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Shein is reportedly exploring ways to restructure its US business in an attempt to get around the US tariffs on China, putting its London IPO in question, according to reports from the Financial Times.
The fast-fashion company’s US business will come under heavy strain when a tax exemption known as “de minimis” is closed this week. That will leave Shein, which ships orders directly from Chinese warehouses to shoppers’ homes, paying tariffs of 120% on its products.
If tariffs did inflict lasting damage on Shein’s US business the company could be forced to push back its widely anticipated London IPO, initially scheduled for the first half of this year.
Two people with knowledge of the company’s deliberations said one workaround under consideration was to divert production for the US market to countries outside China.
While the majority of Shein’s supply chain is located in China, the company has some manufacturing capacity in other countries, including Brazil and India.
However, its supply chain capacity in these countries is limited and it is doubtful it would ever reach a scale to match Shein’s operations in China, where it has a network of 7,000 suppliers.
Furthermore, any effort to lessen the effect of tariffs by moving manufacturing out of China might also attract the ire of the government. China’s commerce ministry has been discouraging Shein and other exporters from moving supply chains to other countries, according to Bloomberg.
One executive who declined to be named due to the sensitivity of the issues told the FT: “Internally we are all focused on figuring out how to deal with the tariff situation at the moment. Before we have clarity on that, no one can even start to think about the IPO.”
Retail Sector has contacted Shein for comment.
