Shein poster during its inauguration, at ABC Serrano, on April 26, 2024 in Madrid, Spain.
Alejandro Martínez Vélez | Europe Press | fake images
Shein, the fast fashion giant with ties to China, has confidentially filed for a public listing in London as it faces a backlash in the United States, a person familiar with the matter told CNBC.
The company had confidentially filed for an initial public offering in the United States in November, but changed course toward London after it failed to win support from U.S. lawmakers. Elected officials in the United States have repeatedly raised concerns about Shein's use of forced labor in its supply chain and its use of an exemption from US tax law known as de minimis.
Shein would still prefer to go public in the US, sources previously told CNBC, and its filing in London does not mean an IPO will happen there. Shein had previously sought approval from China to go public in the U.S. It is unclear whether Beijing has approved the London listing.
Founded in China, Shein has gone to great lengths to establish itself as a “global” company, moving its headquarters to Singapore in 2021. Still, the vast majority of its supply chain is still based in China, and the fact that it needed to seek approval from Beijing to go public in the United States, meaning regulators there view it as a Chinese company and could exert control over its operations and data.
Shein's presentation in London marks another turn in the company's so far long road to its public markets debut. She burst onto the American fashion scene during the Covid-19 pandemic and won over consumers with her ability to quickly offer the latest styles at rock-bottom prices. She has been a thorn in the side of U.S.-based competitors, who have ceded market share to the digital upstart and struggled to match its speed.
As Shein's prominence in the United States grew, so did its ambitions to go public. She began waging an American charm offensive in her attempt to win approval from lawmakers and the retail industry, but those efforts have yet to succeed. Shein has applied for membership in the National Retail Federation, the industry's largest trade association, several times and has been repeatedly rejected, CNBC reported.
It finds itself caught in the crossfire of a tense geopolitical rivalry between the United States and Beijing. U.S. lawmakers, concerned about the influence companies with Chinese ties may have on the U.S. economy, stepped up their scrutiny of Shein after he filed to go public. Some elected officials at the federal and state levels have asked the U.S. Securities and Exchange Commission to block the company from listing because they say it would violate a U.S. law that prohibits the import of products made in China's Xinjiang region. , where the government has faced accusations of genocide against the Uighur ethnic group.
Shein has acknowledged to CNBC that raw materials from banned regions have been found in its supply chain, but previous tests show that, on average, it has done a better job of removing such materials from its garments than the industry as a whole.
In May, the Wall Street Journal reported that Shein changed course to London after the SEC told the retailer that its listing would not be accepted unless it made its filing public, a request that experts told the outlet was unusual. Companies typically file their requests to go public confidentially so they can protect confidential information related to their operations and finances while regulators review the filing.
Still, Shein's chief executive insists his ambitions to go public are about transparency, not raising capital.
“Most companies look to go public for liquidity reasons,” Donald Tang told the outlet. “We are looking to go public to embrace public scrutiny and diligence.”
— CNBC's Sara Salinas contributed to this report.
