The fashion company that won over hundreds of millions of shoppers worldwide with its fashion-forward designs and endless assortment has confidentially filed to go public in the United States. The e-commerce giant could become one of the most valuable China-founded companies to list in New York. But it faces several challenges, including scrutiny from lawmakers and heightened concern over the company’s supply chain.
Shein rose to prominence during the Covid-19 pandemic as shoppers in the US and elsewhere fell for its $5 tops and $10 biker shorts. Still, the company has been criticized over labor law violations, environmental harm, and design theft. The company has defended itself, saying it is working with lawmakers to address concerns. It also says it is investigating accusations of forced labor in its factories.
To boost its profile, Shein hired a former Bear Stearns investment banker as its executive chair and public face earlier this year and started hosting events with influencers, musicians, and other celebrities. However, it has not disclosed its financials publicly, making it hard for analysts to assess its profitability and margins. The company has primarily evaded scrutiny from Chinese regulators as well. However, that may be less of a problem now than it would have been, given President Xi Jinping’s intensified campaign to crack down on businesses that violate the country’s rules.
Founded in Shenzhen, China, Shein has grown into a global behemoth with its headquarters in Singapore. It has expanded operations in Europe, the US, and elsewhere and is opening distribution centers to speed up shipping times in key markets. It has also begun manufacturing in countries like Turkey and Brazil to boost growth and diversify its production base. It also has shifted its focus to online sales, relying on its website and mobile apps to get customers to buy.
Its strategy has been to ship clothing directly from China to shoppers, which avoids unsold inventory problems and allows the firm to take advantage of a US tax provision that exempts low-value goods from tariffs. But the practice has drawn increased scrutiny from members of Congress who say that it’s a way for Shein to evade US taxes and is exploiting workers in violation of US laws.
The sources said Shein has tapped Goldman Sachs, JPMorgan Chase, and Morgan Stanley to be lead underwriters on its initial public offering (IPO), which could launch sometime in 2024. The company hasn’t set a valuation for the IPO, but it is expected to be worth billions of dollars and could be the most prominent Chinese float in years.
