China’s Shein is reportedly continuing with its initial public offer in the U.S., even as the fast-fashion giant comes under fire from American lawmakers over its labour practices.
The USD 60 billion fast-fashion group has officially registered with the U.S. regulators, paving the way for one of the largest-ever public offers from a Chinese company on the U.S. stock market, according to a Reuters
Shein has submitted its IPO registration under confidential terms with the US Securities and Exchange Commission (SEC), according to the report.
News first began circulating about a Shein U.S. IPO in 2020, but the company shelved the plan partly due to unpredictable markets amid rising U.S.-China tensions.
Then in early March, 2022, rumours began circulating about an IPO again. The news prompted a bipartisan group of two dozen U.S. representatives to call for the SEC to halt the initial public offering later that month, based on scrutiny of Shein’s labour practices.
In 2022, Bloomberg reported that Shein garments contained cotton linked to China’s Xinjiang region. Rights groups and governments have accused China of forced labor and internment of Uyghurs, a mainly Muslim ethnic minority, in Xinjiang. However, Beijing denies any rights abuses.
In a move to settle the controversy and shed light on its practices, Shein invited a group of influencers on a brand trip to China in late June. The trip, which saw the influencers tour one of the brand’s factories in Guangzhou and document their experience on social media, sparked a huge backlash online with critics questioning whether the Shein factory shown to the influencers was a staged facility, as it did not resemble a factory from a brand that mass produces reportedly 35,000 and 1000,000 items per day and rosters its factory workers for 18-hour shifts.
Shein also has a “very poor” by ethical fashion brand watchdog Good On You (the lowest possible rating), and received a score of 0-10 percent in the 2022 Fashion Transparency Index.
Looking ahead, the proposed stock market debut could make Shein the most valuable Chinese company to go public in the United States since ride-hailing giant Didi Global listed in New York in 2021 at a USD 68 billion valuation.
Shein’s market share in the U.S. more than doubled between March 2020 and March 2022, going from approximately 18 to 40 percent, according to Statista.
This market share gain occurred at the expense of nearly all other fast fashion companies in the U.S., as all except Zara saw their market share dwindle during that time period.