Shein switching to Hong Kong listing after London IPO stalls, sources say
Shein's proposed listing in London failed to secure the green light from Chinese regulators, sources say. PHOTO: REUTERS
HONG KONG - Shein is working towards a listing in Hong Kong after the online fast-fashion retailer's proposed initial public offering (IPO) in London failed to secure the green light from Chinese regulators, said three sources with knowledge of the matter.
The Singapore-based company aims to file a draft prospectus with Hong Kong's stock exchange in the coming weeks, one of the sources said. Shein plans to go public in the Asian financial hub within the year, two of the sources said.
Shein plans to change the listing venue as it had not yet received approval for its London IPO from Chinese regulators, notably the China Securities Regulatory Commission (CSRC), the two sources said.
The company in March secured approval from Britain's Financial Conduct Authority (FCA) for its IPO in London, and soon informed the CSRC, one of the sources said.
The company initially expected the green light from Chinese regulators to follow swiftly after the FCA but has since experienced an unexpected delay and limited communication from the CSRC, said the source.
Before its attempt to list in London, Shein had pursued a listing in New York, as part of its efforts to gain legitimacy as a global, rather than a Chinese company, and access to a wide pool of large Western investors.
A listing in Hong Kong would go against that strategy and could hurt its global credentials.
Allegations that Shein's products contain cotton from China's Xinjiang region and a planned legal challenge to the London IPO by a non-governmental organisation campaigning against forced labour in China have complicated the London listing and risk embarrassment for the Chinese government, a separate source with direct knowledge of the matter said.
Tensions with the United States over trade only exacerbate the wariness of Beijing and the CSRC, the source said.
The US and NGOs accuse China of human rights abuses in the Xinjiang Uyghur Autonomous Region, where they say Uyghur people are forced to work producing cotton and other goods. Beijing has denied any abuses.
Shein says it has a zero tolerance policy for forced labour and child labour in its supply chain.
IPO valuation
In 2022, the company moved its headquarters from China to Singapore for regulatory, international expansion, and financial reasons – while keeping its supply chains and warehouses in China.
Shein does not own or operate any factories, and instead sources its products from 7,000 third-party suppliers in China as well as some factories in other countries like Brazil and Turkey.
But its business model of sending products straight from factories to shoppers around the world has been disrupted by the Trump administration ending duty-free access and slapping steep tariffs on e-commerce packages from China.
The 'de minimis' exemption allowed e-commerce packages from China worth less than US$800 to enter the US duty-free and helped Shein, Temu, and Amazon Haul sell clothes, gadgets and accessories extremely cheaply.
Now, those parcels are subject to a minimum tariff of 30 per cent.
Regardless of where Shein lists, its eventual IPO valuation will hinge on the impact of the removal of the de minimis exemption, the sources have said. The US exemption is still in place for goods that are not from China or Hong Kong.
The European Union has also proposed changes to its duty exemption on parcels under 150 euros, adding to pressure on the business model.
Reuters reported in February that Shein was set to cut its valuation in a potential London listing to around US$50 billion (S$64.5 billion), nearly a quarter less than the US$66 billion valuation it achieved in a US$2 billion private fundraising in 2023. REUTERS
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