Shein owners pursue IPO in Hong Kong; valuation around US$25B, far below its peak

Shein’s IPO: The Sustainability Gap

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Shein’s IPO: The Sustainability Gap

After failed IPO attempts in New York and London, the owners of the Chinese fashion e-commerce giant Shein are now pursuing a listing in Hong Kong. Time is money, quite literally: after being valued by private investors at close to US$100 billion in 2022, the company is now reportedly targeting a valuation of just around a quarter of that former peak.

The Post Hearing Information Pack (PHIP), a key disclosure document prepared as part of Shein’s planned Hong Kong IPO, offers a rare glimpse into Shein’s business model, corporate structure and future priorities . At the heart of the company’s investment story is the claim that its “commitment to sustainable and responsible growth is woven into the fabric of our business model” (p.1). Yet a closer reading suggests an entirely different picture.

The following observations highlight key ESG-related takeaways from the filing and may help put some of Shein’s claims and narratives into context.

  1. Outsourcing as business model - Show details The document places Shein among the world’s top five fashion companies. With revenues of US$41.8 billion in 2025 (p.7), it clearly plays in the same league as Nike, Inditex or Uniqlo. Yet its workforce tells a different story: with only around 18,000 employees (p.198), Shein appears less like a traditional fashion group than a tech company orchestrating a vast network of contracted partners. This outsourcing extends beyond manufacturing to large parts of warehousing, logistics, marketing and design. Despite claiming more than 370 in-house designers (p.173), the launch of around 4,700 new styles per day suggests that most creative work is also externalised. The company’s plans for an even more profitable future reinforce this picture: technology and the expansion of its tech workforce come way before all other priorities. Section Close

  2. Outsourcing of responsibility along the value chain - Show details Responsibility for working conditions, product quality and legal compliance is largely delegated to manufacturers, merchants and other business partners, who must also indemnify Shein in case of breaches (p.200). Shein treats labour rights violations and other abuses as business risks, while emphasising its lack of control over the third parties that formally employ most workers. Its main response is the “Responsible Sourcing Programme”, a conventional third-party audit system – despite the well-documented limitations of such schemes and Shein’s own acknowledgement that it “cannot guarantee that those SRS audits will always detect non-compliance” (p.69). The IPO documents give no indication that Shein intends to assume more responsibility by changing its purchasing practices, redistributing risks or bringing necessary key functions in-house. As a result, problems documented by Public Eye and others, including excessive working hours, missing contracts and insufficient safety measurements, remain framed as compliance failures by suppliers rather than as consequences of Shein’s business model. Section Close

  3. Digital speed and supplier pressure - Show details Shein describes its “Large-scale Automated Test and Reorder” model, or LATR, as a digital and semi-automated system linking the value chain from demand forecasting to production and sales. The company presents it as an efficiency driver that “structurally minimises production costs […] allowing us to pass on savings to our customers” and enables rapid restocking “in as few as five days” (p.2). But there’s a huge flip side to this speed: the flexibility burden placed on suppliers and workers. In the filing, this pressure is recast as operational agility and cost efficiency, rather than acknowledged as an actual driver of excessive overtime and unstable work organisation. Section Close

  4. Misleading definition of overproduction - Show details Shein’s core environmental claim rests on a strikingly narrow and misleading definition of overproduction (p.190). The company argues that its operating model “by design helps us minimise overproduction and inventory waste” (p.190). But it defines overproduction only as goods produced but not sold. This leaves out the core problem of its ultra-fast fashion business: ever shorter production cycles, an average of 4,700 new styles introduced every day and a constant aggressive marketing to push consumption. Shein does not solve overproduction; it accelerates the dynamics that drive it. Section Close

  5. Polyester remains Shein’s “preferred material” - Show details Like many fashion companies, Shein claims to improve its environmental footprint by shifting to “preferred materials”. Yet its threshold for this category is strikingly low: for Shein, garments qualify already if they contain 30% materials deemed somehow more sustainable than conventional alternatives, such as recycled polyester (p.192). Rather than aiming for a transformative material shift, these objectives suggest a business-as-usual model framed in the language of sustainability. Section Close

  6. Circularity at token scale - Show details Shein claims to support the fashion industry’s transition towards circularity. Yet the initiatives highlighted in the filing remain alarmingly marginal compared with the scale of its business. The company points to 83,700 products that were listed on its resale platform “Shein Exchange in 2025 (p.193). This stands against 273 million customers and makes up less than 0.01% of the one billion annual orders of new products. Similarly, Shein highlights that it “rescued” 10,500 metres of deadstock fabric (p.193), a negligible amount for a company introducing around 4,700 new styles every day Section Close

