In just a few years, Shein has gone from a mysterious Chinese site with a quirky interface to a Gen Z favorite that accounts for 40% of the US fast fashion market.
Founded by Chris Xu in 2008, the shopping site has seen astronomical growth in many countries outside of China to a current valuation of over $100 billion. The clothes sold on the site reflect the top trends of popular designers and, with prices like $11 for pants or $4 for a T-shirt, they have found a large customer base. They are seen by many as an even more affordable alternative to fast fashion giants like H&M. (HMRZF) and Zara.
Shein’s popularity with young people in particular has often been attributed to his presence on TikTok — Piper Sandler’s recent “Taking Stock With Teens” survey found it to be the second most downloaded e-commerce site behind Amazon. (AMZN) – Get the Amazon.com Inc. Report among teenagers in 2021.
The reason goes back to more than “cheap clothes” and “young people like it”. For years, Shein has invested serious money in targeted advertising and paid well-known influencers to promote their clothing through hauls. The redistribution creates a snowball effect for both individual styles (from a $47 wedding dress to a wrap-around top) to the company itself.
On TikTok, the #shein hashtag alone has over 3.33 billion views. Some estimates say sales rose from $10 billion in 2020 to $16 billion in 2021.
Shein considering the next step
While Shein is currently a private company, there has been talk of a US IPO for at least a year. Major investors include Sequoia Capital China, IDG Capital and Tiger Global Management. Recently, reports surfaced about Xu’s attempt to obtain Singaporean citizenship to facilitate this process. China’s securities regulators tightened rules to make it very difficult for local companies to trade overseas in 2021.
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People familiar with Shein’s plans told Bloomberg that a U.S. IPO could come as soon as 2024 as the company works to overcome the Chinese government’s hostility to foreign trade and criticism of its human rights and environmental records. the company.
The cheap prices that fueled Shein’s astronomical growth are one of the main things catching the attention of Western regulators – probes have previously drawn attention to everything from employees forced to work 75-hour weeks to clothes themselves no longer lasting more than some is consumed and is a major contributor to textile waste.
There are many hoops ahead for Shei
But even if Shein is able to overcome ESG concerns about a US IPO, major hurdles will remain thanks to the growing antagonism between China and the US.
In December 2020, the Securities and Exchange Commission (SEC) began requiring Chinese companies to submit their documents for more extensive audits. After refusing to implement due to the risk of facing trouble from the authorities in the country, Chinese companies such as JD.com (JD) – Get the JD.com Inc. Report and JinkoSolar Holding Co Ltd (JKS) – Get JinkoSolar Holding Company Limited US depositary shares (each represents 4) Report all have been added to the list of those at risk of being kicked out of US markets.
“The complications show how difficult it will be for large Chinese companies to list overseas,” Alex Frew McMillan wrote for TheStreet’s RealMoney in February. “Shein appears to be in the process of recasting itself as a Singapore corporation. Then again, the Chinese authorities have said their long arm applies to companies that do a significant amount of business there.”
Shein did not immediately respond to TheStreet’s request for comment.
