Aug 28 (Reuters) - When Shein makes its market debut on Tuesday, it will be in Hong Kong and not New York or London like it once dreamed — symbolic of the long journey the fast-fashion online retailer has had to make to embrace its identity as a Chinese company.
Shein, which famously moved its headquarters to Singapore in late 2021 and spent years touting its credentials as a global company, first attempted to go public in New York and then in London.
Both times, sources have said it failed to secure
approval from Chinese authorities including the securities regulator, which oversees foreign-registered companies with significant operations in China.
After pivoting to a Hong Kong IPO in the first half of 2025, Shein's founder Sky Xu sought to build ties with Chinese authorities and became more personally involved in regulatory and capital markets outreach in China, according to two people familiar with those efforts.
Normally not one to make public appearances, Xu also spoke at a business forum in Shein's manufacturing heartland in February this year, pledging $1.5 billion of Shein investment.
"We will continue to deepen our roots in Guangdong ... to build Shein's smart supply chain system, working together to create a world-class fashion industry cluster," he told an audience of officials and business leaders.
That pledge came a few months after Shein inaugurated a research and development centre in the eastern city of Nanjing where it was founded in 2012.
Efforts to highlight those business commitments helped persuade Chinese authorities that Shein remained a Chinese company at its core, which in turn helped it secure approval for the Hong Kong IPO, according to the two people and a third source.
All declined to be identified due to the sensitivity of the issue.
Shein did not respond to a Reuters request for comment. The China Securities Regulatory Commission also did not respond to a request for comment.
TOUTING SHEIN'S CONTRIBUTION TO CHINA'S ECONOMY
In other efforts to play up Shein's Chinese roots, officials of Guangdong province promoted the company before central government authorities as a prominent employer and creator of domestic jobs, said two of the sources.
It was a message that may have resonated as China increasingly grapples with rising unemployment. The Guangdong provincial government's information office did not respond to a faxed Reuters request for comment.
Shein also highlighted in its outreach efforts that it does not sell its ultra-cheap products in China and does not contribute to the cut-throat competition between e-commerce platforms that is driving deflation and which regulators have vowed to crack down on, according to one of the sources.
Instead, Shein argued its overseas business helps the Chinese economy by bringing in dollars, the source said.
THE COSMOPOLITAN PLAY
Shein, known for selling $5 tops and $10 dresses, is set to raise $1.7 billion in its IPO at a valuation of just $26.5 billion, a little over a quarter of what it was worth in 2022.
Before deciding to debut in Hong Kong, Shein had spent four years trying to present itself as a global player.
It had not only moved its headquarters, but also publicised its efforts to develop manufacturing hubs in Brazil and Turkey and floated investing in factories in Europe or Britain.
Notably in 2024, Donald Tang, Shein's former executive chairman, characterised the company's values as American and said they were the reason for its success — comments which angered Chinese officials, according to two of the sources.
"Shein tried to portray itself as cosmopolitan, and it engaged in what is today known as Singapore-washing to try to distance itself from its Chinese roots - but I think that failed because it is so closely linked to its Chinese supply chain," said Curtis Milhaupt, a Stanford University law professor.
"Having failed in the cosmopolitan strategy, I think they saw no choice but to embrace their Chinese roots," he said.
In its Hong Kong IPO prospectus, Shein described China as the anchor of its global logistics and fulfilment system and said nearly 80% of its workforce is located in mainland China.
The prospectus gives no details of its manufacturing in Brazil and Turkey. Tang stepped down before the IPO filing.
A WORSENING OF FORTUNES IN THE WEST
In its efforts to list in the West, Shein not only faced opposition from Chinese authorities but also grappled with setbacks and pressure as U.S.-China trade tensions worsened.
U.S. lawmakers called for the Securities and Exchange Commission to mandate that Shein verify it does not use forced labour before it could list.
Since mid-2022 companies importing into the U.S. must comply with the Uyghur Forced Labor Prevention Act, which presumes goods linked to China's Xinjiang region involve modern slavery. China rejects all allegations of forced labour in the region and Shein's supplier code of conduct prohibits forced labour.
In Europe, retailers raised concerns about Shein unfairly competing and selling illegal products.
France's consumer watchdog found sex dolls resembling children for sale on the company's marketplace in November, triggering a government crackdown shortly after Shein announced its first brick-and-mortar presence in Paris.
And after the U.S. last year ended the de minimis duty exemption for ecommerce shipments under $800 — which had powered Shein's rapid growth — the European Union followed suit, imposing fees on low-value packages.
That Western pressure has also somewhat softened Chinese regulators' perspective on Shein, said a fourth source with knowledge of the matter. Beijing now views the company as a national champion deserving of support in an increasingly hostile external environment, the source said.
For many observers, Shein's final listing venue of Hong Kong makes the most sense.
"Corporate identity and geopolitical alignment are increasingly important determinants of where a company can list," said Lauren Yu-Hsin Lin, a professor of law focused on securities regulation at City University of Hong Kong.
(Reporting by Reuters Staff; Editing by Lisa Jucca and Edwina Gibbs)
