Shein Eyes Hong Kong Opos while Chinese regulators stop London's plans

According to three sources familiar with the matter, Shein is moving forward with plans to list in Hong Kong after his initial public offer proposal (OPI) in London stagnant due to delays in obtaining Chinese regulatory approval.

A source said that the giant objective of China fashionable aims to present a prospect project before the Hong Kong Stock Exchange in the coming weeks. Two sources added that Shein points to a public debut at the Asian Financial Center within the year.

The two sources said that the decision to change the listing places comes from the absence of approval of the Chinese Securities Regulatory Commission (CSRC). Shein had already received the green light from the United Kingdom Financial Behavior Authority (FCA) in March and subsequently notified the CSRC, waiting for a quick follow -up. However, another source pointed out that the communication of the Chinese regulator has stagnated since then.

These developments, including the company's plans for an OPI of Hong Kong, have not been previously informed. All sources requested anonymity due to the sensitivity of the matter and because they were not authorized to talk to the media.

Shein and the CSRC did not respond to Reuters comments. A Hong Kong Exchange spokesman and Clearing Ltd. (HKEX) declined to comment on individual companies.

Before following a London opi, Shein had explored the list in New York to reinforce his global image and attract large Western investors. Hong Kong's turn marks a deviation from that strategy and could weaken Shein's appeal as an international brand.

London's list also faced challenges beyond regulatory delays. A separate source revealed that the accusations around the use of Shein cotton from the Xinjiang region of China and a planned legal challenge of an NGO that opposes forced labor contributed to the growing concerns. These factors risk public reaction and shame for Beijing.

The source added that tensions between China and the United States on commercial policies have only been added to Beijing's caution. Washington and several NGOs have accused China of human rights violations in the autonomous region of Xinjiang Uyghur, where the Uigures are allegedly subject to forced labor. Beijing has repeatedly denied these statements.

In response, Shein argues that he enforces a strict zero tolerance policy against forced labor and child labor throughout his supply chain.

As the regulatory approval of the CSRC was still uncertain, Shein rescinded his contracts with the public relations firms Brunswick and FGS, which were initially hired to support their opi campaign in London, as Reuters previously reported.

Valuation of the IPO

If Shein has formally requested or received the authorization of CSRC for his list of Hong Kong, he still is not clear. The company had previously sought the regulatory approval of Beijing for listings both in New York and London.

Two sources explained that Shein falls under Beijing's listed requirements for Chinese companies that are public abroad. These rules, which are based on the principle of “substance on form”, give CSRC broad discretion by deciding how and when to apply them.

Shein does not have any factory or operates directly. Instead, it obtains its products of approximately 7,000 external suppliers in China, together with selected manufacturers in countries such as Brazil and Türkiye.

The company originally intended to complete its London list in the first half of the year. However, its business model, which displaces the elements directly from factories to customers worldwide, has faced interruption after changes in the policies of the United States.

During the Trump administration, the United States finished tax free access for Chinese electronic commerce shipments and imposed steep tariffs. Previously, an exemption from “Minimis” allowed the packages valued for less than $ 800 to enter the US.

Now, those Chinese plots face rates that begin at 30%. Although the exemption still applies to the assets of countries other than China or Hong Kong, its elimination of shipments of Chinese origin has forced companies such as Shein to reassess their international strategies.

The European Union has also proposed changes to its own tax exemption threshold for plots of less than 150 euros, which further complicates the company's cost structure.

In February, Reuters reported that Shein was prepared to reduce its assessment to approximately $ 50 billion for a possible outpost of London, given of the valuation of $ 66 billion reached during a round of collection of private funds of $ 2 billion in 2023.

Fashionnetwork.com with Reuters