Shein Returns Home to Hong Kong and Will Attempt to Go Public There

Shein is considering relocating its headquarters to China to increase its chances of obtaining approval from local regulators for its long-awaited initial public offering (IPO) in Hong Kong, Bloomberg has learned.

Currently, Shein is registered in Singapore, but according to informed sources, the company has consulted with lawyers about the possibility of establishing a parent company in mainland China. Discussions are still in the preliminary phase, and it is uncertain whether the company will ultimately decide to take such a step. Shein declined to comment on the reports, and the only thing they have publicly stated about the IPO in recent years is that they remain committed to going public. Executive Chairman Donald Tang confirmed this in March of this year.

After failing to secure approvals for a public offering in New York and London, the company is pinning all its hopes on Hong Kong, where it has already submitted a confidential application. However, a key prerequisite is to obtain the green light from Chinese regulators.

– For companies like Shein, which operate at the intersection of consumer, cross-border, and digital commerce, Hong Kong is likely the only realistic major offshore destination for listing. Relocating the headquarters could be a strategic move to demonstrate alignment with regulators and increase the visibility of the listing – said Melanie Tng, an analyst at PitchBook.

After reports emerged about Shein’s possible return to China, shares of Kengic Intelligent Technology, a supplier of warehouse systems, jumped 17 percent, while losses for Guangzhou Jiacheng International Logistics, which provides quality control services to Shein, decreased.

Although formally headquartered in Singapore, Shein remains subject to Chinese regulation as the China Securities Regulatory Commission (CSRC) requires that all companies with significant ties to China must obtain their approval before listing anywhere in the world. The failure to obtain that approval was one of the main reasons why Shein abandoned London and turned to Hong Kong.

According to lawyers specializing in IPO processes, changing a company’s headquarters during the IPO process is possible, although rare.

– The business reality often changes after the submission of Form A1. While the application is expected to be ‘substantially complete,’ it is acceptable for the applicant to undergo corporate restructuring after submission, provided there is a valid justification and it can be completed before the actual listing – said Ryan Tou from the law firm White & Case.

For Shein, moving to China would also mean paying taxes in the country, as well as greater oversight of the vast amount of data it possesses, which is another prerequisite of the Chinese authorities for approving the IPO. It is worth noting that from 2023, all companies targeting an IPO outside of China must undergo a data security review.

Shein was founded in Nanjing and relocated its headquarters to Singapore in 2021, aiming to position itself as a global rather than a Chinese company. Its value was estimated at $100 billion in 2021, but has since significantly declined, partly due to fierce competition from Temu and the elimination of the U.S. ‘de minimis’ tax exemption that facilitated the shipping of small packages to customers in the U.S.

It is important to remember that the company has been facing criticism for years. From allegations of using forced labor in Xinjiang to regulatory hurdles in the U.S. and the UK. After those options failed, Hong Kong remains the last realistic opportunity for Shein to finally go public. If the IPO succeeds, it would be another valuable trophy for the city, which is experiencing strong growth in the initial public offering market this year.