Shein, a China-based online fast-fashion retailer, will now make a major step forward in gaining approval to launch an IPO in London. The move came after sources stated that the U.K.’s Financial Conduct Authority (FCA) has approved the company’s initial public offering plan.
However, the company will have to face several challenges, such as the market turmoil caused by the U.S.’ 145% tariffs on Chinese goods, the end of the de minimis duty exemption, and the need to secure approvals from the China Securities Regulatory Commission (CSRC).
The turmoil may cause Shein to postpone its IPO like several companies, such as Swedish fintech Klarna. When markets become more volatile, investors are likely to invest in risk assets, making the funding for IPO less appealing.
As for the “de minimis” issues, its end could affect the IPO valuation, according to a source. This rule allowed Shein to transport products valued below $800 into the U.S. without facing any tariff. Now that the Trump administration has ordered its end, the company may have to raise its product price in the U.S.
According to the report from Reuters in February, Shien was expecting to reduce its IPO valuations from $66 billion measured in 2023 to $50 billion. However, this turmoil and the de minimis cancellation may force the company to reduce the figure even further, despite adjusting to the situation by adding suppliers in Brazil and Turkey.
The final challenge is the approval from CSRC. Shein did inform the regulator about the FCA’s approval but still has not received any permission, which is needed for a Chinese company to launch its stock in foreign nations according to China’s new listing rules.
This rule also allows CSRC to get other Chinese regulators involved, which could further delay the approval.
