Shein, the fast-fashion giant known for its ultra-cheap and trendy clothing, is considering moving its legal base back to mainland China as part of efforts to push through its long-delayed stock market listing in Hong Kong. According to Bloomberg, the Singapore-domiciled retailer has held preliminary discussions with lawyers about setting up a parent company in China. The move is aimed at winning Beijing’s blessing for an initial public offering (IPO) in Hong Kong, after failed attempts to go public in New York and London.
Running out of IPO options
Shein’s road to the stock market has been riddled with obstacles. The company abandoned a New York IPO in 2023 amid political backlash in the US over allegations of forced labour in its supply chain, charges the firm has denied, saying it maintains a “zero-tolerance” policy. A subsequent plan to list in London also stalled after Beijing withheld approval, forcing Shein to shift focus to Hong Kong.
Now, with a confidential filing already submitted in the city, the company faces pressure to secure regulatory clearance from China’s securities watchdog. Bloomberg reports that relocating its corporate base back to the mainland could strengthen its case, as it would make Shein’s income taxable in China and place its trove of consumer data directly under Beijing’s oversight, both key factors for regulatory approval.
Data, taxes, and political control
Since 2023, China has required all companies with substantial ties to the country to undergo a data security review before pursuing overseas IPOs. Even though Shein is headquartered in Singapore, it still falls under this framework due to its deep reliance on China’s vast garment manufacturing supply chain.
Analysts say that moving back to China could help the company clear these hurdles more smoothly. Once a mainland entity is created, Shein’s Singapore office and overseas operations would function as subsidiaries, Bloomberg noted.
Valuation pressures mount
Beyond regulatory challenges, Shein has seen its valuation tumble. Once worth around $100 billion in 2021, the company has been forced to slash its value to roughly $30 billion, according to Bloomberg. Fierce competition from rival Temu in the US and Europe, as well as Washington’s decision to close the “de minimis” tariff loophole that had allowed Shein to ship low-value parcels duty-free, have added further strain on its business model.
The uncertainty has rattled investor confidence. Shares of some Shein-linked companies, such as Kengic Intelligent Technology, which provides warehouse automation services, surged more than 17 per cent in trading after Bloomberg reported news of the possible move.
A turnaround from Singapore strategy
If Shein does go ahead with shifting its domicile, it would mark a reversal of its 2021 strategy, when it relocated headquarters to Singapore to present itself as a global, rather than Chinese, company. But the commercial reality appears to have caught up: without Beijing’s blessing, the Hong Kong IPO seen as one of the city’s most high-profile listings this year, cannot proceed.
For Shein, founded in Nanjing in 2008, the stakes are high. The company’s long-awaited public debut could help it raise fresh capital to fight rivals and expand globally, but the decision on whether to approve the IPO lies firmly in Beijing’s hands.
(With inputs from the agencies)
