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Shein’s Winding Path to an IPO

Rumours of a public listing have swirled around the e-commerce giant for years, but geopolitical tensions, a volatile stock market and scrutiny from US lawmakers keep postponing the event. Recent reports indicate an end is in sight, however.
Shein app. Shutterstock.
Shein app. (Shutterstock)

Shein’s road to initial public offering has been unusual — and that’s before the company has even formally announced its intentions.

Last week, Reuters reported that the fast-fashion giant had filed paperwork with the Securities and Exchange Commission to list shares on a US exchange, seemingly confirming years of rumours. Instead, Shein vehemently rebuked the claims, telling BoF and other media outlets “we currently have no plans for an IPO.”

Reuters retracted the story, only to publish a new one on Tuesday reporting that Goldman Sachs, Morgan Stanley and other banks were helping Shein prep for an IPO. It cited at least six sources, and this time there was no retraction.

There are other signs a Shein IPO is coming, and may be imminent: the company moved its assets from a holding company in China to another in Singapore last year in an effort to circumvent Chinese laws that prohibit domestic companies from pursuing offshore listings. Chris Xu, who founded Shein in 2008, has also become a permanent resident of Singapore, according to Reuters.


In March, Shein raised $2 billion from investors including General Atlantic and Sequoia Capital China at a more-than $60 billion valuation. If the public market agrees with that figure, it would make Shein the second-biggest Chinese company to list in the US, after the ride-hailing service Didi Global, and one of the 10 or 15 biggest from any country.

And yet even at this late stage, there’s still scepticism among investors and many within the fashion industry about whether Shein’s blockbuster exit will happen at all.

What is behind the delay?

For Shein, the timing is never right.

The company’s popularity exploded around the start of the pandemic in 2020, and an IPO was rumoured to be in the works that year, according to multiple reports at the time. Plenty of other e-commerce companies did go public as the market boomed in 2021, including Warby Parker, Poshmark and Rent the Runway.

Had Shein joined them, its shares might have been snapped up by retail and institutional investors eager to own a piece of the world’s hottest fashion company. But it might also have found itself caught up in the deteriorating relationship between the US and China, which was at a low ebb following the crackdown on Hong Kong protesters and the mass detention of Uyghurs in Xinjiang, including allegations of forced labour in the region’s cotton and textile industries.

Shein might have tried again last year. But by then the IPO market had dried up, as Russia’s invasion of Ukraine and high inflation sent stock markets tumbling. While there has been a steady trickle of listings (including Lanvin in December), there hasn’t been a major tech IPO in 18 months and counting.

Shein has the scale and the potential to break that logjam. But market conditions are the least of its problems.

Could geopolitical tensions prevent an IPO from happening?

Shein denies it uses labour from the Xinjiang region and has said that it has zero tolerance for forced labour in its supply chain. It has struggled to convince activists and US lawmakers.


In May, a bipartisan group of US representatives penned a letter to the SEC asking the agency to halt Shein’s prospective IPO until it can prove that it does not use forced Uyghur labour, which is prohibited under the Uyghur Forced Labor Prevention Act that went into effect last year.

Critics have also pointed to Shein’s use of the “de minimis” tariff loophole, which allows e-commerce operators to ship individual packages under $800 in value into the US without paying duties or fees. That gives the company an edge over many competitors, which bring clothing into the country in bulk shipments that are fully taxed.

Shein isn’t the only company with ties to China that’s under such close scrutiny. The state of Montana is trying to ban its residents from using TikTok, and fellow e-commerce platform Temu faces the same questions over forced labour and customs duties.

Ultimately it’s up to the SEC, not Congress, to approve an IPO. Shein can also proceed toward an IPO even under these clouds; at any given moment, there are likely to be publicly traded companies under investigation for labour practices or grappling with changes to their tax structures.

The greater threat would come if lawmakers or regulators go further than they have so far. Fresh rounds of hearings and investigations could delay a listing. Attempts to shut Shein down could still end the company’s IPO dream.

“It’s possible that Congress could act to effectively delay an IPO, but the process would likely be an indirect one,” Susan Scafidi, the founder and director of the Fashion Law Institute, told BoF in an emailed statement. “Geopolitical tensions are more likely to delay than derail an IPO unless the company is placed on a banned list for reasons such as military sensitivity or criminal connections.”

What’s next for Shein?

It’s clear that an IPO is on the horizon at some point.

With a gargantuan $66 billion valuation, Shein’s current investors — which include Sequoia Capital and General Atlantic — likely won’t be able to cash out with another set of buyers. Their only viable exit is a stock offering on a public market.


For now, they can afford to be patient. Despite slowing growth last year, Shein projects global revenue to increase 40 percent this year.

If the Nasdaq or New York Stock Exchange is a bust, Shein could always go public via the Hong Kong or Shanghai Exchange — or elsewhere too. But Chinese tech companies prefer the US exchanges because the market is significantly larger compared to its international counterparts, creating more lucrative opportunities for private investors.



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Compiled by Diana Pearl.

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