Its runaway success has been attributed to its prowess with data, favourable tax treatment for small packages and, more controversially, to its vast network of contract manufacturers that pump out thousands of youth-friendly styles daily at ultra-low prices. Critics and rivals have assailed the company over concerns about the environmental impact of disposable fashion, pay and working conditions for those assembling garments, anti-competitive behaviour and even evidence that some cotton in its clothing was made with forced labour.
US investors are facing the growing risk of losing out on Shein’s potentially huge initial public offering, as the fast-fashion giant with Chinese roots considers holding it in London instead. Dealmakers in New York once reaped huge fees from Chinese companies going public; now they wonder whether the regulatory clouds that set in after Didi Global Inc’s 2021 US IPO turned into a debacle will ever lift. With the first US$1-billion-plus IPO in New York by a Chinese-owned company post-Didi safely in the books as of February, investors are watching to see if Shein can also break through the impasse — and what it means for Chinese IPOs in the US if they fail.
1. How did Shein become controversial?
Shein’s roots in China played a big role in its initial success, but in some ways they’ve have come back to bite it. Founded in 2008, the e-commerce pioneer gained attention in 2021 as it became the most downloaded shopping app in the US, overtaking Amazon. The company managed to more than triple its sales during the Covid-19 pandemic, to a staggering US$10 billion in 2020, making it the biggest web-only fashion brand in the world.
