In April 2022, fast-fashion retailer Shein was riding high. Pandemic lockdowns and social media hype from “Shein hauls” had drawn young consumers to its cheap, trendy clothing, making it the largest apparel retailer in the US by sales.
Investors valued the company at as much as $100bn, and it seemed headed for a listing on public markets that would secure its place as one of China’s most successful global consumer brands.
But after four years, two false starts and billions of dollars in lost paper value, that process is only now nearing its conclusion.
Shein is limping towards a listing in Hong Kong at a quarter of its peak valuation, seeking to raise $1.7bn to $1.8bn for a market capitalisation of $25.7bn to $26.8bn. The company is battling trade investigations in the EU and US, while a tax loophole that advantaged its business has all but closed.
The story of how Shein’s four-year quest to go public went awry is a cautionary tale for companies caught in the middle of a growing rivalry between Beijing and the west.
“It’s one of the world’s most closely watched IPO candidates and a bellwether for the whole ultra-fast-fashion . . . ecommerce model,” said Brittain Ladd, a Texas-based supply chain consultant who previously worked at Amazon and Dell.
For Shein, which makes but does not sell its products in China, a prestigious overseas listing was a chance to cement its reputation as a global fashion heavyweight and tap western capital.
It hired Donald Tang, a flamboyant former Bear Stearns investment banker, to lead an effort to list on public markets. But Tang, who stepped down as executive chair earlier this year, faced an uphill battle.
Investor enthusiasm for the company had begun to ebb in late 2022 amid a global tech rout. By October, its shares were trading in secondary markets at levels valuing Shein at $65bn to $85bn. Months later, it raised money at a $66bn valuation, down a third from its April peak.
Retailers across the US and Europe were in uproar over what they saw as unfair competition from Chinese fast fashion. US officials were readying measures to end de minimis tax exemptions on packages under $800 in value, which Shein used to avoid duties on shipments. Similar moves followed or are under way in the UK and EU.
Meanwhile, regulators and politicians were starting to pick apart the company’s business model, raising questions over labour practices and sustainability issues in its supply chains.
There was particular concern about potential links to cotton produced in China’s Xinjiang region, where the UN high commissioner for human rights has alleged extensive detention and forced labour practices imposed on minority groups — allegations that Beijing has denied.
Perris Lee, head of Asia-Pacific equity capital markets at Mergermarket, said Shein opened itself up to scrutiny when it embarked on the US initial public offering process. “That’s when people went: ‘Oh my goodness, there’s this tax loophole and this labour . . . issue.’”
Shein has previously said it has a “zero-tolerance policy” on forced labour and argues that its efficient supply chains, not tax loopholes, ensure its low costs.
The company sought to allay concerns by “de-Chinafying” its image. It moved its domicile to Singapore in 2022. At a conference in Los Angeles in 2024, Tang said Shein was essentially an “American company”, remarks that drew criticism in China. On its website, the company referred to itself as a “Singapore-headquartered global online fashion and lifestyle retailer”.
Stakeholders were unconvinced. By early 2024, with regulatory and political pushback mounting, the company had shifted its IPO focus to London. At the time, Tang told the FT that Shein had made “progress” on changing the perception that China controlled it “but not enough” to win over US lawmakers.
He later said London was home to a “fantastic capital market” with “the best timezone, the best language . . . the best separation between legality and politics and . . . one of the highest standards for accountability”.
But moving the listing did not resolve Shein’s underlying issues.
Donald Trump’s election victory in 2024 fast-tracked the end of de minimis exemptions and brought higher tariffs on Chinese goods. In the US and Europe, Shein faced mounting challenges from rivals such as PDD-owned Temu, which rapidly grew its market share.
Investors started to question whether Shein would be able to sustain even the vastly reduced $66bn valuation from its last funding round in 2023. Some called for the company to slash the figure to as little as $30bn, the FT reported in February last year.
Back at home, Shein’s efforts to “de-Chinafy” had become a sticking point for the country’s securities regulator, which has to sign off on any offshore listing.
That proved to be a major stumbling block for the London plans. While the UK’s Financial Conduct Authority gave Shein initial approval to list in London, the China Securities Regulatory Commission objected to how the company described potential links to Xinjiang in its risk disclosure.
By May last year, it was time for plan C. The company began to shift its focus to Hong Kong, where it reckoned securing CSRC approval would be easier.
It also worked on rebuilding its image as a Chinese entity, with reclusive founder Xu Yangtian making his first major public appearance at a government conference in February this year to praise Communist Party officials and vaunt the company’s local roots.
“Ideally Shein could file its IPO in a first-class world financial market like New York or London but unfortunately neither worked out,” said Sheng Lu, a professor at the University of Delaware specialising in the fashion industry.
Meanwhile, longstanding frustration with fast fashion and the effect of ecommerce on local retailers boiled over in impassioned protests in Paris, where the company opened its first bricks-and-mortar store late last year.
Then, the European Commission began investigating the platform’s algorithms under its Digital Services Act and allegations that third-party sellers on its marketplace had been selling weapons and childlike sex dolls.
The investigation could lead to a penalty equal to as much as 6 per cent of Shein’s global revenues. The company said in February it took its DSA obligations seriously and had “always co-operated fully with the European Commission”.
The layering of regulatory, tax and consumer issues dented the company’s valuation further. The FT reported this month that IPO advisers pitched a sub-$30bn valuation to investors, below what Shein was seeking, and many of the cornerstone investors are existing backers of the company.
In a draft prospectus filed with Hong Kong’s stock exchange last month, Shein revealed a $99mn net loss in the first quarter of this year. Annual net profit moderated to $2bn in 2025, down from a peak of $3.4bn the previous year.
In the filing, the company said it was “pursuing a wide range of options” to respond to higher tariffs, “including increasing our prices in the US market to offset a portion of the increased costs”. Shein also revealed it was being investigated by the Federal Trade Commission, but neither the company nor the US regulator elaborated on the subject of the probe.
Some analysts said Shein’s large $15bn pile of cash and short-term investments suggested the company did not need to raise money and was listing to give early investors an exit. In the filing, Shein said it planned to use raised funds for technology, marketing and “initiatives to promote corporate responsibility”, such as supplier training schemes.
Ladd, the supply chain consultant, said Shein’s future was in growing its third-party marketplaces, opening its supply chain infrastructure to existing large retailers and seeking new markets outside the US and EU.
“Shein is losing access to a regulatory advantage that was built into their business model,” he said. “The changes to the de minimis rules have disrupted the way the entire company operates.”
