Kara Costello is among millions of young Britons who shop at Shein, the ultra-fast fashion retailer which has deployed an army of social media influencers to capture the hearts — and wallets — of Generation Z.
The 25-year-old, who lives in Kent with her parents, buys a “haul” of clothing and accessories each month — costing no more than £50 for 15 items — and waits for up to two weeks for the goods to arrive directly from China.
Why? “Because the clothes are cheap — so you’re getting more for your money, they have a huge range of stylish products and the app is easy to use,” she said. “I first started using Shein in the lockdown when shops were shut and now I use it all the time.”
You might not have heard of Shein (unless you have a teenage daughter, or are under the age of 30), but the online fashion retailer is one of the fastest-growing companies to emerge from China in recent years. It has enjoyed explosive growth in the West, where its cheap and trend-led clothing has proven to be a hit with shoppers aged between 11 and 26.
Its rise has been meteoric. So much so that its bosses are eyeing a potential multibillion-dollar stock market debut, which could launch as soon as this year.
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The company, which was founded in China but is now headquartered in Singapore, had originally set its sights on a New York listing, but fresh reports suggest that it is considering switching its initial public offering to London. Jeremy Hunt held talks with Donald Tang, Shein’s executive chairman, this month in a bid to persuade the company to commit to what would be one of the City’s biggest corporate flotations, according to Sky News.
While the company is said to prefer a US-based initial public offering, it does not expect to win the approval of the US Securities and Exchange Commission, Bloomberg reported. London is said to be the likely frontrunner among a list of possible alternative stock markets, including Hong Kong and Singapore.
A flotation in Britain would provide a much-needed boost to the London stock market as it struggles to boost the City’s standing as an international financial centre. The stock exchange saw just 23 companies listing last year, a 49 per cent decline compared with 2022, according to EY, the auditing firm.
The fashion giant is said to be seeking a valuation of as much as $90 billion, which would push it into the top ten largest companies on the FTSE 100. It would also make it the biggest fashion retailer on the index by market cap.
Bloomberg reported in January that the online retailer’s investors recently tried to sell shares in private market deals that valued it at between $45 billion (£35 billion) and $55 billion, way below a target public market valuation of up to $90 billion.
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Founded in Nanjing in 2012 by the reclusive entrepreneur Chris Xu, its chief executive, Shein — pronounced “She-in” — was originally a portal to buy wedding dresses. It branched out into womenswear in the early 2010s and to all types of fashion a few years later. It produces clothing to sell online in the United States, Europe and Asia, excluding China.
The online fast-fashion group has come as a huge threat to western competitors, including Zara, Boohoo Group, Asos and H&M, because of its ultra-cheap prices that have attracted hoards of customers worldwide. Its model has proven so successful that new competitors have started to replicate it to try and mirror its success, including the likes of Temu, the Chinese e-commerce company.
In the first set of accounts to show the impact the company has had on British retail, Shein reported £1.1 billion of turnover and £12.2 million profit in the 16 months to December 2022. Its corporation tax bill was just £2.3 million. It is aiming to raise global sales of $22.7 billion (£18.5 billion) to $58.5 billion by 2025. Total profits were $700 million.
Shein exports fast fashion — its T-shirts and dresses cost as little as £2 — directly to shoppers from China, but does not levy export duty on firms dispatching to the West. Shein has suggested its success was down to fashionable products and a flexible supply chain, not tax exemptions.
Despite its rapid rise to success, the company has come under scrutiny for its “secretiveness”. Little is known about Xu, its mysterious, billionaire founder. He refuses interviews and rarely comments publicly outside the odd press release quote. “He’s very shy, unassuming and keeps a low profile,” according to an insider. “No one in the business really knows what he looks like. He wanders around the office keeping a low profile.”
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He is said, however, to be closely involved with the day-to-day running of the business. According to sources, he recently hired a rental car in Brazil and drove around the country, turning up to suppliers unannounced, asking “do you want to work with us?”
Not much is known either about the company’s operations, and it has come under fire in recent years over a lack of transparency regarding its supply chain, alleged worker exploitation and for copying the fashion designs of independent designers.
Shein’s rapid rise and prodigious use of air freight has also sparked concerns about the fast-fashion group’s impact on the environment. About 350,000 tonnes of clothing go to landfill every year in the UK.
The company claims to avoid “overproduction” and sees itself as different from the fast-fashion pack because its output is “demand-led”. The company starts off with a small batch of orders — between 100 and 200 items — measures demand in real time and increases output if necessary. It then tests again and reorders if it is warranted.
A listing in Britain will also raise fresh concerns over how it contributes so little to the exchequer. Shipping directly from China means Shein’s parcels escape import duties, which are levied only on consignments worth at least £135. Shein has previously said the company’s UK corporation tax payment was above 2022’s prevailing rate of 19 per cent and that Shein is “fully compliant with UK tax policies and pays applicable taxes including corporation tax, VAT and employment taxes”.
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Shein could also be subject to scrutiny from politicians and regulators, as the UK looks to take stock of its business ties with China and any possible security implications.
According to sources, Shein wants to launch an IPO so it “can be held accountable” for its operations. It is understood to have been preparing a listing since 2019, but is “not yet ready for public scrutiny”.
Shein declined to comment.