  7. Sustainability only a third-tier priority - Show details Although sustainability is presented as one of the three pillars in Shein’s Future Plans section, it receives far less concrete backing than the company’s other and real priorities (p.269). While the filing outlines detailed plans for technology and growth, including hiring 1,500 to 2,000 additional tech specialists and expanding global marketing teams, commitments for social or environmental sustainability remain broad and short on measurable targets, dedicated investments or staffing plans. Section Close

  8. Transparency Gaps Remain - Show details For the first time, Shein’s Hong Kong filing provides a partial overview of the group’s complex corporate structure. It confirms the central role of entities in tax havens such as the Cayman Islands and the British Virgin Islands and broadly aligns with the earlier corporate mapping by Public Eye. Yet key transparency gaps remain. Shein applied for a waiver from full disclosure requirements (p.100), meaning the filing covers only a small fraction of the group’s “over 100 subsidiaries”. In consequence, the ownership of important companies such as the Chinese company “Guangzhou Shein Supply Chain Management” remain unclear. Shein also fails to disclose names and places of warehouses, logistics providers and contract manufacturers. This makes it impossible to know whether unauthorised subcontracting may be taking place. Rather than providing transparency, the filing illustrates how much of Shein’s corporate, logistics and supplier structure remains hidden from public scrutiny. Section Close

  9. Rising logistics and marketing costs - Show details Shein’s dumping-price model is expensive to run. In 2025, fulfilment expenses amounted to US$19.1 billion and marketing expenses to US$6.2 billion, together absorbing around 60% of net revenues. By contrast, the cost of sales, including the manufacture of products, accounted for just 32.1% of revenues (p.211). In other words, Shein spends far more on moving and selling products than on making them. This leaves very limited room for manufacturers’ margins, especially given the company’s extremely low retail prices. A likely key driver of the extreme fulfilment costs is Shein’s reliance on air cargo. Such transport is not only expensive, but also highly climate-damaging . Section Close

  10. Regulation is starting to bite - Show details In its Hong Kong listing documents, Shein acknowledges that regulatory changes are already affecting its business. The company warns that measures “may materially and adversely affect our business” and reports that changing customs practices have weighed on U.S. revenues since mid-2025 (p.46). Shein further foresees increased impact on its business from recent European Regulation, including the introduction of Extended Producer Responsibility (EPR) fees, the Corporate Sustainability Due Diligence Directive (CSDDD), the Ecodesign Regulation and the French anti-fast fashion bill (p.135-136). Importantly, the filing also suggests that Shein sees these developments not as the existential threats that they are, but merely as business challenges that can be managed. Section Close

The filing offers a revealing glimpse into how Shein sees itself and its future. Despite prominent sustainability rhetoric, its priorities remain firmly centred on technology, speed and growth. At the same time, the document shows that regulatory pressure is beginning to have measurable effects.

Ultimately, the key question is not whether Shein succeeds on the stock exchange, or what valuation investors assign to the company. The more important issue at stake is whether growing regulatory pressure will change the business practices of Shein and other companies. Because labour rights, environmental sustainability and corporate responsibility need to become more than marginal add-ons to a business model that is more than ever driven by speed, growth and short-term shareholder returns.

Read also: Toiling away for Shein: where the TikTok generation’s cheap clothes are made

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The company’s real priorities revealed

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  1. Outsourcing as business model

The document places Shein among the world’s top five fashion companies. With revenues of US$41.8 billion in 2025 (p.7), it clearly plays in the same league as Nike, Inditex or Uniqlo. Yet its workforce tells a different story: with only around 18,000 employees (p.198), Shein appears less like a traditional fashion group than a tech company orchestrating a vast network of contracted partners. This outsourcing extends beyond manufacturing to large parts of warehousing, logistics, marketing and design.

Despite claiming more than 370 in-house designers (p.173), the launch of around 4,700 new styles per day suggests that most creative work is also externalised. The company’s plans for an even more profitable future reinforce this picture: technology and the expansion of its tech workforce come way before all other priorities.

  1. Outsourcing of responsibility along the value chain

Responsibility for working conditions, product quality and legal compliance is largely delegated to manufacturers, merchants and other business partners, who must also indemnify Shein in case of breaches (p.200). Shein treats labour rights violations and other abuses as business risks, while emphasising its lack of control over the third parties that formally employ most workers.

Its main response is the “Responsible Sourcing Programme”, a conventional third-party audit system – despite the well-