Shein, the global fast fashion behemoth originating from China, has confidentially filed for a public listing in London as it navigates mounting challenges in the United States. According to a source familiar with the matter speaking to CNBC, the move to London comes after Shein encountered resistance from American lawmakers regarding its planned initial public offering (IPO) in the U.S.
The company initially filed for a U.S. IPO in November but redirected its efforts towards London following concerns raised by U.S. officials. Issues highlighted include allegations of forced labor within Shein’s supply chain and its use of the U.S. tax exemption known as de minimis, which allows packages under $800 to enter the country without import duties and with reduced customs oversight.
Despite its pivot to London, sources indicate that Shein continues to prefer a U.S. listing, and the filing in London does not guarantee that the IPO will proceed there. Shein had previously sought approval from Chinese regulators for a U.S. listing, underscoring its classification as a Chinese company subject to regulatory scrutiny from Beijing.
Founded in China and headquartered in Singapore since 2021, Shein has positioned itself as a global player in the fashion industry, leveraging its ability to swiftly offer trendy apparel at competitive prices. Its expansion into the U.S. market during the Covid-19 pandemic disrupted traditional retail dynamics, prompting both admiration and scrutiny from industry peers.
However, Shein’s path to a public market debut has been fraught with challenges, including efforts to assuage concerns over its operational practices and regulatory compliance. Despite its assertions of transparency, including acknowledging past issues with banned raw materials in its supply chain, Shein has faced heightened scrutiny amid geopolitical tensions between the U.S. and China.
In response to regulatory pressure and geopolitical complexities, Shein’s decision to explore a London IPO represents a significant strategic shift. This move not only reflects the company’s resilience amidst regulatory hurdles but also underscores its determination to pursue growth opportunities in international markets.
Shein’s confidential filing in London highlights the fact that in its bid for public listing amid regulatory challenges, it has to go through many complexities faced by Chinese companies seeking international market access amidst geopolitical tensions and regulatory scrutiny.
