Shein, the fast fashion giant with strong ties to China, has confidentially filed for a public listing in London, according to a source familiar with the matter. This move comes as Shein faces increasing scrutiny and backlash in the United States.
Initially, Shein had confidentially filed for a U.S. initial public offering (IPO) in November but shifted its focus to London after failing to gain the support of American lawmakers. Concerns about forced labor in Shein’s supply chain and the company’s use of a U.S. tax law exemption known as de minimis have been significant obstacles. This provision allows packages valued at less than $800 to bypass import duties and stringent customs oversight, raising issues about items from banned regions entering the country.
Despite the London filing, sources indicate that Shein still prefers to go public in the U.S. However, the company’s future listing location remains uncertain, as it had previously sought approval from Chinese authorities to go public in the U.S., and it is unclear if Beijing has approved the London listing.
Founded in China, Shein has made significant efforts to position itself as a global company, moving its headquarters to Singapore in 2021. Nevertheless, most of its supply chain remains in China, and the necessity of seeking Beijing’s approval for a U.S. IPO suggests that Chinese regulators still exert considerable control over its operations and data.
Shein’s journey to a public market debut has been fraught with challenges. It gained significant traction in the U.S. during the COVID-19 pandemic, attracting consumers with its ability to rapidly offer trendy styles at low prices. This success has disrupted U.S.-based competitors, who have struggled to match Shein’s speed and pricing.
As Shein’s U.S. presence grew, so did its ambitions for a public listing. The company has repeatedly sought membership in the National Retail Federation, the industry’s largest trade association, but has been consistently rejected. Its efforts to win approval from lawmakers and the retail industry have been hindered by geopolitical tensions between the U.S. and China.
American lawmakers have heightened their scrutiny of Shein, concerned about the influence of companies with Chinese ties on the U.S. economy. Some officials have urged the U.S. Securities and Exchange Commission to block Shein’s listing, citing violations of U.S. laws banning the import of products from China’s Xinjiang region, where the government has been accused of committing human rights abuses against the Uyghur ethnic group.
Shein has acknowledged the presence of raw materials from banned regions in its supply chain but claims to have improved in eliminating such materials from its garments. The Wall Street Journal reported in May that Shein considered a London IPO after the SEC required its filing to be made public, an unusual request aimed at enhancing transparency.
Despite these challenges, Shein’s executive chairman, Donald Tang, emphasized that the company’s goal in seeking a public listing is to embrace scrutiny and public diligence, rather than raising capital.
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