Shein working towards Hong Kong listing after London IPO stalls: Sources
Shein plans to go public in the Asian financial hub within the year, said two sources.
An employee at the Shein Holiday pop-up shop inside Times Square's Forever 21 in New York City, US, on Nov 10, 2023. (File photo: Reuters/David "Dee" Delgado)
HONG KONG: Shein is working towards a listing in Hong Kong after the online fast-fashion retailer's proposed initial public offering (IPO) in London failed to secure the green light from Chinese regulators, said three sources with knowledge of the matter.
The China-founded company aims to file a draft prospectus with Hong Kong's stock exchange in the coming weeks, one of the sources said. Shein plans to go public in the Asian financial hub within the year, two of the sources said.
Shein plans to change the listing venue as it has not yet received approval for its London IPO from Chinese regulators, notably the China Securities Regulatory Commission (CSRC), the two sources said.
The company, which sells products including US$5 bike shorts and US$18 sundresses, in March secured approval from Britain's Financial Conduct Authority (FCA) for its IPO in London, and soon informed the CSRC, one of the sources said.
The company initially expected the green light from Chinese regulators to follow swiftly after the FCA but has since experienced an unexpected delay and limited communication from the CSRC, said the source.
Details about Shein's Hong Kong listing plan have not been reported previously. All the sources spoke to Reuters on the condition of anonymity as they were not authorised to speak to the media.
Shein and CSRC did not immediately respond to Reuters' request for comment. A spokesperson for Hong Kong Exchanges and Clearing Ltd (HKEX) declined to comment on individual companies.
Before its attempt to list in London, Shein had pursued a listing in New York, as part of its efforts to gain legitimacy as a global, rather than a Chinese company, and access to a wide pool of large Western investors.
A listing in Hong Kong would go against that strategy and could hurt its global credentials.
Allegations that Shein's products contain cotton from China's Xinjiang region and a planned legal challenge to the London IPO by a non-governmental organisation campaigning against forced labour in China have complicated the London listing and risk embarrassment for the Chinese government, a separate source with direct knowledge of the matter said.
Tensions with the US over trade only exacerbate the wariness of Beijing and the CSRC, the source said.
The US and non-governmental organisations accuse China of human rights abuses in the Xinjiang Uyghur Autonomous Region, where they say Uyghur people are forced to work producing cotton and other goods. Beijing has denied any abuses.
Shein, founded by China-born entrepreneur Sky Xu, says it has a zero tolerance policy for forced labour and child labour in its supply chain. The company moved its headquarters from Nanjing, China, to Singapore in 2022.
As it awaited a response from the CSRC, Shein earlier this month dropped the communications firms Brunswick and FGS it had hired to help with public relations ahead of the London listing.
"MORE TO DO WITH CHINA THAN LONDON"
Reuters could not determine if Shein had sought or received a nod from the CSRC for the Hong Kong listing. The company had sought Chinese regulatory approval to go ahead with processes to list in New York and later in London.
Shein's filings with the CSRC make it subject to Beijing's listing rules for Chinese firms going public offshore, two sources have said.
The rules are applied on "a substance over form" basis, giving the CSRC discretion on when and how to implement them, the sources added.
Shein does not own or operate any factories, instead sourcing its products from 7,000 third-party suppliers in China as well as some factories in other countries like Brazil and Türkiye.
The company had aimed to go public in London in the first half of this year.
"Shein's listing would have been a boost to the market," said Alasdair Steele, corporate partner with law firm CMS.
"However, there was never any guarantee that a single large listing would reignite the IPO market."
"The Shein news is much more to do with China than London," said Lisa Gordon, chair of investment bank Cavendish and a member of the Capital Markets Industry Taskforce (CMIT) - a group dedicated to the revival of Britain's markets.
"The London market is in a very good position."
This is not the United Kingdom capital’s first major IPO loss this year.
In February, Unilever said it had chosen Amsterdam for the main listing of its ice cream business. That follows a string of London-listed companies moving, such as online betting company Flutter. Others, such as Shell, are considering leaving as well.
BUSINESS MODEL DISRUPTION
Shein’s business model of sending products straight from factories to shoppers around the world was disrupted by the Trump administration ending duty-free access and slapping steep tariffs on e-commerce packages from China.
The "de minimis" exemption allowed e-commerce packages from China worth less than US$800 to enter the US duty-free and helped Shein, Temu and Amazon Haul sell clothes, gadgets and accessories extremely cheaply.
Now, those parcels are subject to a minimum tariff of 30 per cent.
Regardless of where Shein lists, its eventual IPO valuation will hinge on the impact of the removal of the de minimis exemption, the sources have said. The US exemption is still in place for goods that are not from China or Hong Kong.
The European Union has also proposed changes to its duty exemption on parcels under €150, adding to pressure on the business model.
Reuters reported in February that Shein was set to cut its valuation in a potential London listing to around US$50 billion, nearly a quarter less than the US$66 billion valuation it had achieved in a US$2 billion private fundraising in 2023.
A revival in Hong Kong's capital market, with sizable recent listings including Chinese electric vehicle battery giant CATL's US$5.3 billion float, the world's largest listing this year, augurs well for a potential Shein IPO in the city.
Companies have raised US$9.7 billion in Hong Kong through IPOs and second listings so far in 2025, compared to US$1.05 billion at the same time last year, according to LSEG data.
