Shein targets Hong Kong listing to tap wider investor base

Shein is turning to a Hong Kong listing to ease investor scrutiny of its supply chain and sourcing practices while opening access to new capital from mainland China and emerging markets, analysts said.

The Singapore-headquartered company shifted its public market ambitions to Hong Kong after failing to secure Chinese regulatory approval for a planned London initial public offering, Reuters reported last month, citing sources.

While a successful listing would significantly boost Hong Kong’s market, the move could also complicate Shein’s efforts to position itself as a global— rather than Chinese— company.

Shein, which sells products such as $5 bike shorts and $18 sundresses, has faced political and environmental criticism in the UK over its cotton sourcing and supply chain practices. The company has also faced allegations that its products contain cotton from China’s Xinjiang region, where the U.S. and human rights groups have accused the Chinese government of forced labor and other abuses. Beijing denies any wrongdoing.

Shein, which relocated its headquarters from China to Singapore in 2022, maintains that it enforces a zero-tolerance policy for forced labor and requires its contract manufacturers to source cotton only from approved regions.

“If this is the only option now open to them, the Hong Kong market makes sense as a place to list a global business with a mainland supply chain,” said Eliot Fisk, a Hong Kong capital markets consultant and former JPMorgan banker.

Shein did not respond to a Reuters request for comment.

Before pursuing a London listing, Shein had also explored listing in New York. The China-founded company encountered regulatory hurdles and political opposition from U.S. lawmakers in its attempt to list in the United States.

“Listing in Hong Kong would also help Shein avoid the protests and political pushback it might face in the UK,” said Craig Coben, former Bank of America co-head of capital markets in Hong Kong.

It remains unclear whether Shein will seek any waivers for a potential Hong Kong listing. According to capital markets lawyers, several waivers— including those related to disclosure— are available to large IPO candidates in Hong Kong.

A Hong Kong listing would also position Shein for eventual inclusion in the city’s Stock Connect program, facilitating cross-border share trading between mainland China and Hong Kong investors.

Shein would easily meet the market capitalization and other criteria required for Stock Connect inclusion and attracting mainland investment, according to Manishi Raychaudhuri, CEO of Hong Kong-based advisory firm Emmer Capital Partners.

The Hong Kong Exchange reported a 255% year-on-year increase in average daily turnover in Southbound trading— mainland investors buying and selling Hong Kong stocks— in the first quarter of this year.

“Hong Kong would attract a dominant base of Asia- and emerging market-focused investors. London, by contrast, would draw a larger share of global and developed market investors,” Raychaudhuri said. “Supply chain issues would have carried more weight with the latter group.”

($1 = 7.8488 Hong Kong dollars)