Shein mulls China relocation to secure Hong Kong IPO

Shein is reportedly considering a move back to China in order to enable it to go public in Hong Kong, Bloomberg has reported. 

Sources told Bloomberg that Shein, which is currently domiciled in Singapore, has reportedly consulted lawyers about setting up a parent company in mainland China, though talks were said to be preliminary and with “no guarantee” that a move would proceed. 

It comes as the group failed to gain regulatory approvals to go public in New York and London, “raising the stakes” for its plan to list in Hong Kong, where it would need approval from the Chinese authorities. 

Bloomberg noted that Shein has said little about its initial public offering plans over the years, other than confirming its commitment to go public.

Although based in Singapore, Shein is still subject to Chinese regulatory oversight as the China Securities Regulatory Commission (CSRC) requires businesses with substantial links to the country to clear the regulator’s review prior to listing shares anywhere in the world.

Shein’s failure to get CSRC approval for a London listing was key to why it has turned its IPO focus to Hong Kong.

Sources told Bloomberg that a move to mainland China could help secure Chinese regulators’ approval, partly because it would allow Shein’s income to be taxable by authorities there.

They added that after the Chinese parent entity is formed, Shein’s current Singapore headquarters and all its overseas operations would become subsidiaries.

As well as taxation, a relocation would also allow the Chinese government to apply greater oversight into Shein’s data, which is a key condition for the company to get a greenlight for its Hong Kong IPO.

Shein has been contacted for comment.