Shein Abandons US/UK IPO for Hong Kong
Fast-fashion giant Shein is now seeking a Hong Kong IPO after regulatory hurdles and supply chain concerns blocked its attempts in the U.S. and UK. The move comes as the company faces new headwinds, including a sharp drop in U.S. sales after tariff-related price hikes and a full exit from Brazil following a failed $150 million investment.
Shein's valuation has seen a dramatic swing, peaking at $100 billion in 2022 before dropping to $66 billion in a 2023 funding round. Some investors are now reportedly pushing for a valuation as low as $30 billion for its public offering, reflecting concerns over profitability and competition. The company's net profit reportedly fell by 40% in 2024 to around $1 billion, despite a 19% increase in sales to $38 billion, as it faced increased competition from rivals like Temu. The move to Hong Kong follows significant regulatory headwinds in the U.S. and skepticism from Chinese regulators. U.S. lawmakers have raised concerns about Shein's supply chain, citing allegations of forced labor, which the company denies. Simultaneously, Beijing has increased scrutiny of Chinese companies listing overseas, a factor that complicated Shein's initial plans for a New York IPO. The "de minimis" trade exemption, which allowed Shein to ship packages valued under $800 to the U.S. duty-free, has been a cornerstone of its low-price strategy. The removal of this exemption for Chinese goods led to immediate price hikes. In the first week after the new tariffs, Shein saw a 23% drop in U.S. sales. By September 2025, sales were down 8% year-over-year, marking one of the worst monthly performances for the company in the past three years. Shein's attempt to build a manufacturing base in Brazil has largely stalled. An announced $150 million investment to partner with 2,000 local factories fell dramatically short, with only 336 agreements signed in the first year. Brazilian manufacturers balked at Shein's demands for price reductions of up to 30% and production deadlines that were incompatible with the local industry's structure. Executive Chairman Donald Tang, a former Bear Stearns banker, is now the public face of the company, tasked with navigating these challenges. He has publicly stated that a public listing will increase transparency and accountability for the fast-fashion giant. Scrutiny of Shein's supply chain remains intense. The company has admitted to finding two instances of child labor in its supply chain in both 2023 and 2024. Investigations have alleged that workers in some supplier factories work 75-hour weeks, a violation of Chinese labor laws. Shein maintains it has a zero-tolerance policy for forced labor and is investing significantly in supply chain governance. Despite these controversies, Shein continues to hold a significant portion of the global fast-fashion market. In 2024, it saw the largest market share increase in the global apparel market, growing to 1.53%. The company's success is attributed to its ultra-low prices and its ability to quickly react to fashion trends.
