On November 27, it was announced that Shein, the giant Chinese fast-fashion retailer, has confidentially filed for an initial public offering (IPO) in the United States.
The company expects to list in 2024, with Goldman Sachs, JP Morgan Chase, and Morgan Stanley acting as lead underwriters. Reuters reported in July that Shein was in discussions about a possible IPO with at least three investment banks this year, as well as with the New York Stock Exchange and NASDAQ.
Shein is a fast fashion brand that has gained popularity among U.S. consumers among teenagers with its wide selection of ultra-low-priced trend-setting apparel and accessories. The company’s valuation stands at $66 billion as of May of this year, making this potentially the largest IPO in recent years.
Criticism Gathers at Shein
However, there are many harsh opinions from the public about Shein.
One of the issues is the sale of counterfeit products.
It is said that many of the clothing designs the company has produced include complete imitations of luxury and designer brands, and the company has been the subject of multiple lawsuits from artists, brands, and designers over trademark rights, copyrights, and intellectual property rights.
In the past, the company has been sued by brands such as Stussy and Dr. Martens over trademark infringement, and by Los Angeles-based artist Jennifer Stark and artist Maggie Stephenson for “infringing the copyright” of their work. Giuliano Calza, designer for Italian brand GCDS, also criticized the company, claiming that his designs for GCDS shoes were copied.
In response, Shein has now introduced a collaboration program with individual designers to begin working on sustainable goals. The company has also recently partnered with the fast fashion retailer Forever 21 and seems to be stepping up its efforts to sell its products in brick-and-mortar stores.
In June of this year, the company also invited influencers on a tour of its warehouses in China, where they also came under fire. Influencers spread transparency about the company’s efforts on social media, but followers strongly criticized the content, saying that it was not true.
This is because the reason for the extremely low prices of Shein products is said to be “poor working conditions,” and the company has long been viewed as a problem for “forcing employees to work long hours for low wages.
In addition, the results of an inspection commissioned by Bloomberg revealed last year that Shein is using “Xinjiang cotton” (The cotton produced by using large-scale forced labor) in its garments exported to the United States, and the company came under intense scrutiny.
In April of this year, as a condition of the planned initial public offering, Shein was required to prove through a third-party organization that the company “does not use Uyghur forced laborers. In response, the company claims to have “zero tolerance for forced labor.”
Thus, in recent years, Shein has begun to address various criticisms from consumers and politicians and has attempted to change its perception of its business and practices. Investors have been whispering for some time that an IPO could occur as early as the end of this year.
However, amid the tense relations between the U.S. and China, there are concerns that an IPO in the U.S. may invite increased scrutiny from the regulatory authorities.