Chinese fast fashion retailer Shein is reportedly set to ditch plans to list its shares in London and switch to Hong Kong instead.
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According to a Reuters report, Shein, which received the green light from U.K. financial regulators earlier this year, is now looking to file a draft prospectus with Hong Kong’s stock exchange in the coming weeks.
Chinese Regulators
It is understood that Shein plans to go public some time this year.
The decision appears to have been made after struggling to get the thumbs up from the Chinese regulator, the China Securities Regulatory Commission, to list in London.
Shein, which was founded in China where most of its suppliers are based, now has its headquarters in Singapore. However, it is still very much exposed and to some extent hostage to Chinese political and economic stances and strategy.
“Apparently, the Chinese regulator insisted the listing was moved from London. This suggests that it was becoming political, which is usually problematic in the long term,” said Kathleen Brooks, research director at XTB. “The difficult relationship between Beijing and Washington, and the U.K.’s desire to stand shoulder to shoulder with the U.S. could have made a Shein listing more trouble than it was worth.”.
Shein, which had been considering a listing in the U.S. until concerns over its labor practices arose, sells $10 dresses and $12 jeans in more than 150 countries and was valued at $66 billion in its last fundraising round in 2023.
Tariff Hit
Shein has been hit by the tariffs in the trade war with the U.S., which has imposed huge levies on Chinese imports. It has also suffered from the culling of the so-called de minimis tariff exemptions, which cover smaller packages typical of e-commerce players.
This could force Shein to hike its prices in the U.S., which is its biggest market. It is also looking to add new suppliers in Brazil and Turkey, which is significant since at present most of its products come from third-party manufacturers in China.
Chinese data has revealed that total e-commerce shipping to the US dropped by 65% by volume in the first three months of the year but rose by 28% in Europe.
Its Chinese rival Temu, owned by PDD Holdings (PDD), has also suffered, reporting a big Q1 profits drop earlier this week.
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