China’s top cybersecurity watchdog is probing how Shein handles data as the fast-fashion company is seeking Beijing’s approval for its initial public offering in the US, Wall Street Journal reported.

The Cyberspace Administration of China is looking into whether Shein can protect data on its China-based staff, suppliers and partners effectively and prevent the information from leaking overseas, the Journal said, citing unnamed people familiar with the matter.

The Chinese agency is also trying to learn what data Shein needs to provide to US regulators as part of its preparations for a listing in New York, according to the report.

It took CAC months to investigate similar cases in the past, the Journal said, and the ongoing probe could result in delays to Shein’s stock sale in the US.

Shein could be forced to completely scrap the IPO plan should Chinese cybersecurity officials find any serious fault with its data handling, according to the report.

Shein and CAC did not immediately respond to requests for comment.

CAC has grown increasingly powerful under Chinese President Xi Jinping as his administration has tightened control over the hoard of information produced by the nation’s tech companies as part of broader efforts to position China as a leader in big data. Beijing has been pouring money into data centres and other digital infrastructure to make electronic information a national economic driver and help shore up the Communist Party’s legitimacy.

As a result, Beijing has scuppered the efforts by several Chinese firms to list overseas and forced some to retreat from the US capital market.

Beijing-based ride-hailing start-up Didi Global Inc. delisted from the US months after Beijing launched a probe into the company in July 2021. TikTok’s parent ByteDance Ltd. also reportedly suspended plans to go public after Chinese regulators told it to address data security issues.

By Sarah Zheng

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