China has given approval for fast-fashion giant Shein to proceed with its long-awaited initial public offering (IPO) in Hong Kong, according to a notice published on the China Securities Regulatory Commission (CSRC) website on Friday.
The approval marks a major step forward for the online retailer after its previous attempts to list in New York and London faced regulatory hurdles. A spokesperson for Shein did not immediately comment on the development.
Shein has reportedly been awaiting Beijing’s approval for nearly a year, with the IPO process requiring clearance from senior levels of the Chinese government, according to a source familiar with the matter.
The company’s listing plans have attracted close scrutiny in China due to political sensitivities surrounding its global operations. Concerns were reportedly heightened following controversies involving the company, including a sex doll-related scandal in France and allegations regarding labour conditions among some of its suppliers in China.
IPO Valuation Could Reach US$40 Billion to US$50 Billion
Shein was valued at as much as US$100 billion (RM407.11 billion) in 2022 during the peak of the pandemic-driven e-commerce boom. However, its valuation was later adjusted as investor sentiment weakened amid slowing online retail growth, increased regulatory pressure and criticism from politicians, retailers and industry groups.
The company’s most recent private fundraising round in May 2023 valued Shein at approximately US$66 billion.
According to sources, Shein is now targeting a valuation of between US$40 billion and US$50 billion through its Hong Kong IPO. While this would place the company below rival Temu’s parent company PDD Holdings, which has a market capitalisation of about US$117 billion, it would still make Shein significantly larger than Swedish fashion retailer H&M, which is valued at around US$24 billion.
Previous Listing Attempts in US and UK
Founded in 2012 by Chinese-born entrepreneur Sky Xu, Shein has grown into one of the world’s largest online fashion retailers, offering low-cost apparel such as US$5 dresses and US$10 jeans across around 150 countries.
The company initially filed for a US IPO in November 2023 but faced increasing resistance from lawmakers and regulators over concerns linked to its supply chain practices and Chinese ownership ties.
Following delays in the US, Shein shifted its focus to London, where the Financial Conduct Authority reportedly approved a draft prospectus. However, the company was unable to proceed as it had not received the required approval from China’s CSRC.
Shein’s prolonged IPO journey highlights the growing impact of geopolitical tensions on Chinese-linked companies seeking access to global capital markets. The situation also reflects Beijing’s increased oversight of overseas listings following its decision in 2020 to halt Ant Group’s planned IPO at the last minute.
New regulations introduced by the CSRC in 2023 gave Chinese authorities greater authority to review and potentially block offshore listings that could raise national security or data concerns. Although Shein relocated its headquarters to Singapore in 2022, the company remains subject to Chinese listing regulations due to its reliance on a large network of suppliers based in China.
Hong Kong Set to Benefit from Major Listing
A successful Shein IPO would provide a boost to Hong Kong’s capital markets, which have experienced renewed momentum as a global listing destination.
Over the past 12 months, the CSRC has approved more than 180 IPO applications, according to public disclosures, contributing to increased activity in Hong Kong’s equity capital markets.
Ongoing Criticism Over Labour and Business Practices
Despite its rapid global expansion, Shein has faced criticism from competitors, regulators and non-governmental organisations over several aspects of its business model.
The company has been accused of contributing to concerns surrounding factory working conditions, carbon emissions from air freight shipments and the environmental impact of producing large volumes of low-cost clothing.
Its direct-to-consumer model, which involves manufacturing apparel through Chinese suppliers and shipping products directly to customers worldwide, has also come under pressure as the US and European markets move to tighten customs exemptions and impose duties on low-value imports.
The Hong Kong listing would represent a significant milestone for Shein as it seeks to strengthen its global presence while navigating increasing regulatory scrutiny and geopolitical challenges.
