Commentary: Shein’s IPO Has Only One Winner

Shein spent years trying to look less Chinese. Its Hong Kong listing now appears set to strengthen the very manufacturing network it once sought to leave behind.

The Singapore-based online retailer priced its initial public offering at HK$48.56, or $6.19, per share last week. That gave Shein a valuation of slightly more than $26 billion, about one-quarter of the $100 billion value it reached at its private-market peak four years ago.

Existing shareholders have some protection from the fall. Shein agreed to pay pre-IPO investors as much as $3.5 billion under arrangements guarding them against a steep markdown. That payout could approach twice the $1.7 billion the company raised in the IPO, leaving little reason to view the listing as a victory for investors or the company itself.

The clearest beneficiaries are the thousands of small suppliers concentrated in southern Guangzhou. Their factories, most of them producing clothing, allow Shein to spot trends, place very small initial orders and prepare products for delivery within two weeks. The network remains particularly important in women’s fashion, where Shein continues to compete with PDD’s Temu.

Shein had tried to downplay that dependence by moving to Singapore and presenting itself as a global company for Western investors. But strong US opposition and the failure to reproduce the same speed, flexibility and low costs in countries such as Brazil and Turkey exposed the limits of that strategy. The company plans to direct 40% of the IPO proceeds to technology, including investments intended to improve the manufacturing network that remains central to its business.