Shein, the Chinese fast fashion giant, is going public. According to CBC News, the company's shares are set to start trading on the Hong Kong exchange on September 1, giving a firm known for cheap clothing sold online a place on a major stock market.
The listing comes as Shein's business in the United States has taken a hit from trade policy. CBC reports that American sales have been adversely affected after Washington, under President Trump, removed a duty exemption on small packages valued under 800 dollars entering the US from China.
That change hit Shein where it is most vulnerable. With the exemption gone, American customers suddenly had to pay significant duties, ranging anywhere from about 10 to 90 percent on the goods, which cuts directly against the dirt-cheap prices that are a massive selling point for the company. According to CBC, Shein's US sales were down 14 percent.
Shein itself acknowledges the risks tied to its image. In the risk disclosure section of its prospectus, the company says that negative publicity associated with its brand, business partners or industry may reduce the value and attractiveness of its brand and products, a nod to the criticism that has followed it.
Central to that criticism are labour concerns, which the company rejects. Shein insists there is no forced labour in its supply chain. But the accusation that it exploits workers, along with concerns about its environmental impact, has trailed the company even as its low prices keep drawing shoppers.
The choice of Hong Kong follows earlier failures elsewhere. CBC reports that Shein initially tried for an IPO in New York but faced roadblocks from regulators over labour concerns, and then in London it could not answer questions about the company's manufacturers and whether its supply chain used cotton from China's Xinjiang region.
That region sits at the heart of the labour controversy. According to CBC, human rights groups say forced labour programs in Xinjiang target Uyghur minorities, making the question of where Shein's cotton comes from a sticking point. With those questions unresolved, the company is now set to test the market in Hong Kong, where its shares begin trading on September 1.