Will Shein’s IPO Make it in 2025?

Ultra-fast-fashion giant Shein has been trying to go public for more than a year. But its ambitions have run up against a series of road blocks thrown up by an array of campaign groups, trade associations and political actors.

The company initially launched a bid to list in New York in late 2023, but switched to London when it became clear that any efforts to float in America faced substantial political hurdles amid growing tensions between the US and China and concerns over the company’s business practices. Efforts to list in London have so far proved somewhat less politically fraught, but no less controversial.

Shein is headquartered in Singapore, but makes most of its $5 tank tops and $10 dresses in China, where it was founded. Its explosion to become one of the world’s most popular apparel brands over the last few years has been fuelled by a highly disruptive test-and-learn manufacturing model that allows it to churn out a staggering assortment of new styles in small batches at rock-bottom prices. This hyper-efficient system of operating helped the company reach an expected $50 billion in revenue in 2024, but it’s also attracted a barrage of criticism focused on issues including labour practices, product safety, copyright infringement and environmental impact.

The UK’s financial regulator has received four separate letters seeking to derail the ultra-fast-fashion giant’s plans to go public in London as a result of such concerns, according to information obtained by BoF through a Freedom of Information request.

The objections include a legal challenge from the advocacy group Stop Uyghur Genocide, which supplied the FCA with a dossier in August that it claimed showed links between Shein’s supply chain and cotton produced with forced labour in the Xinjiang region of China. Beijing has denied allegations of human rights abuses against Uyghur and other ethnic minorities in the major cotton-producing region. Shein has said it takes a zero-tolerance approach to forced labour. It doesn’t use much cotton in its products and has contracted forensic traceability firm Oritain to monitor the origins of the material it uses.

Another challenge put forward by corporate accountability campaign group Eko and reviewed by BoF raised additional concerns about the company’s lack of transparency, potential greenwashing and allegations of broader failings in labour standards. Fashion trade group the British Fashion Council has also raised concerns with the regulator.

Such challenges have reportedly prompted Britain’s financial regulator to take longer than usual approving Shein’s bid to float. Both the company and the FCA declined to comment on the potential listing.

Elsewhere, the UK’s Independent Anti-Slavery Commissioner, a monitoring body of the Home Office, has also raised concerns with the government about Shein’s alleged human rights failings. And the company must still gain approval from China’s securities regulator before it can go public.

“There’s a lot of hurdles, and the fact that it’s taken this long suggests that it’s not going to happen any time soon and may never happen at all, at least not in the UK,” said David Swartz, a senior equity analyst at Morningstar. “This is a high-profile company, but unfortunately it’s also a lightning rod for controversy.”

Shein has been on a months-long charm offensive meeting with politicians and investors in an effort to counter the criticism and court more support for its listing. In July, it pledged €250 million ($262 million) to support British and European designers and circularity initiatives. It prefers to style its business as “on demand” fashion rather than “fast fashion,” arguing that its test-and-repeat manufacturing model avoids the wasteful overproduction associated with many established fashion players. It announced the formation of an external advisory board focused on bolstering the company’s environmental, social and governance strategies in December.

For all the scrutiny, the company’s plans to go public in London dovetail with ambitions to revive the City’s fading fortunes. The government is aiming to stem an exodus from the London Stock Exchange and attract new players to the market. If Shein’s IPO goes ahead, it could be the biggest listing in London in years.

“I would anticipate any concerns about Shein’s human rights and employment records will be overcome by this desire to promote the UK listing market as open for business,” said Harvey Knight, head of the UK financial regulatory team at law firm Withers Worldwide.

Competition and Trade Tensions

Nonetheless, pressure on the company is unlikely to let up. And while politicians and advocacy groups have raised concerns about the ethics of the company’s operations, prospective investors may be more concerned about looming financial risks.

The company is facing fierce competition from rival Temu, which ranked as the Apple store’s most downloaded app in the US this year (Shein came in 12th). Amazon is also looking to muscle in, launching its own low-cost online storefront in November.

Elswhere, policymakers in Europe and the US are looking to crack down on import-duty exemptions for low-value packages that have benefited businesses, like Shein’s, that ship direct to consumers. Incoming environmental regulations led by the EU are likely to bring costly compliance burdens. And how President-elect Donald Trump will deliver on election promises to impose hefty tariffs on all goods imported from China represents a looming threat to the business.

“These have a direct impact on Shein’s business model and profitability,” said Swartz. “It has to be a little scary for investors because some of these issues could be permanent problems.”

Editor's Note: This article was updated on Jan. 2, 2025 to adjust dates for republication in the new year.