Fast-fashion giant Shein is seeking approval from Beijing to proceed with its planned initial public offering (IPO) in the United States, complying with new listing rules for Chinese firms. The move, despite Shein’s efforts to emphasize its global presence, could potentially delay its IPO plans due to increased scrutiny from U.S. regulators and a lengthy approval process in China.
Shein had confidentially filed for a U.S. IPO in November, aiming to launch the new share sale in 2024. The company’s decision to file with the China Securities Regulatory Commission (CSRC) in the same month aligns with Beijing’s new listing rules for Chinese firms going public offshore.
This development raises questions about Shein’s previous efforts to distance itself from China and position as a global company. The company had relocated its headquarters to Singapore from Nanjing, emphasizing its global identity.
The new Chinese listing rules, implemented in March the previous year, require local firms planning to list in offshore markets to file with the CSRC and gain clearance from domestic regulators. The involvement of various authorities, including the National Development and Reform Commission and the cybersecurity regulator, in approving offshore IPO applications can introduce uncertainties.
The rules define a Chinese company as having 50% or more of its revenue, profit, total assets, or net assets generated in mainland China. If the main parts of its business activities occur in China, or senior managers are mostly Chinese citizens or domiciled in mainland China, the company falls under these rules.
Given the substance-over-form basis of determination, the CSRC has discretion in deciding if a company is considered Chinese for offshore IPO purposes.
Founded in China in 2012 by entrepreneur Chris Xu, Shein has grown into a global fashion marketplace, serving customers in over 150 countries. The company, known for affordable mass-market fashion, produces clothing in China for online sales in the U.S., Europe, and Asia (excluding China). Shein collaborates with around 5,400 third-party contract manufacturers and ships products directly from China to customers worldwide.
