. Despite facing multiple challenges, the company remains committed to its goal of becoming a publicly traded company, seeking transparency and public oversight. The success of its IPO in Hong Kong will depend on its ability to address regulatory concerns and maintain its competitiveness in the global market.
Key Challenges Ahead
Shein needs to overcome several hurdles to achieve its goal. These include:
- Addressing regulatory concerns in Hong Kong and globally
- Improving its labor practices and supply chain transparency
- Competing with rivals like Temu and adapting to changing import policies
- Maintaining profitability in a challenging market environment
What’s Next for Shein?
As Shein prepares for its IPO in Hong Kong, the company will need to demonstrate its ability to navigate the complex regulatory landscape and address concerns over its labor practices. With its focus on low prices and fast fashion, Shein will also need to show that it can maintain its competitiveness in a market with increasing competition and evolving consumer preferences. The outcome of its IPO will be closely watched by investors, regulators, and human rights advocates alike.