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BUSINESS

SHEIN's Wall Street Debut
 By: Kelly Lanoue                         Edited by Eleanor Unsworth

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rumors are circulating on Wall Street as SHEIN confidentially pursues an IPO to make its financial debut in the United States.  The fast-fashion brand proved itself to be one of the largest fashion players in the world, as it is currently valued at approximately $66 billion. At the same time, SHEIN continues to face scrutiny for its supposed unethical practices that allow it to produce clothing and fashion pieces at shockingly low prices. Despite the controversy, SHEIN has dominated the fast fashion market and plans to take business to the next level with their IPO in 2024. However, to enter the US financial space, SHEIN must prove to US regulators that their practices are ethical and legitimate before opening up to investors. Executives at SHEIN refused to comment on the supposed IPO, but reporters are confident that the retailer will confirm the offering early this year. Since the debut is on the horizon, let’s dive into what this means for SHEIN as a company as it dominates the world. 

 

Currently, SHEIN operates as a foreign private company not owned or traded within the United States. By filing for an IPO (initial public offering),  SHEIN would seek to sell its shares to the public via the United States stock exchange. Companies are motivated to file for IPOs for several reasons, including access to capital from an increased number of investors and liquidity for current investors. In other words, it will be easier for current owners and investors to sell their shares for a profit and exit the company.  

 

Although filing for an IPO seems like the next move for the fast fashion giant, it may prove to be a tenuous process.  All filings for an IPO must be reviewed and approved by the SEC (Securities and Exchange Commission). Essentially, the SEC is holding a spotlight on SHEIN, looking for compliance with all laws and regulations in the accounting and finance sectors, as well as moral and ethical obligations. One of SHEIN’s most criticized aspects is its supposed use of forced and child labor to produce its products. Missouri representative Blaine Luetkeymeyer has been one of many politicians who has expressed unease regarding SHEIN publicly entering the US stock market. In an interview with CNBC, he shared, “accessing US markets and capital is a privilege, and we rely on the SEC to root out undeserving companies.” He hopes that “the officials at the commission will review SHEIN to ensure American capital does not fund crimes against humanity.” If a publicly traded company in the US violates ethical codes, it will be held legally liable for all instances of negligence, meaning the company may be subject to lawsuits, fines, regulatory investigations, trading halts, and possible public boycotting of the company’s products and services. 

 

 

 

 

 

 

 

 

 

 

 

 

 

It is peculiar that such a successful company simultaneously has everyone convinced of its moral dilemmas through years of scandal, including the UK documentary filmed by an undercover factory worker titled Inside the SHEIN Machine: UNTOLD. The documentary found that workers at SHEIN work 17-18 hour days, finishing around 2 am. 

 

One of SHEIN’s greatest criticisms regarding its ethics is around specific cotton used for its garments which can be traced  to a region in China proven to use forced labor. With such concrete evidence of SHEIN exploiting human rights, it is shocking that the company would willingly put itself under investigation by the SEC. An IPO will likely result in an extensive campaign by SHEIN to prove its morality. Even if the company manages to pass inspection, will investors still enter into business with them? At this point, I don’t think SHEIN can convince anyone of its integrity. If SHEIN does go public, this may prompt other retailers to follow suit. There are rumors of Vuori, Skims, and Golden Goose also filing to go public in 2024.  Ultimately, SHEIN must prepare to navigate the scrutiny it will receive from the public and be ready to defend its reputation with evidence.

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