Shein, the queen of polyester and fast fashion, goes public tomorrow with the challenge of making it profitable to ship a dress for 10 euros from China.

Shein, the Chinese e-commerce giant known for its fast-fashion model and low prices, will begin trading on the Hong Kong Stock Exchange tomorrow with a valuation of $26 billion (approximately €23 billion). The company’s initial public offering (IPO) comes after years of delays and setbacks, including failed attempts to list on Wall Street and the London market. Despite the reduced valuation, roughly one-quarter of what was anticipated in 2022, Shein aims to raise capital and expand its shareholder base through this new phase of growth. The IPO marks a pivotal moment for Shein, which has built its business around the concept of “fast fashion,” producing and distributing clothing at unprecedented speed and scale. Known for selling items as cheaply as $10 per garment, the company has relied heavily on its ability to manufacture and ship products rapidly from China to global markets. However, recent changes in trade regulations have impacted its operations, particularly affecting its ability to avoid tariffs on low-cost orders previously exempted under certain policies. These regulatory shifts have forced Shein to reassess its financial strategy and adjust expectations for its public listing. Sky Xu, who will become chairman following his appointment as CEO, acknowledged that the current valuation reflects a more conservative outlook compared to earlier projections. In 2022, the company had aimed for a valuation of up to $100 billion, but geopolitical tensions and economic uncertainties have altered the landscape significantly. As a result, Shein’s IPO will see it rank sixth globally among apparel retailers, behind major players such as Inditex (owner of Zara), Fast Retailing (Uniqlo), Nike, Adidas, and H&M. Shein plans to leverage its IPO to further solidify its position in the fashion industry by expanding its role beyond just a brand. It positions itself as a platform akin to Amazon Web Services, providing infrastructure and supply chain solutions for independent designers and fashion labels. The company currently collaborates with over 7,500 suppliers and manufacturers, aiming to offer comprehensive services to both established and emerging brands. This shift from being solely a retail entity to becoming a supplier and service provider represents a strategic pivot intended to diversify revenue streams and increase average order value. In May 2023, Shein acquired the American brand Everlane for approximately €70 million, seeking to enhance its appeal to consumers interested in sustainable fashion. However, the deal faces scrutiny from U.S. authorities, who have placed it on hold citing national security concerns. The resolution of this issue remains pending, adding uncertainty to Shein’s broader expansion plans. Despite these challenges, Shein continues to project confidence in its long-term prospects. According to its prospectus filed with the Hong Kong Stock Exchange, the company anticipates continued growth in the online fashion industry, estimating annual growth rates of 3.4% through 2030. By that year, nearly 40% of textile industry sales are projected to occur via digital channels, reaching approximately $792 billion, a figure significantly lower than the $1.2 trillion forecast for traditional retail. Shein’s journey has not been without controversy. Over the past few years, the company has faced criticism regarding product composition, labor practices, and data privacy issues related to customer information. Nevertheless, it presents itself as a leader in making fashion more accessible and affordable, emphasizing its commitment to innovation and technological advancement in its operations. As the IPO proceeds, investors will be watching closely to gauge how well Shein can navigate ongoing challenges while maintaining its competitive edge in a rapidly evolving market. The success of its public offering could determine whether the company can sustain its dominance in the fast-fashion sector amid increasing competition and regulatory pressures.