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Shein Eyes London IPO Amid U.S. Roadblocks

Shein Eyes London IPO Amid U.S. Roadblocks

Shein, the major player in fast fashion, has confidentially filed for an initial public offering (IPO) in London. This move follows setbacks in its efforts to secure a U.S. listing, as confirmed by an anonymous source familiar with the matter.

Initially, Shein filed for a U.S. IPO in November, but difficulties in gaining support from American lawmakers have redirected its focus to the UK. Concerns in the U.S. primarily revolve around allegations of forced labor in Shein’s supply chain and the exploitation of a tax exemption known as de minimis. This provision allows packages valued under $800 to bypass import duties and stringent customs oversight.

Despite the London filing, Shein remains inclined to go public in the U.S., suggesting that the UK IPO might not materialize. Previously, Shein also sought approval from Chinese authorities for a U.S. listing, and it remains uncertain whether Beijing has endorsed the London move.

Shein has not provided any comments on the matter. Reuters initially reported the confidential filing in London.

Founded in China, Shein has made significant efforts to rebrand itself as a global entity, relocating its headquarters to Singapore in 2021. However, with most of its supply chain still based in China and the need for Beijing’s approval for a U.S. IPO, it is clear that Chinese regulators maintain a level of control over its operations and data.

The London IPO attempt is the latest development in Shein’s ongoing quest to enter public markets. The company gained substantial traction in the U.S. during the COVID-19 pandemic by offering trendy styles at low prices, challenging U.S.-based competitors who struggled to keep up.

Shein’s ambitions to go public have grown alongside its U.S. market presence. Despite efforts to win over U.S. lawmakers and the retail industry, it has faced resistance. The company has applied for membership in the National Retail Federation multiple times, facing repeated rejections.

Caught in the geopolitical tensions between the U.S. and China, Shein has faced heightened scrutiny from American lawmakers concerned about the influence of Chinese-linked companies 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 prohibiting the import of products from the Xinjiang region, where allegations of human rights abuses have been raised against the Chinese government.

Shein has acknowledged finding raw materials from banned regions in its supply chain but claims to have improved its efforts to eliminate such materials compared to industry standards.

In May, The Wall Street Journal reported that Shein considered a London IPO after the SEC required the retailer to make its filing public, an unusual request aimed at enhancing transparency. Shein’s executive chairman emphasized that the company’s intent to go public is driven by a desire for transparency rather than capital raising.

“Most companies seek to go public for liquidity reasons,” Donald Tang told the Journal. “We seek to go public to embrace scrutiny and public diligence.”