Shein, the Chinese fashion giant that is overtaking H&M and Inditex, wants to go public on the New York stock exchange. To do so, it will need to launch a charm offensive and purge itself of some very questionable practices.
Bigger than H&M
It is an understatement to call Shein a rising star in the fashion firmament: the unicorn made 23 billion dollars in sales last year, accounting for a growth of 46 %. That is already more than H&M’s 22 billion, and an unprecedented increase in the inflation-plagued apparel market. By 2025, the clothing retailer is targeting 59 billion dollar in sales.
Shein raised two billion dollars in growth money just a month ago, and now the company wants to go public. However, authorities in the United States do have reservations about that, Reuters reports. Especially in the context of the trade war between the US and China, the specialist in ultra-fast fashion has some charming to do.
A first stumbling block is how Shein ships millions of packages to the United States, without paying taxes. Due to the low value of the orders (the average order value is estimated at 80 euros), the parcels escape import taxes, but therefore usually also customs checks for counterfeiting.
Cotton from Xinjiang is a major second stumbling block, as China is forcing the local Muslim populations in the region to work in so-called “re-education camps”. The US therefore bans all cotton from Xinjiang and also wants to be sure before the IPO that Shein uses neither the banned cotton nor forced labour. In a reaction, the company vows it uses mostly synthetic fabrics anyway, but gives no further insight into production conditions.
Factories in Mexico and Brazil
However, undercover reports did reveal abuses in the company’s factories. Shein has since appointed a sustainability manager and says it is monitoring conditions, but the Chinese company remains far less transparent about sustainability and its supply chain than industry peers. This is the third stumbling point that many NGOs in particular insist on.
To meet the criticism, Shein is increasingly moving away from China. A first notable step the company has taken is to move its holding company to Singapore. An additional headquarters will soon be set up in Ireland. In addition, the clothing manufacturer is opening sewing workshops in Mexico, Brazil and possibly India, even if at the expense of already razor-thin margins.
In the US, the fashion giant will open vacancies for a head of logistics and an anti-moneylaundering officer, Reuters reports. Whether it will be enough to make the general image of the company more positive, to be seen.