Shein’s IPO Valuation Hinges on Trump’s De Minimis Ban on China

LONDON — Shein’s pursuit of a London IPO got a green light from the U.K.’s financial watchdog Financial Conduct Authority on Friday.

First reported by Reuters, citing sources familiar with the matter, the IPO would mark a major step in helping Shein build credibility and demonstrate a commitment to transparency, particularly in light of ongoing concerns around supply chain ethics, sustainability and the safety of shopping with Chinese marketplaces.

Shein declined to comment Friday.

However, it remains unclear when the IPO will happen, as it is still waiting for approvals from Chinese regulators, such as the China Securities Regulatory Commission and the State Council.

The IPO valuation also hinges on how it deals with the escalating trade war between the Trump administration and China.

In addition to slapping a whopping 145 percent tariff on imported goods from China, Trump last week signed an executive order ending de minimis for shipments from China and Hong Kong, effective May 2.

A bipartisan basis often referred to as a “loophole,” de minimis allows shipments bound for American businesses and consumers valued under $800 to enter the U.S. free of duty and taxes.

It forms the cornerstone of crossbroader businesses like Shein, Temu and Amazon, which ship goods from overseas directly to consumers. Removing de minimis would no doubt harm Shein’s probability and market share in the U.S.

The U.S. is Shein’s largest market, according to data from Reuters, making up more than 28 percent of its sales volume, and the majority of the Shein packages are de minimis.

In 2024, de minimis trade has ballooned to nearly 4 million packages each day, reaching nearly 1.4 billion the whole year. At least half of those duty-free parcels came from China.

The de minimis exception has been thrust into the spotlight with the explosion of firms like Shein and Temu. Both Republican and Democrat lawmakers have been calling for its elimination for years, saying that it gives Chinese corporations a leg up to the detriment of American manufacturers.

When the executive order goes into effect, de minimis packages from China will be subject to an informal entry process, and each package that travels to the U.S. via international post will now be subject to a tariff rate of 120 percent or $100, a rate that will increase to $200 after June 1.

John Mercer, head of research and retail analyst at Coresight Research, believes Shein, as well as Temu, will lose the advantage conferred by de minimis exemptions on U.S. import duties.

“This change would exert upward pressure on Shein and Temu pricing. However, we think it is neither a ‘killer blow’ to these cross-border players in the U.S. market nor a completely unanticipated outcome. We expect these platforms to continue to be price-aggressive,” Mercer said.

He thinks platforms like Shein have greater resilience due to a diversification of their businesses over time, including through onshore and nearshore distribution, an onboarding of local sellers, and a move toward a third-party marketplace model.

“Moreover, in a context where the wider mass market will face additional tariff costs, we expect rock-bottom retail companies to be able to increase prices and remain rock bottom of the market. While these changes will pressure profitability at cross-border players, we do not anticipate that the narrative of competitive threats from Shein and Temu will fundamentally change,” Mercer added.

Felicia Pullam, former executive director of the Office of Trade Relations at the U.S. Customs and Border Protection, agreed that e-commerce and low-value packages won’t go away with the end of the de minimis exemption.

She also thinks that major e-commerce companies are super sophisticated and some of them can move very quickly. “The highest profile companies have the resources to adjust their systems, and they are also incentivized to comply voluntarily,” Pullam added.

Last month, the Agence France-Presse reported that Donald Tang, Shein’s executive chairman, said the company would work to provide the best possible experience for its customers despite trade uncertainty and noted that Shein’s business model has helped it successfully navigate other unexpected global trade disruptions, like the COVID-19 pandemic. 

While the U.S. and China are clashing over trade, the U.K. is looking to cozy up to Chinese firms following Finance Minister Rachel Reeves’ visit to China in January, where she met Chinese vice-premier He Lifeng in Beijing, discussing trade and investment opportunities as part of efforts to grow the U.K. economy.

Following the talks, where both nations agreed to deepen cooperation in trade, financial services, investment and climate issues, Reeves went home with a deal that would see Beijing investing 600 million pounds in the U.K. over the next five years.

One thing worth noting is that Reeves’ China visit took place days after Yinan Zhu, Shein’s general counsel for Europe, the Middle East and Africa, faced a string of sensitive questions during a bruising hearing in the U.K., prompting one committee member, the Liberal Democrat MP Charlie Maynard, to accuse her of “willful ignorance” and describe her testimony as “very unhelpful.”

Greg Zakowicz, senior e-commerce expert at email marketing firm Omnisend, said Shein’s FCA approval is a significant moment for the wider e-commerce landscape in the U.K.

“Our data consistently shows that Shein has been successful at winning over British consumers, with over two-fifths saying they have shopped with the e-commerce giant,” Zakowicz added.

According to data compiled by Omnisend, British shoppers are placing greater emphasis on value. Some 60 percent of U.K. consumers surveyed by Omnisend said they have shopped on Chinese marketplaces like Shein and Temu in the past year, despite only 4 percent saying they fully trust these platforms.

While Shein is headquartered in Singapore, the majority of its operations sit within China. Over the years, Shein has been accused of skirting U.S. tariffs, employing forced laborers in China, illegally using Xinjiang cotton in its products, and copying others’ designs, all of which it denies.

In its bid to seek a public listing in London, the company has been trying to show that it is an ethical operator.

Shein’s Tang told WWD last year that Shein wants to comply with international laws and become a more transparent company. Being a publicly traded company, he said, is the way to foster that.

Shein had originally tried to list on the New York Stock Exchange, but its bid was blocked by U.S. lawmakers in 2023. It later pivoted to London.

Seeking to improve its public image and shine a light on all the positive work it has been doing, Shein last July unveiled plans to pump 250 million euros into European fashion’s circular economy and back the sector’s budding entrepreneurs, artists and artisans.

— With contributions from Kate Nishimura and Evan Clark.