Shein is reportedly seeking approval from a Chinese regulator to go public in the United States.
The online fashion company, which is based in Singapore and valued at $66 billion, filed with the regulator in November to comply with new listing rules for local firms, Reuters reported Friday (Jan. 12), citing unnamed sources.
Shein did not immediately reply to PYMNTS’ request for comment.
The decision could potentially delay Shein’s plans to float on the stock market, due to a lengthy approval process with various Chinese regulators and potential increased scrutiny in the U.S., according to the report.
Shein filed with the China Securities Regulatory Commission (CSRC) for the U.S. float, subjecting itself to Beijing’s new listing rules for Chinese firms going public offshore, the report said.
Chinese listing rules implemented in March require local firms seeking offshore listings to make a filing with the CSRC and obtain clearance from domestic regulators, per the report. This process involves multiple authorities, potentially leading to more uncertainty due to their different priorities.
Under the CSRC rules, if a company generates 50% or more of its operating revenue, profit, total assets or net assets in mainland China and conducts its main business activities in the country, it would be recognized as a Chinese company and subject to the new rules, according to the report. Shein’s reliance on a supply chain and manufacturers in China suggests that it may fall into this category.
Shein produces clothing in China and sells it online in the U.S., Europe and Asia (excluding China), the report said. The company does not own or operate any manufacturing facilities but works with approximately 5,400 third-party contract manufacturers, primarily in China. It ships most of its products directly from China to customers worldwide.
The company’s listing plans are also expected to face increased scrutiny from U.S. regulators, particularly in an election year, despite its efforts to distance itself from China, according to the report.
Shein has faced controversy in the U.S. due to allegations of copyright infringement and the use of forced labor in China.
The filing with a Chinese regulator raises questions about Shein’s efforts to position itself as a global company, the Reuters report said. It moved its headquarters to Singapore from Nanjing in late 2021.
Shein reportedly confidentially filed to go public in the U.S. in November and could launch its share sale in 2024. If successful, the company’s initial public offering (IPO) could be one of the biggest in recent years.
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